EIGHTEENTHPUBLIC REPORT OF THE TRUSTEE IN BANKRUPTCY PURSUANT TO by hmh17149

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									                                                          17 JANUARY 2007

                              EIGHTEENTH PUBLIC REPORT OF THE TRUSTEE IN BANKRUPTCY
                            PURSUANT TO ARTICLE 73A OF THE NETHERLANDS BANKRUPTCY ACT

                    in the bankruptcy order issued by the Amsterdam District Court on 27 March 2002 for:

                              SAirGroup Finance (NL) B.V.
                              in Amsterdam
                              bankruptcy number: 02.0120
                              Trustee in Bankruptcy: Mr R.J. graaf Schimmelpenninck
                              Houthoff Buruma N.V., Gustav Mahlerplein 50, P.O. Box 75505, 1070 AM
                              Amsterdam
                              Supervisory Judge: Mr R.H.C. Jongeneel

                         and the fourteenth public report of the Trustee in the bankruptcy order issued by the
                         Amsterdam District Court on 11 February 2003 for:

                          SAirLines Europe B.V.
                          in Amsterdam
                          bankruptcy number: 03.0053
                          Trustee in Bankruptcy: Mr R.J. graaf Schimmelpenninck
                          Houthoff Buruma N.V., Gustav Mahlerplein 50, P.O. Box 75505, 1070 AM
                          Amsterdam
                          Supervisory Judge: Mr R.H.C. Jongeneel
                    ___________________________________________________________________
                    TABLE OF CONTENTS

                    1.        INTRODUCTION
                              1.1  Introductory Observation
                              1.2  Activities of the Trustee in Bankruptcy

                    2.        FINANCES
                              2.1  Major   Assets FinBV
                              2.2  Major   Liabilities FinBV
                              2.3  Major   Assets EuropeBV
                              2.4  Major   Liabilities EuropeBV

                    3.        MISCELLANEOUS
                              3.1  Interim distribution to creditors
                              3.2  Provision of Information to Creditors
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                    1.     INTRODUCTION

                    1.1    Introductory Observation
                           This is the eighteenth public report of the trustee in bankruptcy of SAirGroup
                           Finance (NL) B.V. (“FinBV”). This report should be read in conjunction with the
                           previous reports.

                           This current report is also the fourteenth report of the trustee in bankruptcy of
                           SAirLines Europe B.V. ("EuropeBV"). This report should be read in conjunction
                           with the previous reports, also with respect to EuropeBV. The trustee in
                           bankruptcy of FinBV and EuropeBV is hereafter referred to as “Trustee in
                           Bankruptcy”.

                           It must be emphasised that the financial information of FinBV and EuropeBV as
                           from the year 2000 onwards has not been furnished with an unqualified audit
                           opinion. The Unaudited Statement of Assets and Liabilities and Cash flow
                           Statement of FinBV as at 31 December 2006 is attached as Appendix 1. The
                           Unaudited Statement of Assets and Liabilities of EuropeBV as at 31 December
                           2006 is attached as Appendix 2.

                           At a later stage, it could be apparent that these financial data may have to be
                           amended.

                           Considering the relatively limited extent of the remaining activities in the
                           bankruptcies of FinBV and EuropeBV, the Trustee in Bankruptcy will no longer
                           publish public reports on a quarterly basis. The Trustee in Bankruptcy will
                           obviously inform the creditors that have subscribed to the mailing list (see 3.2) if
                           and as soon as there are relevant developments and will issue a public report
                           every six months.

                    1.2.   Activities of the Trustee in Bankruptcy
                           The activities of the Trustee in Bankruptcy focused, in the period under review, on
                           LOT, Flightlease and the claims submitted in the insolvency proceedings of
                           SAirGroup and SAirLines.

                           With respect to the latter, the Trustee in Bankruptcy notifies the following. After
                           substantiating the claims submitted by FinBV and EuropeBV in the liquidation
                           proceedings of SAirGroup and SAirLines, the Trustee in Bankruptcy consulted with
                           the liquidator of SAirGroup and SAirLines, Mr Wüthrich (the “Liquidator”). In this
                           respect, two meetings with the Liquidator were held in Zurich. The Liquidator has
                           not (yet) formally admitted or disputed the claims filed against SAirGroup regarding
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                          the mismanagement of FinBV and the claim filed under the guarantee agreement
                          (see appendix 6 to the first public report of 10 April 2002). These negotiations aim
                          to avoid unnecessary legal proceedings in Switzerland and proceed constructively.
                          The Trustee in Bankruptcy expects that he will be able to provide the creditors with
                          substantive information about this matter in the next report. The Trustee in
                          Bankruptcy observes that an agreement with the Liquidator, if any, is conditional
                          upon the consent of the Supervisory Judge and on the positive advice of the
                          Creditors’ Committee. The Liquidator will also have to submit any agreement to the
                          Creditors’ Committees of SAirGroup and SAirLines.

                    2.    FINANCES

                    2.1   Major Assets FinBV
                          The assets of FinBV consist almost exclusively of inter-company claims of which a
                          major part against companies that are wound up themselves. The pay-out ratio of
                          these claims is therefore uncertain. The most important claims are discussed
                          below. Further details of these claims can be found in previous reports.

                           SAirGroup                  € 178 million            Nachlassliquidation
                           SAirLines                  € 1.6 million            Nachlassliquidation

                          For further information with respect to Nachlassliquidation proceedings of
                          SAirGroup and SAirLines, the Trustee in Bankruptcy refers to the public reports on
                          the website of the Liquidator: www.liquidator-swissair.ch.

                           SAirLines Europe B.V.          € 784.1 million      Faillissement

                          FinBV has a total claim of € 823.2 million arising from loans granted to EuropeBV.
                          FinBV received a first distribution by EuropeBV on 16 September 2003 to the
                          amount of € 39.1 million. For a summary of the assets and liabilities of EuropeBV,
                          the Trustee in Bankruptcy refers to sections 2.3 and 2.4.

                           Flightlease Holdings           € 167.6 million      Voluntary wind-down
                           (Guernsey) Ltd.

                          FinBV is an unsecured creditor of Flightlease Holdings (Guernsey) Ltd. ("FLH").
                          This company is a 100% subsidiary of Flightlease AG in Nachlassliquidation,
                          which in turn is a 100% subsidiary of SAirLines. The Trustee in Bankruptcy refers
                          to previous reports for further details.

                          In the period under review the Creditors’ Committee, consisting of the Trustee in
                          Bankruptcy (on behalf of FinBV) and Mr Karl Wüthrich (on behalf of SAirGroup),
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                    met twice and consulted several times over the phone with Mr. Steve Akers, the
                    liquidator of FLH. As the last unencumbered aircraft has been sold, the main
                    activity of the liquidator is conducting proceedings against Airbus.

                    With regard to the proceedings pending between FLH and Airbus at the New York
                    District Court regarding the repayment by Airbus of USD 227.6 million of pre-
                    delivery payments, the Trustee in Bankruptcy reports as follows.

                    On 4 April 2006, Airbus requested the District Court to reject FLH’s claim by way
                    of a partial summary judgment motion. In this motion Airbus argued, among other
                    matters, that it had lawfully terminated the agreement regarding the purchase by
                    GFAC (FHL’s joint venture) of Airbus aircrafts and that it is entitled under this
                    agreement to keep the “pre-delivery payments”. On 20 December 2006 the District
                    Court rejected the motion of Airbus. The Trustee in Bankruptcy has attached this
                    decision to this report as Appendix 3. The Trustee in Bankruptcy refers to this
                    decision for the backgrounds of the dispute.

                    In addition to this the usual discovery has been started as part of these
                    proceedings, as part of which Airbus and FLH provide each other with information
                    and examine witnesses. Expectations are that discovery will last for another few
                    months.

                    On behalf of FLH and (probably) Airbus, experts will also draw up reports. The
                    tentative expectation is that the Court in New York will give judgment late 2007,
                    early 2008. This judgment will be subject to appeal.

                    With respect to the action instituted against Airbus by the liquidator on behalf of
                    FL7 ( a subsidiary of FLH) before the Paris District Court for reimbursing the loss
                    of USD 320 million, the Trustee in bankruptcy reports that Airbus has not yet
                    delivered its defence.

                    The Trustee in Bankruptcy maintains the estimation that the final total payment by
                    FLH to FinBV will amount to USD 45 million. This estimation does not take into
                    account any proceeds resulting from legal proceedings against Airbus.

                    In December 2006, the liquidator made an interim distribution to the creditors of
                    FLH. FinBV received an amount of € 14 million. This payment will enable the
                    Trustee in Bankruptcy to make a third interim payment to the creditors of FinBV.
                    The Trustee in Bankruptcy refers to 3.1 of this report.
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                           Swissport                      € 13.5 million             Escrow account

                          The Trustee in Bankruptcy will discuss this matter further with Mr. Wüthrich in the
                          coming period.

                           Atrib Management Services AG       € 4 million             In Liquidation
                           Atrib Switzerland AG               € 6.7 million           In Liquidation

                          The Konkursverwalter of Atrib Management Services AG informed the Trustee in
                          Bankruptcy that the claim of FinBV will not be set off against possible
                          counterclaims of Atrib Management Services AG. The claim FinBV has therefore
                          been unconditionally admitted. The Konkursverwalter expects to make a payment
                          to creditors including FinBV in the first half of 2007. The amount of such a payment
                          is not yet known.

                           AMP Switzerland                € 16.5 million              In Liquidation

                          The Trustee in Bankruptcy has set-off the claim on Swissair (in
                          Nachlassliquidation) as liable partner of the Airline Management Partnership (UK),
                          against the claim of Swissair on FinBV. As notified in previous reports, the
                          liquidator of Swissair disagrees with this set-off.

                           Cash as at 31 December 2006        € 42.7 million

                          The balance of the bank account held in the name of the Trustee in Bankruptcy
                          (faillissementsrekening) amounted to € 42.7 million on 31 December 2006, of
                          which € 42 million was placed in a deposit account.

                    2.2   Major liabilities FinBV
                          For a statement of the major liabilities, the Trustee in Bankruptcy refers to
                          Appendix 1 as well as to previous reports.

                    2.3   Major Assets EuropeBV
                          EuropeBV was incorporated as a holding company for participations of the
                          Swissair Group in foreign airline companies. The assets of EuropeBV consist
                          currently of a 25.1% interest in LOT Polish Airlines (“LOT”).

                           LOT

                          EuropeBV is represented on the Supervisory Board of LOT by three members,
                          including the Trustee in Bankruptcy. Of the other supervisory directors, four
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                    members are appointed by the Polish state (owner of 67.96% of the shares) and
                    three by employees' organisations. Employees hold 6.93 of the LOT shares. If the
                    Trustee in Bankruptcy sells the EuropeBV held 25.1% interest in LOT to a third
                    party, the right to appoint three supervisory directors cannot be transferred without
                    the assistance of the Polish state.

                    On 31 January 2006, the agreement the Trustee in Bankruptcy had concluded with
                    the Polish state, expired. This agreement intended to sell LOT shares held by
                    EuropeBV around July 2006 by means of an Initial Public Offering (“IPO”). On the
                    occasion of this IPO, LOT was also to issue shares itself. This agreement
                    contained - on specific conditions - a lock-up period within which Europe BV was
                    not allowed o sell its shares. Because of the expiry of this agreement, the Trustee
                    in Bankruptcy is free to sell the shares in LOT.

                    The Trustee in Bankruptcy, after consultation with the Creditors’ Committee,
                    currently holds the view that it would preferable to sign a new IPO Agreement with
                    LOT and the Polish state. A draft agreement has been prepared for this purpose,
                    which provides for an IPO in mid-2007. This agreement has not yet been signed.
                    The main reason for this is that LOT, after CEO Kapis’ dismissal in November
                    2006, is now looking for a new CEO. In the meantime Mr Demslic acts as CEO ad
                    interim.

                    The general meeting of shareholders is still to approve LOT’s annual accounts for
                    2006. At the moment, only the annual accounts of LOT S.A., the core company,
                    are available. The profit of LOT S.A. amounted to 88,610,000 zloty in 2005 (2004:
                    17,120,000 zloty). In the context of the consolidation with, among others,
                    Centralwings, a major part of LOT S.A.’s profit will go to the losses Centralwings
                    suffered. Furthermore, LOT has had to contend with setbacks in the first quarter of
                    2006 in connection with bad weather and technical problems. For 2006, a lower
                    profit is therefore anticipated.

                    Both the change of management and the financial figures in 2006 necessitate
                    postponement of a possible IPO. The cost savings programme will be further
                    implemented this year and the impression of the Trustee in Bankruptcy is that all
                    the parties involved, both the new CEO of LOT and the Polish state, and the
                    employee’s representatives realise that an IPO is in LOT’s best interest.

                    The Trustee in Bankruptcy is of the opinion that an IPO is also in the interest of the
                    creditors of Europe BV (and therefore of FinBV). Whether this will indeed occur in
                    2007 cannot be anticipated at the moment. This depends both on developments
                    within LOT and developments of the financial markets. Several parties, however,
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                          have reported to the Trustee in Bankruptcy that they are interested in LOT shares.
                          Talks with these parties are still at an early stage.

                          The Trustee in Bankruptcy refers to the website www.lot.com for further
                          information.

                           SAirGroup / SAirLines

                          The Trustee in Bankruptcy submitted claims to SAirGroup and SAirLines regarding
                          the mismanagement of Europe B.V. These claims are included in the consultations
                          with the Liquidator as referred to in 1.2.

                           Cash as at 31 December 2006          € 0.9 million

                          On 31 December 2006, the balance on the bank account of EuropeBV held in the
                          name of the Trustee in Bankruptcy was € 0.9 million, of which € 0.8 million is
                          placed in a deposit account.

                    2.4   Major Liabilities EuropeBV
                          The liabilities of EuropeBV are mainly loans of FinBV amounting to € 784.1 million
                          in total after the first distribution to creditors. SAirGroup and SAirLines have also
                          submitted claims amounting to € 3.8 million and € 0.4 million in the bankruptcy of
                          EuropeBV. As indicated before, claim validation proceedings with respect to these
                          two claims are pending before the Amsterdam District Court. These proceedings
                          have been placed on ice for the time being. The Trustee in Bankruptcy and the
                          Liquidator have included these proceeding in the ongoing discussions.

                    3.    MISCELLANEOUS

                    3.1   Interim distribution to creditors
                          The payment received by the Trustee in Bankruptcy regarding FinBV’s claim
                          against FLH, will enable the estate to make a third interim distribution to creditors.
                          In consultation with the Supervisory Judge, the Trustee in Bankruptcy will
                          determine a percentage.

                          Expectations are that the Trustee in Bankruptcy will draw up a distribution list and
                          after approval of the Supervisory Judge, lodge this list with the court registry of the
                          Amsterdam District Court in February 2007. As from the date of filing the creditors
                          will be entitled for two weeks to raise objections against the distribution list.
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                          The Trustee in Bankruptcy will further inform the creditors that subscribed to the
                          mailing list when the approved list will have been filed with the court registry of the
                          Amsterdam District Court.

                    3.2   Provision of Information to Creditors
                          The public reports of the Trustee in Bankruptcy are available on the website
                          www.houthoff.com/sair. The next public report will be published halfway through
                          2007. The Trustee in Bankruptcy will, if necessary, release interim announcements
                          on the aforementioned website. Creditors that wish to be kept informed of such
                          announcements are requested to send an e-mail to Frédéric Verhoeven
                          (f.verhoeven@houthoff.com). These creditors will be notified by e-mail, if and
                          when such an interim announcement will be released on the website.

                          This report is a translation of the official Dutch report. Both reports are available on
                          the aforementioned website. In the event of differences between the Dutch reports
                          and the English translations, the Dutch text will prevail. The public reports are also
                          available for inspection at the Amsterdam District Court. The District Court does
                          not provide free copies.



                          Amsterdam, 17 January 2007

                          on behalf of Rutger Schimmelpenninck,
                          Trustee in Bankruptcy

                          Frédéric Verhoeven




                          Houthoff Buruma N.V.
                          Gustav Mahlerplein 50
                          P.O. Box 75505
                          NL-1070 AM Amsterdam
                          The Netherlands
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