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Freshfields and Kirkland land roles in biggest ever UK airline collapse

Freshfields Bruckhaus Deringer and Kirkland & Ellis have won advisory roles as Monarch Airlines filed for administration in the early hours of Monday (2 October).

The job – one of the most high profile corporate failures of the year – has attracted two of the City’s top insolvency teams, with Freshfields fielding a team under its veteran restructuring chief Ken Baird.

Big Four accountancy firm KPMG was appointed administrator for the airline after it stopped operating, leaving 110,000 customers stranded overseas and cancelling around 300,000 future bookings.

The announcement came after terror attacks in North Africa, the weak pound and an increasingly competitive aviation market took its toll on the UK’s fifth-largest airline, which reported a £291m loss for the year to October 2016.

KPMG UK head of restructuring Blair Nimmo and partners Jim Tucker and Mike Pink are joint administrators to the airline. Nimmo, Tucker and KPMG director Steve Absolom have also been appointed administrators to the group’s tour operator Monarch Travel Group. Its engineering operation Monarch Aircraft Engineering will continue to trade normally.

Baird and fellow Freshfields finance partner Catherine Balmond are leading the team advising KPMG. Kirkland is advising the Civil Aviation Authority (CAA).

‘While this timing is unusual in insolvency situations, it was necessary for the appointment to be made once all Monarch aircraft were on the ground,’ Nimmo commented in a statement, adding that the administrators’ primary focus for the first 48 hours was to work with the CAA on repatriating the customers due to travel back to the UK within the next two weeks.

After Monarch’s Air Operating Certificate was suspended with immediate effect on Monday morning, the government tasked the CAA with bringing back to the UK 110,000 people stranded overseas.

More than 11,800 were flown home on Monday on 61 flights. Around 44,000 others are expected to follow this week.

Stephenson Harwood has also picked up a role advising the Pension Protection Fund.

Founded in 1968, the Luton-headquartered airline operated flights to more than 40 destinations with a capacity of six million seats from five UK bases: London Gatwick, Birmingham, Manchester, Leeds-Bradford and Luton.

UK’s largest ever airline to enter administration, it had employed about 2,100 people, around 250 of them retained to help with repatriation operations.

Freshfields has previously acted for Monarch in two key deals in the airline’s 49-year history. The company secured the largest investment in its operations from Greybull Capital in October last year, meaning it was able to maintain its licences from the CAA for the following 12 months. The Magic Circle firm also acted for the airline operator when Greybull acquired the majority of the group in 2014.