Aviation specialist Run Ming has recently advised on China’s very first airline bankruptcy. East Star Airlines was declared bankrupt last year and Run Ming partner Gavin Wang was instructed by Airbus, one of the creditors of East Star Airlines, to file the bankruptcy claims and provide Airbus with advice on Chinese bankruptcy law.

The bankruptcy proceedings were launched on March 2009 at the request of six creditors. The airline, with a total debt of more than RMB752m, officially went bankrupt in August after its restructuring application was rejected by the Intermediate People's Court in Wuhan.

While General Electric's aircraft leasing arm, GE Commercial Aviation Services, one of the creditors, has taken back all nine aircraft it had leased to the airline, others have not finalised their claims to date.

The firm, together with Clifford Chance, assisted Airbus in formulating solutions in areas where no judicial precedents and PRC statutory rules are directly applicable. Airbus was consequently able to implement precautionary measures and reach a settlement agreement after an eight-month negotiation.

At the same time, Wang also separately represented ICBC Financial Leasing Company in its first tax-bonded aircraft lease in China. The lease, related to two Boeing 777F aircrafts, and was entered into between an innovative Chinese SPC as lessor and China Southern Airlines as the lessee.

Run Ming provided ICBC and the SPC with a full range of legal services from transaction structuring, documents drafting to advice relating to customs, foreign exchange control and tax bonding. 

In the past two years, Run Ming has represented its clients in relation to lawsuits and arbitration matters against several other airlines.

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