Barlow Lyde partner Michael Mendelowitz advised Global Aerospace Underwriting Managers, the underwriting agents of a specially-formed insurance company called Troika. The company had to be set up, receive Government backing and be authorised by the Financial Services Authority in just one weekend.
Mendelowitz said: “Once the Chancellor Gordon Brown had announced that the Government would provide the aviation insurance cover that was no longer commercially available, all of the parties involved and their lawyers cooperated and worked around the clock to draft and negotiate a set of complex agreements against an extremely tight deadline.”
Troika is sponsored by brokers Aon, Marsh and Willis. It is able to underwrite aviation liability risks as the Treasury has granted indemnity through a reinsurance contract. A&O represented the consortium of brokers, while Freshfields acted on behalf of the Treasury.
“The challenge of providing a solution which has kept the UK aviation industry flying was formiddable”
Guy Beringer, Allen & Overy
A&O brought out its big guns for the deal, with senior partner Guy Beringer leading the team. Corporate partner Ian Stanley and head of the insurance group Michael Brown were also involved.
Beringer said: “The challenge of providing a solution which has kept the UK aviation industry flying, within such a short timescale, was formidable.”
This short-term rescue package was essential for UK airlines following the withdrawal of insurance cover by the international commercial aviation insurance market. Airlines would have been forced to remain on the ground had this scheme not been completed.
For an initial period of a month, the Treasury will deliver replacement insurance for UK airlines. Should the cover need to be extended, airlines will have to pay premiums based on commercial rates prior to the terrorist attacks in the US.
The Freshfields team was led by partners Graham Nicholson and Ian Poynton. Andrew Renshaw in the Brussels office was also called in to assist in handling EU issues. Nicholson said: “A lot of people all worked extremely hard to put the deal together. The weekend went in a bit of a blur, but there are plenty more.”