Ex-Adria CEOs offered €450.000 deal to end €78 million lawsuit

The bankruptcy administrator of former Slovenian flag carrier Adria Airways has proposed a court settlement in the 78 million euro damages lawsuit against the airline’s last two CEOs, Arno Schuster and Holger Kowarsch. Under the proposed deal, which requires approval from the creditors’ committee and timely payment, the two executives would jointly pay 450.000 euros within thirty days of the court’s confirmation. The administrator, Janez Pustatičnik, explained that the main motivation behind this move is to bring the lengthy bankruptcy process, ongoing since 2019, to a close. Prolonged litigation, including appeals and possible enforcement abroad, could stretch the case for years while increasing costs, with little guarantee of recovering the full claim.

Although the settlement amount is far below the original lawsuit, Mr Pustatičnik stressed that it reflects both the legal complexities and the limited ability to collect more from the former executives. He noted that pursuing the full claim could expose creditors to even higher risks, including the possibility of having to cover a portion of the defendants’ legal expenses if the court limited their liability. By securing a settlement, the bankruptcy estate avoids these uncertainties, reduces procedural costs and ensures creditors receive at least some compensation more quickly, allowing the winding down of Adria Airways’ bankruptcy proceedings to move forward.

Mr Schuster and Mr Kowarsch led Adria after the German fund 4K Invest bought the carrier in 2016. The two were also partners at 4K Invest. They are both accused of financially draining the airline and were sued for 78 million euros in what has become the largest compensation claim in Slovenia’s history. When Adria declared bankruptcy in October 2019, it owed tens of millions of euros to its suppliers, leasing companies, airports, airlines, employees and other creditors. The lawyers hired by the official receiver studied the forensic audit of Adria and found that managers had allegedly violated insolvency legislation. While knowing Adria was insolvent, they are accused of not requesting owner 4K Invest to supply the airline with fresh capital as promised nor declare bankruptcy. Instead, they are alleged to have addressed Adria's financial issues with "problematic bookkeeping tricks".

Airlines which have filed claims against Adria include Lufthansa, Austrian Airlines, the now-bankrupt Montenegro Airlines, Aeromexico, Shenzhen Airlines, Brussels Airlines, United, EVA Air, Air China, TAP Air Portugal, Ethiopian Airlines, Turkish Airlines, Thai Airways, Swiss, Singapore Airlines, LOT Polish Airlines, SAS, South African Airways, Egypt Air, Air New Zealand, Trade Air, Solinair, Air Serbia and Croatia Airlines. The Serbian national carrier is seeking 22.236 euros in compensation, its Croatian counterpart 48.461 euros, Trade Air 47.590 euros, while Solinair is asking for 114.054 euros. However, these are among the smallest claims. Turkish Airlines had aimed to collect 121.912 euros, United 202.663 euros, while Lufthansa has been seeking 6.607.074 euros. In addition, Lufthansa’s subsidiaries and affiliated companies, such as Lufthansa Technik, Lufthansa Industry Solutions, Lufthansa Aviation Training and Lufthansa Systems are jointly owed almost three million euros.

Over a dozen airports have also been seeking funds from the bankrupt airline. Among them are the airports in Ljubljana, Belgrade, Pristina, Tirana, Manchester, Brussels, Copenhagen, Zurich, Berlin, London Southend, Antalya, Lugano, Trieste, Moscow Sheremetyevo, Sofia, Podgorica, Tivat and Brač. Claims have also been filed by various service providers, aircraft leasing companies, tour operators and hotels. They include the Serbia and Montenegro Air Traffic Services Agency (SMATSA), Bosnia and Herzegovina’s air service provider BHANSA and Obzor Putovanja, a tour operator wholly owned by Croatia Airlines. Requests for financial compensation have been lodged from all former Yugoslav republics.