If the German laws are like the USA laws, then the administrators have much more latitude in making payments than some here believe.
This is not the case in Germany. In Germany everyone is equal in front of the law, so no administrator can do foul play.
The is a list, everyone who should get money from the company can apply to be put on the list if they can properly show that the airline owns them certain amounts. The list has a specific ranking which is specified in German insolvency law.
Once the company stops operating, the administrator looks how he can sell the assets or just make the most money of what is left. Once this is done, the cash he has on hand will be distributed EVENLY under the creditors.
So one example, if the administrator has done his job, and there are 40 million Euro on the companies bank account, but the company has claims from creditors as high as 800 million Euro, every one on the list gets five percent of what he should get.
Coming back to this case of ISAVIA illegally holding up ABs plane, they might still get something like 8.000 Euro, in this example case of 5%, they would get 400 Euro in the end. Just a simplified example.
There is no chance the administrator can give them more or pay them now before these proceedings are complete, because (a) all other creditors would have to agree to this (then it would be possible) and this is unlikely and (b) that would be preferential treatment, resulting in the other creditors treated worse than ISAVIA (this would be highly illegal).
And even by all logical means, AB has no more reason to pay. They stop to operate on friday. Then they will be no airline anymore, but a core company insolvency. The airplane then returns to the lessor, who will get it for free from ISAVIA (except if they play the full banana republic game).
It's funny, just because they are a small country, that they have to act like some wild banana republic instead of going the way of everyone else and following EU and the airline countries applicable local law.
The Iceland law does not matter at all in this case. Actually it matters in the fact, that Icelandic laws should have the relevant laws which guarantee that EU law is applicable in such cases. If not, they should not be an EU member.
Iceland is not an EU member. Why should they follow German or EU laws?
You are right. But afaik they want to join, despite they stopped their first try in 2015. I don't see them staying on their own forever.