Two aircraft leasing companies have lost a lawsuit against Garuda Indonesia (GA, Jakarta Soekarno-Hatta), with a judge last week ordering funds in a frozen bank account be released and the leasing companies pay compensation.

Greylag Goose Leasing 1410 and Greylag Goose Leasing 1446, both special purpose vehicles controlled by New York-based Avenue Capital Aircraft Holdings, sued Garuda Indonesia via its subsidiary, Garuda Indonesia Holiday France (GIHF), in France last year. It was one of a series of legal actions undertaken by the Greylag SPVs in an attempt to derail Garuda's restructuring process and have the airline declared insolvent. In 2013, Greylag Goose Leasing 1410 leased an A330-200 (PK-GPQ (msn 1410)) to Garuda, while Greylag Goose Leasing 1436 leased an A330-300 (PK-GPR (msn 1446)). As part of the restructuring process, Garuda Indonesia attempted to hand back the two planes but Avenue Capital has refused to accept them, preferring to pursue the insolvency option.

In 2022, when initiating the French legal action, the Greylag SPVs were successful in having freezing orders issued. But last week, the Paris Civil Court overturned those orders and ordered them to pay EUR230,000 euros (USD245,805 dollars) in damages and costs. The judge said given that the Indonesian courts had ratified Garuda's restructuring plan, which was also accepted by the bulk of creditors, the SPVs' case lacked a strong legal basis.

Garuda Indonesia has also successfully fought off legal actions pursued by the Greylag companies in Australia and Indonesia. However, the SPVs launched a fresh action in Indonesian courts earlier this month. In a statement following last week's win, Garuda Indonesia CEO Irfan Setiaputra said that the various actions taken by Greylag 1410 and Greylag 1446 were unfortunate, adding that they were "hindering the steps to accelerate the company's performance."

"We need to emphasize that the restructuring that was successfully completed by Garuda Indonesia went through a long discussion process with all creditors in accordance with applicable laws," Setiaputra said. "The existence of attempts to act against the law through various lawsuits filed by the two lessors is of course an action that is very unfortunate and contrary to the spirit of synergy between Garuda Indonesia and all of its stakeholders, as well as hindering steps to accelerate the company's performance which, in this case, concerns the interests of the majority of creditors."

In June 2022, Garuda's administrators came to an agreement with 95.07% of creditors, including aircraft lessors, to restructure over USD9 billion in debt. Those creditors agreed to settle their claims for approximately USD5.1 billion, much of it converted to equity. However, the Greylag companies, which made claims for USD384.7 million in relation to the aircraft leases, were dissatisfied with the USD148 million Garuda's administrators allocated to them, objecting to the method and the calculation of the claims and arguing that the airline could afford to pay more.