In accordance with Rule 18.6 of the Insolvency (England & AM10 Wales) Rules 2016. Notice of administrator’s progress report For further information, please refer to our guidance at www.gov.uk/companieshouse 1 Company details Company number 1 1 7 3 2 7 Filling in this form Please complete in typescript or in Company name in full Connect Airways Limited bold black capitals. 2 Administrator’s name Full forename(s) Simon Jamie Surname Edel 3 Administrator’s address Building name/number Ernst & Young LLP Street 1 More London Place Post town London County/Region Postcode S E 1 2 A F Country United Kingdom 4 Administrator’s name 1 Full forename(s) Alan Michael 1 Other administrator Use this section to tell us about Surname Hudson another administrator. 5 Administrator’s address 2 Building name/number Ernst & Young LLP 2 Other administrator Use this section to tell us about Street 1 More London Place another administrator. Post town London County/Region London Postcode S E 1 2 A F Country United Kingdom 04/17 Version 1.0 AM10 Notice of administrator’s progress report 6 Period of progress report d d m m y y y y From date 1 0 0 9 2 0 2 0 d d m m y y y y To date 0 9 0 3 2 0 2 1 7 Progress report ✔ I attach a copy of the progress report 8 Sign and date Administrator’s Signature signature d d m m y y y y Signature date 0 8 4 2 2 1 04/17 Version 1.0 AM10 Notice of administrator’s progress report Presenter information ! Important information You do not have to give any contact information, but if All information on this form will appear on the you do it will help Companies House if there is a query public record. on the form. The contact information you give will be visible to searchers of the public record. Contact name Donna McNeill Where to send Company name Ernst & Young LLP You may return this form to any Companies House address, however for expediency we advise you to return it to the address below: Address 1 More London Place The Registrar of Companies, Companies House, Crown Way, Cardiff, Wales, CF14 3UZ. DX 33050 Cardiff. Post town London County/Region London Postcode S E 1 2 A F Further information Country United Kingdom i For further information please see the guidance notes DX on the website at www.gov.uk/companieshouse or email [email protected] Telephone (0) 20 7951 2000 Checklist This form is available in an We may return forms completed incorrectly or alternative format. Please visit the with information missing. forms page on the website at Please make sure you have remembered the www.gov.uk/companieshouse following: The company name and number match the information held on the public Register. You have attached the required documents. You have signed the form. This form has been provided free of charge by Companies House. 04/17 Version 1.0 Continuation page Name and address of insolvency practitioner What this form is for What this form is NOT for Filling in this form Use this continuation page to You can’t use this continuation Please complete in typescript or in tell us about another insolvency page to tell us about an bold black capitals. practitioner where more than appointment, resignation, All fields are mandatory unless 2 are already jointly appointed. removal or vacation of office. specified or indicated by * Attach this to the relevant form. 1 Use extra copies to tell us of additional insolvency practitioners. 1 Appointment type Tick to show the nature of the appointment: 1 You can use this continuation page ✔ with the following forms: Administrator - VAM1, VAM2, VAM3, VAM4, Administrative receiver VAM6, VAM7 Receiver - CVA1, CVA3, CVA4 - AM02, AM03, AM04, AM05, Manager AM06, AM07, AM08, AM09, Nominee AM10, AM12, AM13, AM14, AM19, AM20, AM21, AM22, Supervisor AM23, AM24, AM25 Liquidator - REC1, REC2, REC3 - LIQ02, LIQ03, LIQ05, LIQ13, Provisional liquidator LIQ14, - WU07, WU15 - COM1, COM2, COM3, COM4 - NDISC 2 Insolvency practitioner’s name Full forename(s) Lucy Surname Winterborne 3 Insolvency practitioner’s address Building name/number Ernst & Young LLP Street The Paragon 32 Counterslip Post town Bristol County/Region Postcode B S 1 6 X Country United kingdom 04/17 Version 1.0 Continuation page Name and address of insolvency practitioner What this form is for What this form is NOT for Filling in this form Use this continuation page to You can’t use this continuation Please complete in typescript or in tell us about another insolvency page to tell us about an bold black capitals. practitioner where more than appointment, resignation, All fields are mandatory unless 2 are already jointly appointed. removal or vacation of office. specified or indicated by * Attach this to the relevant form. 1 Use extra copies to tell us of additional insolvency practitioners. 1 Appointment type Tick to show the nature of the appointment: 1 You can use this continuation page ✔ with the following forms: Administrator - VAM1, VAM2, VAM3, VAM4, Administrative receiver VAM6, VAM7 Receiver - CVA1, CVA3, CVA4 - AM02, AM03, AM04, AM05, Manager AM06, AM07, AM08, AM09, Nominee AM10, AM12, AM13, AM14, AM19, AM20, AM21, AM22, Supervisor AM23, AM24, AM25 Liquidator - REC1, REC2, REC3 - LIQ02, LIQ03, LIQ05, LIQ13, Provisional liquidator LIQ14, - WU07, WU15 - COM1, COM2, COM3, COM4 - NDISC 2 Insolvency practitioner’s name Full forename(s) Joanne Honor Surname Robinson 3 Insolvency practitioner’s address Building name/number Ernst & Young LLP Street 1 More London Place Post town London County/Region London Postcode S E 1 2 A F Country United Kingdom 04/17 Version 1.0 Ernst & Young LLP Tel: +44 (0) 20 7951 2000 1 More London Place Fax: +44 (0) 20 7951 1345 London ey.com/parthenon SE1 2AF TO ALL KNOWN CREDITORS 8 April 2021 Ref: AH/JR/LW/SE/DM Switchboard: (0) 20 7951 2000 Donna McNeill [email protected] Dear Sirs Connect Airways Limited (in Administration) (“the Company”) High Court of Justice Business and Property Courts of England and Wales Insolvency and Companies List (ChD), Number CR-2020-001588 We refer to the appointment of Alan Hudson, Simon Edel, Joanne Robinson and Lucy Winterborne as Joint Administrators (“the Joint Administrators”) of the Company on 10 March 2020. The Joint Administrators act as agents of the Company only and without personal liability. Under the terms of the appointment any act required or authorised to be done by the Joint Administrators can be done by any of them. We write, in accordance with Rule 18.3 of the Insolvency (England and Wales) Rules 2016 (“the Rules”), to provide creditors with a report on the progress of the administration. This report covers the period from 10 September 2020 to 9 March 2021 (“the Period”) and should be read in conjunction with the Joint Administrators’ Statement of Proposals (“the Proposals”) dated 4 May 2020 and the first progress report for the period 10 March 2020 to 9 September 2020 (“First Progress Report”), including the definitions contained therein. Statutory information about the Company, the administration and the office holders is given at Appendix 1. A copy of the Proposals can be obtained at https://www.ey.com/en_uk/ey-connect- airways-limited-administration. 1. Summary of progress 1.1 Sale of assets As previously reported, Stobart Aviation’s offer for the Company’s shares in Propius, Everdeal and Everdeal Employees (“the Shares”) was accepted by the Joint Administrators on the basis that there was no other offer capable of acceptance which could return any value. Further detail relating to the consideration structure was provided in the Proposals. We note that Stobart Aviation has renamed as Esken Limited (“Esken”) since the First Progress Report. In the Period, deferred consideration of £2.0m was received in respect of the Shares, bringing the total received in respect of the transaction to £2.3m. Further realisations, by way of potential additional deferred consideration (“Potential Consideration”), remain uncertain, as this will only arise in the event of an exit of Esken’s interest in Stobart Air, likely only to be via a sale of Stobart Air, by December 2023. The Shares are subject to fixed security granted in favour of GLAS Trust Corporation Limited, as security trustee (“the Security Trustee”) for the benefit of Virgin Atlantic Airways Limited, Esken and DLP Holdings S.A.R.L as senior lenders (“the Senior Lenders”). 2 1.2 Potential Consideration Given the uncertain timeframe attached to the Potential Consideration, the Joint Administrators have explored the feasibility of assigning the Company’s rights to the Potential Consideration to the Security Trustee by way of a distribution in specie. A distribution in specie is the distribution of a non-cash asset, in this case, the right to the Potential Consideration. The clear benefit of this approach would be to allow the Joint Administrators to bring the administration to a timely conclusion, thereby avoiding further costs to the Company’s creditors; the alternative being that the Joint Administrators remain in office until 31 December 2023 to receive and pay any cash sums (if any) arising from the Potential Consideration to the Senior Lenders. Having established that a distribution in specie was an appropriate mechanism to transfer the Potential Consideration, the Joint Administrators have sought and obtained consent from the Company’s secured creditor, the Security Trustee to receive the Company’s rights to the Potential Consideration in respect of the sale of the Shares in this manner, by passing a resolution to this effect. Consent would also need to be obtained from the Company’s non-preferential creditors to effect a distribution in specie.