Dentons Advises Smartwings on Out-of-Court Restructuring and CZK 2 Billion Financing

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Prague, March 29, 2021 – Global law firm Dentons has advised Smartwings, the largest airline in the Czech Republic, in connection with its out of court restructuring and CZK 2 billion (approximately €76 million) financing, which will allow it to continue operations in the wake of the COVID-19 pandemic. A syndicate of four banks - led by UniCredit Bank and including Komerční banka, Československá obchodní banka and Česká spořitelna – provided the financing. The Export Guarantee and Insurance Company (EGAP) secured the loan as part of the Czech government’s COVID Plus program to mitigate the effects of the pandemic.

A cross-border, multi-competency Dentons team advised Smartwings on all aspects of the complex out-of-court restructuring. This included the strategy, structuring, negotiation and implementation of the debt restructuring, the structuring and negotiating of rescue financing under the COVID Plus program backed by EGAP, and the restructuring of aircraft leases in respect to Smartwing’s fleet. The team also advised on the implementation of the financing, as well as negotiations with the lenders, aircraft lessors and shareholders.

Prior to the pandemic, Smartwings Group was a profitable airline and one of the fastest growing in Central Europe. However, due to COVID-19 related travel restrictions, it recorded an unprecedented drop in revenue and had to implement a number of restructuring measures, including the layoff of 600 people and the implementation of a creditor-supported moratorium.

The financing deal, which concluded the moratorium, will allow Smartwings to finance its operations for the coming financial period. The airline will operate flights not only from the Czech Republic, but also from Poland, France, Hungary, Slovakia and the Canary Islands.

Partner Jiří Tomola, Head of Dentons’ Restructuring, Insolvency and Bankruptcy practice and Co-head of the Banking and Finance group in Prague, led the international legal team on Smartwings’ restructuring and financing.

He commented on the deal, “The air transport sector, which is part of the critical infrastructure of the economy, is among the industries most impacted by the COVID-19 pandemic. We are proud to have had the opportunity to help Smartwings protect the value in its business in these extremely difficult times.  The completion of the restructuring and the new financing will allow the airline to continue operations. This complex deal was made possible by the goodwill and collaboration of all parties involved, including the financing banks, lessors, creditors, shareholders and institutional customers.”

The cross-border legal team consisted of 30 lawyers from seven offices, including: counsel Václav Žalud, senior associate Martin Manďulák, associates Kateřina Pracná, Diana Herdzinová, Soňa Baranová, Ondřej Valeš, Eva Klímová, and David Šutko, and paralegal Bohdan Chrenovský in Prague; partner Gergely Horváth and associates Gabriella Pataki, Bence Böszörményi, Kinga Kovács and Nóra Nagy in Budapest; partners Tomasz Trocki, Mateusz Toczyski and Bartosz Nojek, and associate Magda Kulesza in Warsaw; partners Stanislava Valientová and Peter Kubina, counsel Patricia Gossányiová, and associates Richard Marcinčin, Petra Štrbová and Bianca Böhmová in Bratislava; counsel Surbhi Malhotra-Trenkel and Carl Bjärnram in Munich; partners Stephen Temple and Ian Fox, and counsel Luci Mitchell-Fry in London, and partner Gareth Steen in Dublin.

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