Alerts

7th Circuit Confirms Clear Right of Aircraft Lenders/Lessors To Reclaim

May 13, 2005

The U.S. Court of Appeals for the Seventh Circuit held on May 6, 2005, that an aircraft lessor/lender had “a right to the return of [its leased] aircraft” unless a chapter 11 debtor airline “pays full rental” or unless the lessor/lender " agree[s]  to accept a lower price.” United Airlines, Inc., et al. v. U.S. Bank N.A., et al., 2005 U.S. App. LEXIS 8066, *12 (7th Cir. May 6, 2005). Moreover, added the court in its scathing opinion reversing the lower courts, Bankruptcy Code (“Code”) “§ 1110(a)(1) prevents bankruptcy judges from using any source of law… as the basis of an injunction against repossession.” Id. at *13 (emphasis added).