Case bjh11 Doc 368 Filed 06/20/16 Entered 06/20/16 15:49:35 Page 1 of 8

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1 Case bjh11 Doc 368 Filed 06/20/16 Entered 06/20/16 15:49:35 Page 1 of 8 Demetra L. Liggins State Bar No THOMPSON & KNIGHT, LLP 333 Clay Street, Suite 3300 Houston, Texas Telephone: Facsimile: demetra.liggins@tklaw.com Cassandra Sepanik Shoemaker State Bar No THOMPSON & KNIGHT, LLP 1722 Routh Street, Suite 1500 Dallas, Texas Telephone: Facsimile: cassandra.shoemaker@tklaw.com ATTORNEYS FOR TURBOMECA USA AND TURBOMECA FRANCE SAS IN THE UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF TEXAS DALLAS DIVISION In re: CHC GROUP LTD. et al., 1 Debtors. Case No (BJH) Chapter 11 (Jointly Administered) TURBOMECA S LIMITED OBJECTION TO THE DEBTORS OMNIBUS MOTIONS FOR ENTRY OF ORDERS AUTHORIZING THE DEBTORS TO REJECT CERTAIN EQUIPMENT LEASES AND SUBLEASES PURSUANT TO SECTION 365 OF THE BANKRUPTCY CODE [Refers to Docket Nos. 20, 210, and 250] Turbomeca USA ( TUSA ) and Turbomeca France SAS ( TSF and together with TUSA, Turbomeca ), file this Limited Objection to the Debtors Omnibus Motions for Entry of 1 The Debtors in these Chapter 11 Cases (defined below) and the last four digits of each Debtor s taxpayer identification number, where applicable, are as follows: CHC Group Ltd. (7405), Heli-One (U.S.) Inc. (9617), Heli- One USA Inc. (3691), CHC Helicopter S.A. (6821), CHC Cayman ABL Borrower Ltd. (5051), CHC Cayman ABL Holdings Ltd. (4835), Lloyd Helicopter Services Pty. Ltd. (2394), Lloyd Helicopters Pty. Ltd. (2393), CHC Helicopter Australia Pty Ltd (2402), Lloyd Bass Strait Helicopters Pty. Ltd. (2398), Lloyd Helicopters International Pty. Ltd. (2400), CHC Helicopters (Barbados) Limited (7985), CHC Helicopters (Barbados) SRL, CHC Global Operations Canada (2008) ULC (6979), CHC Global Operations (2008) ULC (7214), CHC Global Operations International ULC (8751), Heli-One Canada ULC (8735), Heli-One Leasing ULC, Heli-One Holdings (UK) Limited (6780), Heliworld Leasing Limited (2464), Management Aviation Limited (2135), CHC Leasing (Ireland) Limited (8230), Holdings S.a r.l. (8004), CHC Helicopter Holding S.a r.l. (0907), CHC Helicopter (1) S.a r.l. (8914), CHC Helicopter (2) S.a r.l. (9088), CHC Helicopter (3) S.a r.l. (9297), CHC Helicopter (4) S.a r.l. (9655), CHC Helicopter (5) S.a r.l. (9897), Capital Aviation Services B.V. (2415), CHC Den Helder B.V. (2455), CHC Holding NL B.V. (6801), CHC Hoofddorp B.V. (2413), CHC Netherlands B.V. (2409), Heli-One (Netherlands) B.V. (2414), CHC Norway Acquisition Co AS (6777), Heli-One (Norway) AS (2437), Heli-One Leasing (Norway) AS (2441), Integra Leasing AS (2439), CHC Holding (UK) Limited (2198), Heli-One (UK) Limited (2451), Lloyd Helicopter Services Limited (6781), and CHC Cayman Investments I Ltd (8558). The Debtors principal offices are located at 600 East Las Colinas Blvd., 10th Floor, Irving, Texas OF THE BANKRUPTCY CODE - Page 1 of 8

2 Case bjh11 Doc 368 Filed 06/20/16 Entered 06/20/16 15:49:35 Page 2 of 8 Orders Authorizing the Debtors to Reject Certain Equipment Leases and Subleases Pursuant to Section 365 of the Bankruptcy Code (the Limited Objection ). 2 RELEVANT FACTS 1. On May 5, 2016 (the Petition Date ), the Debtors each filed a voluntary petition for relief under chapter 11 of title 11 of the United States Code (the Bankruptcy Code ) thereby commencing their bankruptcy cases (collectively, the Bankruptcy Case ). 2. Before the Petition Date, and pursuant to, among other things, that certain Heli- One (Norway) as Support by the Hour Agreement Non Modular Standard Exchange Makila 2Al Engines No A W-SBH (the Support Agreement, as modified, amended and/or supplemented, by, among other things, that certain Consignment Contract, the SBH Agreement ) between certain of the Debtors and Turbomeca, Turbomeca provided the Debtors with certain engines manufactured and owned by Turbomeca 3 for use in certain helicopters owned and operated by the Debtors. The SBH Agreement is governed by French law and contemplates that a standard exchange may be performed under certain circumstances. 3. Pursuant to the SBH Agreement, the Debtors removed certain of the core Turbomeca Engines from helicopters and replaced them with serviceable engines. Likewise, Turbomeca supplied the Debtors with serviceable engines for use on the Debtors helicopters in exchange for other unserviceable core engines from the Debtors (the Exchanged Equipment ). 2 All capitalized terms not herein defined shall have the meanings ascribed to them in the Rejection Motions (as defined herein). 3 The engines supplied by Turbomeca to the Debtors are collectively referred to therein as the Turbomeca Engines. OF THE BANKRUPTCY CODE - Page 2 of 8

3 Case bjh11 Doc 368 Filed 06/20/16 Entered 06/20/16 15:49:35 Page 3 of 8 4. Notably, pursuant to the SBH Agreement, the Debtors were required to (a) install Turbomeca Engines only on helicopters owned and operated by the Debtors; 4 and (b) have clean title to the Exchanged Equipment prior to conveying it to Turbomeca. 5 Accordingly, under the SBH Agreement, the Debtors were not permitted to install the Turbomeca Engines on aircraft owned by third-parties. 5. The Debtors have filed three motions (the Rejection Motions ), seeking to (a) reject certain equipment Leases for helicopters and related equipment (the Excess Equipment ); and (b) convey the Excess Equipment to the relevant Lessors. 6 Although Turbomeca is not a party to the Rejected Leases, many of the Rejected Leases are leases for helicopters with currently-installed and originally-installed Turbomeca Engines Therefore, as evidenced by the Rejection Motions the Debtors installed the Turbomeca Engines on helicopters that were not actually owned by the Debtors. Rather, these 4 See e.g., Support Agreement at 2.2 ( This Agreement only applies to the Equipment listed in Appendix A, CHC owned and operated aircraft, whether fitted on the Aircraft(s) or kept as Spare Equipment. ); Consignment Contract at 2.4 ( Consigned Equipment shall be exclusively meant for the use of HELI-ONE for aircraft both owned and operated by CHC. ). 5 See e.g., Support Agreement, at ( CUSTOMER shall not (i) make or suffer to be made any change in the ownership, leasehold, operational or financial interest, utilization of the Equipment or any Aircraft on which the Equipment is installed, without prior written notice and approval by TUROBMECA; and/or (ii) do any act that would result in the imposition of any lien, security interest or other encumbrance on any Equipment Owned by TURBOMECA. ), 4.1 ( Equipment supplied pursuant to the Standard Exchange procedure shall be regarded as Equipment covered by the Agreement. ). See also, Consignment Contract at 11.3 ( HELI-ONE shall take all necessary steps to protect and record TURBOMECA s title to the consigned Equipment and shall not permit it to become subject to any legal process, lien, charge or encumbrance of any kind. ), 11.4 (..the Equipment being replaced by the Equipment in consignment used as Standard Exchange, becomes the property of TURBOMECA when it is removed from Aircraft or Spare Equipment belonging to or operated by HELI-ONE. ), 13.1 (TURBOMECA has the right to terminate the contract if HELI-ONE transfers the consigned Equipment to any other operator other than CHC without the previous written approval of TURBOMECA.). 6 See Debtors First Omnibus Motion for Entry of an Order Authorizing the Debtors to Reject Certain Equipment Leases and Subleases Pursuant to Section 365 of the Bankruptcy Code [Dkt. No. 20] (the First Motion to Reject ); Debtors Second Omnibus Motion for Entry of an Order Authorizing the Debtors to Reject Certain Equipment Leases and Subleases Pursuant to Section 365 of the Bankruptcy Code [Dkt. No. 210] (the Second Motion to Reject ); and Debtors Third Omnibus Motion for Entry of an Order Authorizing the Debtors to Reject Certain Equipment Leases and Subleases Pursuant to Section 365 of the Bankruptcy Code [Dkt. No. 250] (the Third Motion to Reject ). 7 See First Motion to Reject at Schedule 1, Rows 1-15, 20, 22-24, 27-30, 32-36, 40, ; Second Motion to Reject at Schedule 1, Rows 5-14, 22-40; Third Motion to Reject at Schedule 1, Rows 1-3. OF THE BANKRUPTCY CODE - Page 3 of 8

4 Case bjh11 Doc 368 Filed 06/20/16 Entered 06/20/16 15:49:35 Page 4 of 8 helicopters were, in fact, owned by third-party lessors, in clear violation of the SBH Agreement. Consequently, the Debtors have materially breached the SBH Agreement, and any conveyance of the Turbomeca Engines to the Debtors was ineffective. Without effective title, the Debtors lack authority to transfer title of the Turbomeca Engines to any other party, including the Lessors. Title of these engines remains with Turbomeca. LIMITED OBJECTION 7. Turbomeca files this Limited Objection to protect its interests in the Turbomeca Engines on the helicopters (the Helicopters ) that are the subject of the Rejected Leases. Specifically, Turbomeca objects to the Rejection Motions to the extent that the Debtors are seeking to convey any Turbomeca Engine to any party other than Turbomeca By the Rejection Motions, the Debtors seek to convey clean title to the Excess Equipment, including, apparently, the Turbomeca Engines to the Lessors. Conveying title of the Turbomeca Engines would be in clear violation of the agreement reached by Turbomeca and the Debtors. Not only do the Debtors not hold title to the Turbomeca Engines, but they specifically contracted to not allow any other party to have a lien or rights against the engines In particular, pursuant to the SBH Agreement, the Turbomeca Engines were supplied to the Debtors for use only in helicopters owned and operated by the Debtors and the Debtors were not permitted to install the Turbomeca Engines on aircraft owned by third-parties. Additionally, the SBH Agreement requires the Debtors to have clean title to the Exchanged Equipment before conveying it to Turbomeca. 8 In the Rejection Motions, the Debtors seek to convey the Excess Equipment to the Lessors. While it is unclear, it appears that the Lessors are only those Head Lessors listed in column 3 of Schedule 1 and, therefore, it appears that the Debtors are seeking to convey the Turbomeca Engines to the Head Lessors. Turbomeca does not object to the Rejection Motions to the extent that the Debtors seek to convey the Turbomeca Engines to Turbomeca (as a Lessor ). 9 See supra, at n. 5. OF THE BANKRUPTCY CODE - Page 4 of 8

5 Case bjh11 Doc 368 Filed 06/20/16 Entered 06/20/16 15:49:35 Page 5 of Despite these requirements, the Debtors are now seeking to reject Leases for helicopters with currently-installed and originally-installed Turbomeca Engines. This request is not only a material breach of the SBH Agreement because the Debtor should not have installed Turbomeca Engines on helicopters that the Debtors did not own, but the request is completely overreaching because the Debtors are now trying to convey title of the Turbomeca engines to third-party lessors. The Debtors cannot have title both ways. They cannot claim title (and in turn transfer such title to the lessors) of both the engines that are currently-installed on the helicopters through the standard exchange program and claim title to the engines that are in Turbomeca s possession. As such, the Debtors should acknowledge that the engines that are in Turobmeca s possession are free and clear of any of all liens of any other parties, including the third-party lessors. Anything less indicates a fraudulent scheme by the Debtors to illegally obtain title to the Turbomecca engines while leaving Turbomeca with unserviceable engines that would ultimately be owned by the third-party lenders. Without this acknowledgement, Turbomeca believes it has a fraud claim that requires a full investigation and due diligence of all the aircraft containing Turbomeca engines before any aircraft containing such engines are returned. 11. Likewise, any conveyance of the Turbomeca Engines to the Debtors was based on the Debtors fraud and misrepresentations under the SBH Agreement and was ineffective to transfer clean title. Turbomeca, therefore, is the lawful owner of the Turbomeca Engines and the Debtors request to convey the Turbomeca Engines to third-party lessors must be denied. 12. Alternatively, Turbomeca requests that the Debtors provide title proof that Turbomeca is the lawful owner of any Exchanged Equipment as required by the SBH Agreement. Turbomeca requests that the Debtors formalize the transfer of the Debtors right, OF THE BANKRUPTCY CODE - Page 5 of 8

6 Case bjh11 Doc 368 Filed 06/20/16 Entered 06/20/16 15:49:35 Page 6 of 8 title and interest in such Exchanged Equipment to Turbomeca free and clear of all liens, claims and encumbrances. 13. Turbomeca and the Debtors have been in discussions regarding the relief requested herein, but have not come to an agreement as of the date of the filing of this Limited Objection. RESERVATION OF RIGHTS 14. Turbomeca expressly reserves its right to amend and/or supplement this Limited Objection and to further address the relief requested in the Rejection Motions and any other related issues either by further submission to this Court, at oral argument or testimony to be presented at any hearing. PRAYER WHEREFORE, Turbomeca respectfully requests that this Court (a) sustain its Objection; (b) enter an order that (i) prohibits the Debtors from transferring the Turbomeca Engines to any party other than Turbomeca; or (ii) orders the Debtors to provide clear title to the Exchanged Equipment; and (c) grant Turbomeca such other and further relief as it may be entitled both at law or in equity. OF THE BANKRUPTCY CODE - Page 6 of 8

7 Case bjh11 Doc 368 Filed 06/20/16 Entered 06/20/16 15:49:35 Page 7 of 8 DATED: June 20, 2016 Respectfully submitted, THOMPSON & KNIGHT, LLP By: /s/ Cassandra Sepanik Shoemaker Demetra L. Liggins State Bar No Clay Street, Suite 3300 Houston, Texas Telephone: Facsimile: demetra.liggins@tklaw.com - and - Cassandra Sepanik Shoemaker State Bar No Routh Street, Suite 1500 Dallas, Texas Telephone: Facsimile: cassandra.shoemaker@tklaw.com ATTORNEYS FOR TURBOMECA USA AND TURBOMECA FRANCE SAS OF THE BANKRUPTCY CODE - Page 7 of 8

8 Case bjh11 Doc 368 Filed 06/20/16 Entered 06/20/16 15:49:35 Page 8 of 8 CERTIFICATE OF SERVICE I hereby certify that on June 20, 2016, the foregoing was served on all parties entitled to service via the Court s Case Management/Electronic Case File System ( CM/ECF ), Electronic Filing System ( ECF ). I further certify that a true copy has also been served on the following parties by United States first class mail, postage prepaid: Gary Holtzer Weil, Gotshal & Manges LLP 767 Fifth Avenue New York NY Jasmine Ball Richard F. Hahn Debovoise & Plimpton LLP 919 Third Avenue New York, New York Office of the United States Trustee 1100 Commerce Street Dallas, TX Stephen A. Youngman Weil, Gotshal & Manges LLP 200 Crescent Court, Suite 300 Dallas TX CHC Group, Ltd. Attn: HoomanYazhari, Esq. 600 East Las Colinas Blvd. Suite 1000 Irving, TX Kramer Levin Naftalis & Frankel LLP Attn: Douglas Mannal, Esq. and Kenneth H. Eckstein, Esq Avenue of the Americas New York, NY /s/ Cassandra Sepanik Shoemaker Cassandra Sepanik Shoemaker OF THE BANKRUPTCY CODE - Page 8 of 8