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U.S. Bankruptcy Court has given a green light to Latin American aviation restructuring plans



Once the pending phase is complete, the Latin American Aviation Restructuring Program is considering injecting $ 8.19 billion worth of resources.

This weekend, Chilean and Brazilian airline Latam Airlines announced that the US Bankruptcy Court in the Southern District of New York has approved the restructuring plan it has proposed.

The above is in the context of his process under “Chapter 11” where he entered in the midst of a pandemic crisis.

The company said in front of the Financial Markets Commission that the bankruptcy court’s confirmation of the plan was the final link to the “Chapter 11” procedure in the United States.

Therefore, the enforcement of the corporate law necessary to finalize the departure of the debtor from “Chapter 11” in Chile will continue.

For this reason, airlines will convene an extraordinary shareholders’ meeting within a few days to analyze capital increases, issuance of paid-in shares, and issuance of convertible corporate bonds to the shares under consideration in the restructuring plan.

Jose Olivares, a scholar in the Faculty of Economics and Business Administration at the University of Chile, explained that the decision would allow the company to survive and would not enter the liquidation phase.

Creditors and shareholders, on the other hand, manage Latin American Airlines in anticipation of losses to prevent bankruptcy.

Scholars have shown that this mechanism is harmful to minority shareholders.

This is because the agreement will allow large creditors who have assumed losses from Latin American debt to capitalize these debts into bonds.

Reorganization of Latin American Airlines

He also pointed out that it would later be done in stock, which would significantly increase the number of shareholders and further divide their interests.

In this regard, Ratham’s minority investor Jorge Said Jar has declared that he believes he cannot explain the definition of an American judge.

That’s because, in the face of LANTAI’s imminent bankruptcy, he preferred to defend the manager’s shares rather than the rights of shareholders.

The injection of funds is done by increasing capital, issuing convertible bonds, and combining debt.

In addition, at the end of the process, the company estimates that it will reduce its debt to $ 7.26 billion and gain approximately $ 2.67 billion in liquidity.

Source: Biobiochile

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