JP Lease units blast creditor FitzWalter’s motion to dismiss case

By Sarah Lizee

Olympia, Wash., Jan. 13 – JP Lease Products & Services Co. Ltd. units JPA No. 111 Co., Ltd. and JPA No. 49 Co., Ltd. objected Thursday to a motion from their largest secured creditor, FitzWalter Capital Partners (Financial Trading) Ltd., asking the U.S. Bankruptcy Court for the Southern District of New York to dismiss the debtors’ Chapter 11 bankruptcy cases.

The debtors called the motion a “frivolous and harassing tactic designed to interfere with clear and legitimate bankruptcy purposes.”

The companies said their proposed sale, whether to the stalking horse or to a higher and better bidder, if approved, will result in the satisfaction of all claims in full with interest and a return to equity.

“This should be a ‘win-win’ for all parties-in-interest, which alone demonstrates the debtors’ good faith objectives in filing these cases,” the debtors said in their objection.

“How or why FitzWalter, in either its capacity as a senior secured creditor or as security agent, could find this result objectionable is beyond comprehension. So long as FitzWalter is paid in full, there can be no legitimate objection to these proceedings.”

The debtors said that FitzWalter had bought into their debt on Dec. 1, just over two weeks prior to the start of the cases, and immediately began to take “unilateral self-help measures” by seeking to foreclose on the lease assets, and separate them from the hard aircraft assets, on a 10-day timeframe providing only publication notice.

“There is no evidence that this process would have satisfied the secured lenders in full or that it would have resulted in any recoveries for certain lenders,” the debtors said.

The debtors said it appears that FitzWalter deliberately pursued a bifurcated sale process for the purpose of splitting the lease assets from the physical aircraft assets in order to depress the value of both assets, which could then be sold to affiliates at a reduced rate.

“This court should see the motion for what it is, the continuation of aggressive tactics designed to take advantage of the current distress in the aviation industry, without regard to the consequences for other stakeholders,” the companies said.

As previously reported, FitzWalter claimed in its motion that the debtors don’t qualify for bankruptcy protection, and there is no bankruptcy purpose being served in these cases.

“Each debtor commenced its case at the direction of its parent, JP Lease Products & Services Co. Ltd., to stave off enforcement of remedies being exercised by [Fitzgerald] – including against assets that are not estate property – as security agent for all of the debtors’ non-insider creditors, in accordance with the proceeds agreements and other documents that bind every secured creditor and the only unsecured creditor of any material amount, JPL,” the creditor said in its motion.

The creditor noted that the debtors have no employees, no cash flow, and only de minimis unsecured creditors.

FitzWalter called the cases “nothing more than a two-party dispute between the debtors and their secured creditors.”

Tokyo-based JP Lease Products & Services offers financial services based on a financial scheme combining the borrowings from financial institutions and funds to manage valuable assets including aircraft, ships, containers for maritime transportation, and solar power generation equipment. The debtors are sister companies that were each formed for the purpose of acquiring and leasing an Airbus A350 aircraft. The debtors filed bankruptcy on Dec. 17 under Chapter 11 case number 21-12075.

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