German court to decide on Niki insolvency challenge on Thursday

FRANKFURT/VIENNA (Reuters) - A German court is likely to decide on Thursday whether to reverse the insolvency filing of airline Niki, according to a statement from Berlin's civil courts, which could derail the sale of the Air Berlin <AB1.DE> unit to Britain's IAG <ICAG.L>.

Niki filed for insolvency last month after Germany's Lufthansa <LHAG.DE> scrapped plans to buy the Austrian unit, grounding the airline's fleet and stranding thousands of passengers.

Following hurried talks to find a new owner for Niki before it loses its valuable runway slots, British Airways owner IAG agreed last Friday to buy the business and make it part of its low-cost unit Vueling.

But Fairplane, a group representing airline passengers, said on Tuesday it had filed legal cases to have the insolvency proceedings for Niki shifted to Austria from Germany, which could unravel the sale.

Fairplane argues that Niki, which is registered as a company in Austria, had been profitable but had lost access to bridge financing when insolvency proceedings were opened in Germany in December.

A court in Berlin's Charlottenburg must now decide whether to reverse its Dec. 13 decision opening insolvency proceedings for Niki or to pass on the case to a higher court, the Berlin court's statement on Wednesday said.

At the same time, an Austrian court has received a request to open insolvency proceedings for Niki in Austria, a spokesman for the Korneuburg court said on Wednesday, adding it would take the court until next week to assess the matter.

"We have to look at the jurisdiction first because this is a case currently pending with the Charlottenburg court," the spokesman said.

(Reporting by Maria Sheahan and Alexandra Schwarz-Goerlich; Editing by Tom Sims and Georgina Prodhan)