Navigating Government-Imposed Sanctions in Administration

Abstract

Prior to entering into administration, CargoLogicAir was the UK’s only maindeck freighter airline, which also secured a major contract to transport urgent medical supplies to combat COVID-19. CargoLogicAir is an English registered company and a wholly owned subsidiary of Cargo Logic Holding Ltd (company registration: 09605430) (Parent). In the period prior to its administration CargoLogicAir had a workforce of approximately 110 employees in the UK and certain European jurisdictions, however the majority were based in the United Kingdom. Given the nature of its business the workforce included highly skilled, regulated individuals. Following Russia’s invasion of Ukraine in February 2022 and the introduction of a wider range of EU and UK restrictions against Russian carriers and their owners (but before CargoLogicAir became subject to UK sanctions), it became increasingly difficult for CargoLogicAir to operate commercially. At this time, CargoLogicAir leased two B747 aircraft in carrying on its business (“Leased Aircraft”). In February 2022, the EU refused access to EU airports for Russian carriers and prohibited them from flying over EU airspace. Furthermore, in March 2022, the UK and EU introduced additional measures prohibiting the provision of technical assistance to Russian carriers, effectively grounding the Leased Aircraft. These measures had the effect of preventing both aircraft registered in Russia and/or aircraft leased (whether directly or indirectly) to a Russian citizen and/or entity, landing at an airport based in the EU or flying over EU countries (“EU Airspace Restrictions”). Given CargoLogicAir’s ownership structure, this had a material impact on its ability to carry out its ordinary operations.