An Estonian court has denied a motion filed by a group of former Estonian Air employees seeking to block around EUR1.7 million (USD2.04 million) held by Nordica (EE, Tallinn Lennart Meri). The group had planned to use the funds to settle defunct Estonian Air's outstanding severance and vacation pay as well as redundancy benefits owed to staff, the BNS newswire said.

The court found on December 22, 2017, that blocking such a sum would jeopardise Nordica's operations and could even lead to the company's insolvency. Nordica is a state-owned virtual carrier established after the bankruptcy of Estonian Air in November 2015.

The court, at this stage, did not determine whether Nordica could be held liable by employees of Estonian Air. The next session is scheduled for February 21, 2018.

The case was launched in June 2017, when a group of around 60 former employees of Estonian Air demanded that Nordica settle their redundancy payments, which were not paid by the bankrupt company. The plaintiffs argued that Nordica was established as a de-facto legal continuation of the previous airline. For its part, Nordica underlines that it was created from scratch as a completely new legal entity.

According to court documents, at the end of 2016, Nordica only had EUR3.21 million in available capital. The plaintiffs' representative said that the airline is loss-making and if the court finds Nordica liable for Estonian Air's debts, it may not be able to repay them.

Estonian Air terminated all operations in November 2015 after the European Commission ruled that EUR85 million worth of state aid extended to the airline was illegal and had to be repaid. Unable to shoulder the financial burden, Estonian Air subsequently filed for bankruptcy before being liquidated.