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AV Cargo, the airline borne out of the ashes of the defunct Avient, is to welcome a second MD-11F into its fleet in September.

The aircraft, the second on lease from Boeing Capital Corp, will deliver this month before maintenance and will be followed by another in November, according to the company.

The rebirth of Avient, under a new name and with new shareholders, has been controversial.

Avient Aviation, the Zimbabwe-registered airline, was taken over by Simon Clarke and Neil Glover in March this year. However, according to administration documents seen by The Loadstar, the pair were unprepared for the financial position the company was in at the time.

Avient Ltd owes at least £20.7m to more than 350 creditors, but with question marks over the company’s assets, an estimate by administrator Portland suggests that creditors may only receive between 3% and 5% of their claims. However, if creditors agree, based on the future operations of new sales arm AV Cargo, creditors may receive some 20% of their claims. The document reveals that AV Cargo also hopes to secure financial support from, and possible acquisition by, sales agent ECS.

“Despite their having confidence in the longer term future and merits of [continuing the business within AV Cargo], the incoming directors found the financial position of Avient Limited to be much worse than believed when they took over control,” states the document. “The creditors were about to overwhelm the company and force it to cease trading, such that it was untenable to negotiate informally with them for a moratorium.”

As a result, the administrator, Portland, and the new shareholders decided to put a plan to creditors as the prospects for restructuring the company with new investors was “remote”. The idea was to “find a commercial ‘win-win’ arrangement that allowed Avient Limited to participate in future profits, in return for providing a funding facility and allowing the operational infrastructure owned by Avient Limited to be available”.

As a result of this, Avient has given a temporary interest-bearing facility of £300,000 to AV Cargo, available from debt collections, as well as staff under a managed services agreement, which allows Avient Limited to recharge the costs plus a monthly £5,000 management fee. Some 18 staff in the UK and all staff in Liege were made redundant, however, although Portland is agreeing claims with those staff, thought to be worth about £300,000 in total.

A creditors’ committee was formed in June to agree to the new plan, although a lack of transparency into Avient’s finances, which have not been updated since May 2012, is hampering efforts to resolve outstanding issues. Challenges include the valuation of DC10 spare parts, which according to Avient have a book value of £2m, although this is disputed. The finances have been further complicated by an HMRC tax investigation into Avient’s affairs, which were spread across some six connected companies. The former directors, Andrew and Sam Smith, had also withdrawn some £594,000, which was unaccounted for in the books, and which, depending on an HMRC decision, may need to be recovered. In addition, the families of two crew members which died in a 2009 crash also claim not to have received the €1.5m settlement from an insurance policy which paid out to Avient.

According to Portland, the largest creditors are Pegasus Aviation, which is owed some £5.4m; Asecma, which is owed more than £2m; and HMRC, with £1.2m outstanding.

AV Cargo, which, with new directors and a new strategy has moved to distance itself from Avient in a bid to help pay back creditors,  has continued operating “without significant operational obstacles”.

“Customer demand is holding up with the limitation being mostly around bringing the new aircraft into service, which happened on 1st May 2013.”

An interim agreement with ECS means the sales agent is supplying most of the business and paying out to AV Cargo immediately to minimise working capital.

In a statement, Mr Clarke said: “We have worked hard to ensure a good service on the routes we offer into West Africa. This has given us a solid foundation to build our network further in preparation for the additional capacity.”

AV Cargo is now operating twice per week to Bamako, three times to Lagos and has added Monrovia to complement the services to Port Harcourt, Pointe Noire, Ouagadougou and Freetown. Over the next few weeks and months additional destinations will be added.

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