Former Swissair bosses cough up $3.1mn in final settlement

Almost 20 years after the Swissair (SR, Zurich) grounding, a dispute over liability claims has finally been put to rest with 29 former executives agreeing to pay CHF2.7 billion Swiss francs (USD3.1 billion) as part of a final settlement – a fraction of the sums once demanded. After numerous unsuccessful lawsuits, the former executives, without acknowledging any legal obligation and without prejudice, “showed willingness to settle any claims by paying a small amount of money” to the companies in debt restructuring liquidation, including SAirGroup, SAirLines; Swissair (SR, Zurich), and Flightlease, according to a December 2020 circular to creditors by Swissair liquidator, Karl Wüthrich of Wenger Plattner. In exchange, the estate companies would waive the right to assert any further responsibility claims against them. Amongst those involved are Mario Corti, the former Swissair Chief Executive Officer and Chairman of the Board of Directors of SAirGroup, and his predecessor Philippe Bruggisser. Wüthrich said the creditors’ committees of the estate companies had approved the settlement. It would enter into force if no creditor lodged a successful appeal against it. SAirGroup would receive the lion’s share as it had borne a large part of the costs for the settlement of claims against corporate bodies, the liquidator said. The settlement agreement followed the conclusion by the liquidation bodies that the chances of successfully asserting any further responsibility claims against the former executives would be very small, the circular read. In the meantime, an agreement to dissolve dividend cycles had come into force, Wüthrich said, which would allow Swissair to collect its receivables from former Swissair Group companies. However, the implementation of the agreement would take some time. “We expect that the final dividend from the various bankruptcy and liquidation proceedings will be received by Swissair by mid-2021. Creditors will be informed in spring 2021 about the progress of the liquidation in the current year,” he said. The settlement comes after Switzerland’s highest Federal Court cleared 14 former Swissair bosses of mismanagement relating to its collapse in 2001. It thereby upheld a 2018 decision by a Zürich commercial court, which had been appealed by the Swissair liquidator, who claimed the former managers had failed in their duties as financial administrators, approving loans that could not be repaid after the company’s collapse and disregarding the rules of corporate governance. After having been in business for 71 years, Swissair was grounded on October 2, 2001 bearing debts of CHF17 billion (USD19.1 billion). The downturn in the aviation market after the September 11, 2001, US terror attacks proved the last straw for the national carrier, which folded the following year. The airline has been in debt restructuring liquidation since May 2003. Around 10,000 creditors with recognised claims of around CHF10 billion (USD11.2 billion) have been affected by the bankruptcy.