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No forced takeover of Corendon due to Covid-19

maandag 21 december 2020

On the 7th of December 2020, the Court of Amsterdam dismissed the claim relating to the takeover of tour operator Corendon in an interim injunction.

In December 2019, Sunscreen (Sunweb) and industry partner Corendon Holiday entered into a purchase agreement in respect of the shares in Corendon Holiday. Sunscreen would acquire these shares for € 146 million. However, in October 2020, Sunscreen terminated the agreement for the underlying reason that not all suspensive conditions would have been met. In response, Corendon initiated interim injunction proceedings.

Corendon requested cooperation closing Sunscreen

In Court Corendon claimed full and unconditional cooperation from Sunscreen, including payment of the purchase price and acceptance of the shares. In the preliminary proceedings the Court dismissed Corendon's claims, despite the fact that it had become sufficiently plausible that the Court in following main proceedings will come to the conclusion that Corendon has complied with all conditions.

Reasons for rejection in preliminary relief proceedings were the interests involved, like the particularly extensive and possibly irreversible consequences that such a forced takeover could entail. These consequences, including a possible bankruptcy by having to pay the purchase price to Corendon, are a result of the Covid-19 crisis. That crisis affected the entire travel industry. It is therefore clear from this ruling that the Court has taken the consequences of the Covid-19 crisis into account.

Consequences of the corona crisis on the travel sector are weighed

Interestingly, the interim relief judge did not rule out that "the real motive for Sunscreen to exit the transaction is not in the AOC Conditions, but the Covid-19 crisis, in particular the impact of that crisis on the results of the company (Sunweb) and on the attitude of the shareholders (in particular Triton) towards the acquisition of a company in a sector which has been hit very hard by the Covid-19 crisis and whose recovery is currently uncertain".

The foregoing implies that the Court in preliminary relief proceedings cannot grant a forced takeover. The consequences of the corona crisis are incalculable. However, the interim relief judge did consider that the parties should continue with their negotiations in order to adapt the deal to the changed situation. After all the judge ruled that Sunscreen cannot simply evade the deal.

Approval of the ILT to fly - Air Operator Certificate (AOC)

Another interesting part of this ruling was found in the AOC conditions. Corendon had to request approval for the permit to fly from the Inspectie voor Leefomgeving en Transport (ILT: the Dutch Aviation Authority) on the basis of the purchase agreement. In the event of a takeover such as this, the ILT can check the new flight company. Sunscreen therefore requested security from the ILT regarding the AOC. Corendon, on the other hand, took the view that these arguments were merely a smokescreen for abandoning the takeover and that the AOC conditions had been met. The Court in preliminary relief proceedings concluded that it was not likely that a new AOC would have to be submitted for approval. The judge also concluded that there is no obligation for ILT under EG Regulation 1008/2008 to give a confirmation prior to closing and that ILT will in any case check after closing whether the confirmation given in advance is correct. For the time being, therefore, the objections of Sunscreen did not hold.

Legal questions about the aviation industry?

The aviation industry was hit hard by the Covid-19 pandemic. This ruling just shows that the consequences of the corona crisis on the continuity of these companies were taken into account, which is a good outcome for companies in this sector.

In case you have any questions about this article or you are looking for assistance in corporate or aviation law related issues? Please contact Michelle Reevers. She regularly assists parties in the aviation industry.

Michelle Reevers

aviation, commercial contracts, business and shareholders

+31 (0)10 209 27 75
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