
Icelandic airline Wow Air collapses and cancels all flights - atulg2
https://www.cnbc.com/2019/03/28/icelandic-airline-wow-air-collapses-and-cancels-all-flights.html
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dehrmann
Just a reminder: when you buy something from a company that they don't deliver
immediately, you're one of its creditors. If they declare bankruptcy, unless
you're in the 90-day credit card chargeback window (or have some other
protection), you get in line with the other creditors. This goes for gift
cards, too.

In general, be careful buying things more than 90 days out because of this,
and be careful when you effectively "lend" money to a struggling company.

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photonios
"You can't get blood from a stone".

Even if you are one of the creditors. If the company is bankrupt the biggest
creditors usually get paid first. In the case of Wow Air, that's most likely
the companies that leased them the planes. Many creditors have to be
statisfied before it's your turn as an invidiual.

Legally, you are indeed a creditor and you deserve to be paid back if
possible. In reality, that rarely happens.

~~~
londons_explore
Having different classes of creditor ranked seems like almost fraud to me.

A bank who has a higher priority with bankruptcy proceedings has a strong
incentive to keep loaning out cash to the failing business at ever worse rates
until _just_ the moment that the assets no longer cover their outlay. At that
point, they make the company bankrupt with the full knowledge all the other
creditors will get nothing and they'll get their full capital back.

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ixwt
You make a interesting point. I wonder if we've actually seen this in practice
anywhere. Perhaps to avoid this, you receive a portion of the amount paid back
to creditors equal to your percentage of debt owed?

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sgillen
Must have been pretty dramatic if they suddenly canceled all flights rather
than winding down the company. The article doesn't exactly make that clear.

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umeshunni
It was not abrupt. Things had been bad for them for the last year or so. WOW
worked (publicly) for the past five months to find a new source of funding and
restructure its operations, hoping to continue flights.

* In November 2018 it looked like Icelandair would acquire WOW Air, though that deal ended up falling through

* After that, Indigo Partners (private equity group which has invested in quite a few airlines) signed an agreement in principle to invest in WOW Air; just a few days ago it was announced that this deal fell through

* Earlier this month, WOW Air announced that they were back in discussions with Icelandair, and that the parties hoped to conclude negotiations by Monday, March 25, 2019

* On Sunday Icelandair announced that they had concluded talks with WOW Air, and didn’t intend to move forward

* Then things got really bad, as one of their planes was allegedly repossessed in Montreal

WOW Air bondholders approved a plan to convert their bonds into equity, but
that only takes you so far

On a related note, WOW Air is the third European airline to halt operations
this year, joining Flybmi and Germania.

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sudenmorsian
Just as a note, Indigo Partners is an American private equity firm which has
controlling stakes in Frontier Airlines and Chilean low cost carrier JetSmart
and stakes in Wizz Air and Volaris, which are major low cost carriers in
Eastern Europe and Mexico respectively.

The Indian low cost carrier Indigo is unrelated.

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umeshunni
Thanks for letting me know. I've updated my post to remove that reference.

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gcb0
good riddance. flied with them once. the seat was worse than those outdoors
metal folding and stackable seats you see in very cheap beach front places. no
padding. absolutely no reclining.

it was a criminal lack of basic ergonomics for the tens of hours you seat on
them.

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saagarjha
It would have been nice if they had shut down more gracefully, though, since
there's currently hundreds (if not thousands) of people stranded across the
globe…

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londons_explore
A graceful shutdown can be considered fraudulent.

By doing a graceful shutdown, they will take much bigger losses in the last
few weeks of trading, which is the directors not fulfilling their duty to
shareholders.

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saagarjha
Is not stranding people and not shutting down with zero notice fraudulent?

