The Ninth Arbitration Appeals Court of Moscow has agreed with an appeal from the Deposit Insurance Agency (DIA) of Russia, overturning an earlier Moscow City Arbitration Court ruling, and issued an order on January 30 to recover EUR31 million euros (USD33.4 million) from airBaltic (BT, Riga), the agency announced in a statement.

The appeals court invalidated loan agreements that had been concluded between now-defunct Russian commercial bank Investbank and the Latvian firm Baltijas Aviācijas Sistēmas (BAS), which in 2012, the year the dispute goes back to, held a 47.2% stake in the airline.

The DIA, which pays insurance compensation to depositors of failed banks, said that the basis for the court’s decision was evidence that had been provided pointing to the transitory nature of the allocated loan funds and their direct use by airBaltic rather than by the actual borrower, BAS.

In 2012, Investbank launched three civil cases against BAS, as well as against airBaltic itself as a co-defendant, for repayment of EUR18.4 million (USD19.8 million) in loans, interest, and fines. The bank had extended loans to BAS, which was owned by airBaltic’s then-CEO Bertolt Flick, in January, June, and July 2011. The Latvian carrier was at that time seriously cash-strapped and teetering on the edge of collapse.

In 2016, Russian courts issued rulings in two of the cases, ordering the airline to repay EUR13.5 million (USD14.5 million) to the bank. However, by that time, in December 2013, the Central Bank of Russia had already revoked Investbank’s licence due to the “significant unreliability of its reporting data” and a number of other violations. In late December 2017, it was reported that Russia had requested legal assistance from the Latvian government to help it recover the money on behalf of the defunct bank.

airBaltic has repeatedly claimed that all of the debts were annulled by a bailout agreement signed in 2011 between BAS and the government of Latvia.

Reached for comment, airBaltic told ch-aviation that “lawyers of airBaltic in Russia are currently working on this historic claim, and the company is aware of it. As of now, the court’s decision has not been received yet. Thus, the company will be able to evaluate it and possibly give a broader comment only after receiving the decision.”