LATAM Airlines bankruptcy plan moves forward after creditor appeals fail

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The LATAM airlines logo is seen inside the Commodore Arturo Merino Benitez International Airport in Santiago, Chile April 25, 2019. REUTERS/Rodrigo Garrido

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Aug 31 (Reuters) – LATAM Airlines (LTM.SN) on Wednesday pushed back two challenges to its bankruptcy reorganization plan, bringing the carrier one step closer to exiting Chapter 11 after seeking creditor protection in the early months of the pandemic .

LATAM said in a statement it was pleased with a U.S. bankruptcy court‘s ruling upholding its reorganization plan in which two sets of creditors lost their appeals.

LATAM, which filed for bankruptcy in 2020, won court approval to exit Chapter 11 in June. His reorganization plan would inject around $8 billion into the airline through a combination of capital increases, convertible bond issues and new debt.

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The appeal against the approved plan came from the TLA Claimholder Group, which owns shares in subsidiary LATAM Airlines Brasil, and a group of unsecured claimants including Avenue Capital Management II, Corre Partners Management, CQS (US), HSBC Bank Plc, Invictus Global Management, Livello Capital Management LP and Pentwater Capital Management LP.

The groups’ appeals have been met with opposition from other shareholder entities and the airline itself.

The appeals had challenged LATAM’s so-called support agreement with a group of creditors that had agreed to guarantee certain financing if no one else stepped in to provide it.

Under the deal, the 15 supporting creditors would receive $734 million in fees to ensure $5.4 billion in equity and debt issuances are fully funded.

U.S. District Judge Denise Cote dismissed objections to the support agreement, saying it did not offer unfair treatment to one group of creditors over another.

Instead, the fees and stock rights were reasonable compensation for the risk of securing LATAM’s exit funding, she said.

Earlier this week, LATAM Airlines said in a statement that it expects to emerge from bankruptcy in the last quarter of this year, proposing a slightly modified reorganization plan to reach $11.5 billion in revenue by 2024.

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Reporting by Fabian Cambrero and Dietrich Knauth; Written by Isabel Woodford; Editing by Christian Plumb and Alistair Bell

Our standards: The Thomson Reuters Trust Principles.

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