Freshfields advises as Monarch enters into administration

Freshfields Bruckhaus Deringer has been drafted in by the administrators of Monarch Airlines, as the UK budget carrier collapses.

Freshfields’ team is led by global head of restructuring Ken Baird and partner Catherine Balmond. The firm was appointed by administrators from KPMG following the emergency talks between the airline and regulators ended at the weekend over Monarch’s future.

Monarch, which runs the UK’s fifth-largest airline, flies to around 40 destinations from five UK airports and employs around 2,100 people. Package holidays account for about 5 per cent of its revenues.

KPMG was appointed administrators for Monarch Airlines and Monarch Travel Group earlier today. The administrators is led by the accountancy firm’s partner and head of restructuring in the UK Blair Nimmo, and consist of partner Jim Tucker, associate partner Mike Pink and director Steve Absolom.

According to the Civil Aviation Authority’s (CAA) website, Monarch Airlines has ceased trading with immediate effect, leaving 110,000 customers overseas and in the region of 300,000 future bookings cancelled.

CAA chief executive Andrew Haines described the airlines’ collapse as “the biggest UK airline ever to cease trading”.

The CAA is represented by Kirkland & Ellis in relation to Monarch’s administration.

Reed Smith also advised the CAA, working with its in-house legal team. Partner Richard Spafford advised on licensing and regulatory issues, while partner Charlotte Møller led a team advising on the insolvency law and contingency planning for the repatriation.

Monarch group has been struggling in recent years due to intense comptition in the aviation sector. In 2014, the airlines instructed a raft of UK firms to adivse on the rescue of the Monarch Group by investment firm Greybull Capital, with Freshfields playing a key role.

The magic circle firm took the lead role for the airline in the restructuring, led by finance partner Adam Gallagher and corporate partner Martin Nelson-Jones. Kirkland was also involved, acting for the CAA.

The struggling travel business, which was previously owned by the Mantegazza family for 46 years, was acquired by turnaround specialist Greybull Capital for a nominal sum through the transaction.

Background to this deal

A huge raft of firms flew in to help out travel business Monarch Group on its rescue by Greybull Capital in October 2014.

The list of firms advising included Addleshaw Goddard, Bird & Bird, CMS Cameron McKenna, Forsters, Freshfields, Kirkland & Ellis, Macfarlanes and Norton Rose Fulbright.

But it was Freshfields which played the key role on the deal, at least for Monarch. The magic circle firm managed to pip the group’s regular go-to adviser Bird & Bird to the post, winning a first-time mandate on the game changing transaction.

The magic circle firm took the lead role for the airline, led by finance partner Adam Gallagher and corporate partner Martin Nelson-Jones. The pair was supported by pensions partner Dawn Heath and Charles Magoffin, finance partners Catherine Balmond and Robert Murphy, and aviation regulatory partner Alan Ryan.

Bird & Bird, which is Monarch’s usual go-to counsel, advised the client on secondary parts of the transaction, fielding a team including finance partner Trystan Tether and aviation partners Simon Chamberlain and Robin Springthorpe.

Macfarlanes advised Monarch’s outgoing shareholders, the Mantegazza family, on the deal. The team was led by the firm’s M&A head Ian Martin and banking partner Camilla Barry.

Meanwhile, Forsters advised longstanding client Greybull on its acquisition. The firm’s team was headed by corporate partner Craig Thompson, with support from finance partner Victoria Edwards. Associates Simon Osborne, Alastair Laing, Rowena Marshall and trainee Angus Hortop assisted.

Other firms to win roles on the transaction included Stephenson Harwood, which advised existing client the Pension Protection Fund (PPF) on the restructuring of Monarch’s substantial pension deficit. This problem needed to be solved before any third party was prepared to inject funds into the business, and Stephenson Harwood was drafted onto the transaction in mid-September.

The firm’s team was led by restructuring partner Sue Moore, and included corporate partner Andrew Edge, senior associate Tom Page, and consultant Jessica Boxford.

Kirkland & Ellis restructuring partners Kon Asimacopoulos and Elaine Nolan and finance partner Phil Crump represented the Civil Aviation Authority.

CMS Cameron McKenna advised the trustees to Monarch’s pension scheme on the deal. Partners Mark Grant, Simon Pilcher and Emma Frost were joined by associate Mark Jenkins on the deal.

Norton Rose Fulbright advised Royal Bank of Scotland and Addleshaw Goddard is understood to have advised NatWest on particular debt structures related to the deal.