According to a recent article that appeared on Lexology’s website, airline bankruptcies have prompted conflicting interpretations for owner participants with regard to the right to recover on monetary claims based on tax indemnification agreements (TIA) under leverage lease arrangements.

The authors note that in recent cases involving Northwest Airlines and Delta Airlines, the U.S. Court of Appeals for the Second Circuit overturned a ruling by the bankruptcy and district courts and held that in the context of the Delta leverage lease agreements, the owner participants’ claims would be allowed.

The Second Circuit decision thus stands as a “clear win” for owner participants, as it undeniably confirms (at least in that Circuit) the owner participants’ right to recover ratably for their claim along with other unsecured creditors, Lexology said.

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