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Re Swissair Schweizerische Luftverkehr-Aktiengesellschaft; Flightline Ltd v Edwards [2002] EWCA Civ 63

Company Law - Insolvency - Freezing order - Security interest - Claimant issued proceedings against insolvent company and obtained freezing order - Freezing order discharged by consent after money paid into joint account of parties’ solicitors subject to undertaking not to dispose of or deal with funds pending further order or agreement - Company compulsorily wound up and claimant sought leave to continue proceedings - Claimant not secured creditor to extent of funds in joint account and not entitled to leave to continue action - Freezing order did not create security - Security interest over fund only created by obligation to meet debt out of fund - Consent orders providing for continuation of interim protection of freezing nature did not create security - Insolvency Act 1986, s 130(2)

14 February 2003

The claimant, Flightline, operated certain routes on behalf of Swissair. In 2001 the Swissair group collapsed and repudiated its arrangements with Flightline. Swissair was the subject of a debt re-structuring moratorium imposed by the Swiss court in Switzerland. In January 2002 Flightline commenced English proceedings against Swissair claiming £4.2m and obtained an order freezing Swissair’s assets in England and Wales up to the value of £4.2m. In February 2002 Swissair was expecting to receive from IATA a payment in excess of £4.2m. Orders were made by consent for the £4.2m to be paid into an account in the joint names of the parties’ solicitors and for the freezing order to be discharged on the basis on an undertaking by Swissair not to withdraw dispose of or deal with the moneys in the joint account up to a limit of £3,325,000 pending further order or consent of both firms. Provisional liquidators of Swissair were appointed and it was compulsorily wound up. Flightline applie...

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