Legal Proceedings	9 Months Ended
Feb. 28, 2021
Legal Proceedings
Legal Proceedings	Note 17 – Legal Proceedings We are not a party to any material pending legal proceeding (including any governmental or environmental proceeding) other than routine litigation incidental to our business except for the following: Department of Justice Investigation The U.S. Department of Justice (“DoJ”), acting through the U.S. Attorney’s Office for the Southern District of Illinois, is conducting an investigation of AAR Airlift Group, Inc. (“Airlift”), a wholly-owned subsidiary of AAR CORP., under the federal civil False Claims Act (“FCA”). The investigation relates to Airlift’s performance of several contracts awarded by the U.S. Transportation Command (“TRANSCOM”) concerning the operations and maintenance of rotary-wing and fixed-wing aircraft in Afghanistan and Africa, as well as several U.S. Navy contracts. In June 2018, the DoJ informed Airlift that part of the investigation was precipitated by a lawsuit filed under the qui tam provisions of the FCA by a former employee of Airlift. That lawsuit remains under seal. Airlift is cooperating with the DoJ investigation and believes it has meritorious defenses and counter-arguments to the concerns raised by the DoJ. Nevertheless, in February 2021, Airlift and the DoJ reached a tentative agreement to settle the FCA investigation and related matters for approximately $11.5 million. This tentative agreement is subject to negotiation of a definitive settlement agreement and other contingencies. We recognized a charge of $4.2 million in discontinued operations in the third quarter of fiscal 2021 related to this agreement and related matters. As of February 28, 2021, our reserve for the settlement agreement and related matters, including legal fees, was $12.8 million. As part of the settlement, Airlift and AAR will not admit any wrongdoing. If the parties can agree on a definitive settlement agreement, this will conclude the DoJ investigation into Airlift's contracts with TRANSCOM and the U.S. Navy. However, there is no assurance that the settlement will be finalized. If the settlement agreement is not executed, the DoJ and the qui tam plaintiff could pursue civil litigation under the FCA, which provides for the recovery of, among other amounts, treble damages and penalties. Self-Reporting of Potential Foreign Corrupt Practices Act Violations The Company retained outside counsel to investigate possible violations of the Company’s Code of Conduct, the U.S. Foreign Corrupt Practices Act, and other applicable laws, relating to the Company’s activities in Nepal and South Africa. Based on these investigations, in fiscal 2019, we self-reported these matters to the DoJ, the U.S. Securities and Exchange Commission and the UK Serious Fraud Office. The Company is fully cooperating with the reviews by these agencies, although we are unable at this time to predict what action, if any, they may take.

Legal Proceedings

9 Months Ended

Feb. 28, 2021

Note 17 – Legal Proceedings

We are not a party to any material pending legal proceeding (including any governmental or environmental proceeding) other than routine litigation incidental to our business except for the following:

Department of Justice Investigation

The U.S. Department of Justice (“DoJ”), acting through the U.S. Attorney’s Office for the Southern District of Illinois, is conducting an investigation of AAR Airlift Group, Inc. (“Airlift”), a wholly-owned subsidiary of AAR CORP., under the federal civil False Claims Act (“FCA”). The investigation relates to Airlift’s performance of several contracts awarded by the U.S. Transportation Command (“TRANSCOM”) concerning the operations and maintenance of rotary-wing and fixed-wing aircraft in Afghanistan and Africa, as well as several U.S. Navy contracts. In June 2018, the DoJ informed Airlift that part of the investigation was precipitated by a lawsuit filed under the qui tam provisions of the FCA by a former employee of Airlift. That lawsuit remains under seal.

Airlift is cooperating with the DoJ investigation and believes it has meritorious defenses and counter-arguments to the concerns raised by the DoJ. Nevertheless, in February 2021, Airlift and the DoJ reached a tentative agreement to settle the FCA investigation and related matters for approximately $11.5 million. This tentative agreement is subject to negotiation of a definitive settlement agreement and other contingencies. We recognized a charge of $4.2 million in discontinued operations in the third quarter of fiscal 2021 related to this agreement and related matters. As of February 28, 2021, our reserve for the settlement agreement and related matters, including legal fees, was $12.8 million. As part of the settlement, Airlift and AAR will not admit any wrongdoing. If the parties can agree on a definitive settlement agreement, this will conclude the DoJ investigation into Airlift's contracts with TRANSCOM and the U.S. Navy. However, there is no assurance that the settlement will be finalized. If the settlement agreement is not executed, the DoJ and the qui tam plaintiff could pursue civil litigation under the FCA, which provides for the recovery of, among other amounts, treble damages and penalties.

Self-Reporting of Potential Foreign Corrupt Practices Act Violations

The Company retained outside counsel to investigate possible violations of the Company’s Code of Conduct, the U.S. Foreign Corrupt Practices Act, and other applicable laws, relating to the Company’s activities in Nepal and South Africa. Based on these investigations, in fiscal 2019, we self-reported these matters to the DoJ, the U.S. Securities and Exchange Commission and the UK Serious Fraud Office. The Company is fully cooperating with the reviews by these agencies, although we are unable at this time to predict what action, if any, they may take.