A Valentine's Day Massacre of Liquidated Damages: In re Republic Airways Holdings Inc.
By Arlene N. Gelman and Edward K. Gross
A bankruptcy court ruling in New York this year could be problematic for lessors when enforcing certain typical acceleration and collection remedies against defaulting customers. Specifically, In re Republic Airways Holdings Inc. may impair the reliability of SLV-based liquidated damages provisions even in hell-or-high-water leases and guaranties of those obligations under unconditional and absolute guaranties. The authors will explain why they believe that the court erred, and discuss the enforcement and transactional implications to lessors.