Azul argues “fraudulent management” in €188 million lawsuit against TAP

The Brazilian airline Azul, which is attempting to claw back a €188 million loan in the form of a bond given to TAP a decade ago, is using the legal argument that the Portuguese airline’s management at the time had committed fraud.

Azul’s legal team is arguing that TAP SGPS was always a vehicle for TAP SA and that the insolvency of the former, which before declaring bankruptcy was renamed Siavilo SGPS, was only requested when it became “strategically convenient.”

These are the two arguments in the initial lawsuit filed in the Lisbon Civil Court in which the Brazilian airline founded by David Neeleman is demanding payment of €188.9 million from TAP SA, an amount resulting from a bond loan granted in 2016.

Azul is invoking the “doctrine of piercing the corporate veil,” a legal mechanism designed “to sanction improper behaviors that, outside the bounds of good faith, aim to abuse the principle of separation of assets that prevails in our legal system – in order to hold TAP SA liable for the difference between the amount sponsored under the previous request and the total amount of the plaintiff’s claim on this date.” In practice, according to legal experts, it aims at “the direct liability of the true parties involved” in any “ruinous or fraudulent management.”

Azul argues that the fact that Siavilo has entered insolvency does not mean an inability to pay the amount claimed by the Brazilian company. The petition alleges that the former TAP SGPS had always had a “chronic undercapitalisation,” having operated “from its incorporation until the moment it was declared insolvent, with negative equity and maintained in operation by virtue of the activity and credit of TAP SA itself, thus the two entities (were) operating, in practice, as a single company.”

Case number 7121/26.8TLSB was filed in court on March 13 and assigned to a judge three days later.

Source: Negócios; Credits: Azul