OSLO (Reuters) – Norway’s parliament voted through a new company restructuring law on Friday that could help save Norwegian Air (NWC.OL) and many other companies from potential bankruptcy as a result of the restrictions to stem the spread of COVID-19.
FILE PHOTO: A Norwegian Air plane is refuelled at Oslo Gardermoen airport, Norway November 7, 2019. REUTERS/Lefteris Karagiannopoulos
The legislation replaces current regulation on debt negotiations and relaxes rules for converting debt into equity.
“(The new law) is a more efficient tool to … sort out what parts of a business can be strong enough to survive,” Justice Minster Monica Maeland told parliament.
Her comments were not aimed at any specific firms, but budget carrier Norwegian Air is among those likely to benefit, said Kristoffer Aaseboe, a lawyer at Oslo-based law firm Bull & Co.
“This temporary restructuring law will increase the likelihood to get restructurings in place,” Aaseboe, who specialises in insolvency and reconstruction, told Reuters.
The airline is seeking to convert debt to equity to qualify for state guarantees in a bid to survive the coronavirus crisis, which has grounded all but a handful of its nearly 160 aircraft.
The law will mean only 50% of the debtors and 50% of shareholders have to agree to a solution, which is less strict than under the current law, Bull & Co lawyer Klemet Gaski said.
Norwegian Air this week said four of its Swedish and Danish subsidiaries had filed for bankruptcy and that it had ended staffing contracts in Europe and the United States, putting some 4,700 jobs at risk.
The company still aims to emerge from the crisis, and will hold meetings of bondholders and shareholders ahead of a vote on its proposed plan on May 4.
Norwegian Air declined to comment on Friday.
Editing by Terje Solsvik;Editing by Elaine Hardcastle