Source: Business Times
Article Date: 25 Oct 2023
Author: Tay Peck Gek
FW Aviation accuses Nguyen Thi Phuong Thao of allegedly conspiring with VietJet execs, two companies to thwart repossession attempt.
VietJet Aviation and its founder are among 11 parties that are being sued in Singapore over allegedly conspiring to block the release of four leased planes worth about US$200 million.
FW Aviation (Holdings) 1, which is the beneficial owner of the planes, has accused Nguyen Thi Phuong Thao of conspiring with several VietJet executives and two Singapore incorporated companies – Silva Star Capital and Polar Star Capital – to thwart a repossession attempt.
The 53-year-old Thao was Vietnam’s first female billionaire to be recognised by Forbes, with a net worth of US$2.2 billion as at Oct 23. She launched the Vietnamese low-cost carrier VietJet Air in 2011.
FW Aviation’s attempt to repossess the four planes is being closely watched by the aviation industry. Leasing watchdog Aviation Working Group has placed Vietnam on a watch list after the Vietnamese court blocked the deregistering of the jets, in a reported departure from an international treaty. This might have implications on the future financing cost of plane deliveries for Vietnamese airlines.
VietJet was initially sued in the United Kingdom when the carrier defaulted on its lease payments for the four Airbus A321 aircraft. It paid more than US$4.4 million to US$5.2 million a year for each of the four planes. It was in arrears of about US$8 million as at October 2021, and is liable for not completing the leases.
It then entered into a consent order with FW Aviation, agreeing to write to the Civil Aviation Authority of Vietnam (CAAV) to deregister and export the four aircraft as well as transfer them to FW Aviation. Dinh Viet Phuong signed the letter in his capacity as Vietjet’s then managing director, indicated court documents seen by The Business Times.
Phuong is now the chief executive officer of the carrier, and one of the defendants in the Singapore litigation.
Silva Star Capital, in its position as a shareholder of VietJet, subsequently sued CAAV and obtained a Vietnamese court injunction to restrain the aviation regulator from deregistering the aircraft. It said only the board, and not Phuong, has the authority to requestion a deregistration.
It revealed that the jets in question were planned to be used for up to 12 years, generating an annual revenue of US$27 million to US$29 million, and profit of US$2 million to US$3 million for each aircraft.
VietJet will be entitled to purchase the planes, which are now less than five years old, at a preferential price in the eighth or 10th year of the lease term. It had paid US$45.4 million by the time it buckled under the impact of the pandemic and defaulted on the leases, and these payments would be forfeited if it did not complete the leases.
Silva Star Capital subsequently discontinued the Vietnam lawsuit and discharged the injunction, but three other Vietnamese shareholders have taken out lawsuits in the country and were granted injunctions.
Although these injunctions were subsequently withdrawn after FW Aviation commenced contempt proceedings against VietJet, Thao and Phuong in Britain for breaching the consent order, FW Aviation said the ongoing lawsuit in Vietnam prevented it from exporting the aircraft.
FW Aviation, represented by lawyer Wendy Lin in the Singapore litigation, alleged that Thao is the de facto director and ultimately controls Silva Star Capital and its shareholder Polar Star Capital. Phuong is also one of the two directors of Polar Star.
Phuong, Thao and the carrier are behind the legal actions, including the latest from the three shareholders in Vietnam, to frustrate the consent order, argued FW Aviation. It wants the Singapore court to order the defendants not to commence or continue any proceedings worldwide.
The defendants, separately represented by senior counsel N Sreenivasan and lawyers Megan Chia and Blossom Hing, objected to the city-state as being the appropriate forum to hear lawsuit launched by FW Aviation.
Some defendants said that the litigation lacks a connection to Singapore, as most of them and the claimant have no personal ties to the Republic. Also, the alleged conspiracy as well as the execution of the lease agreement did not take place there.
They alleged the Singapore lawsuit is the claimant’s abuse of process as the matters are before the English and Vietnamese courts.
A case conference will be held on Wednesday (Oct 25) in Singapore’s High Court.
Source: Business Times © SPH Media Limited. Permission required for reproduction.
10596