Brazil’s Latam Airlines Unit Joins Chapter 11 Bankruptcy Files

As New York time published July 9, LATAM Airlines Group, announced that it would add its unit in Brazil to the debt restructuring process. The company said the proposal still needed approval from the US Court. LATAM also announced it would add its unit in Brazil to the bankruptcy protection process in the United States, calling the move “a natural step in view of the ongoing COVID-19 pandemic”.

Based on Latin financeLATAM Airlines Group accused it of entering Brazilian affiliation into the Chapter 11 agreement in what was described as a “natural step” given the ongoing COVID-19 pandemic and which would “facilitate access to the proposed DIP (Debtor-In). -Possession) financing. “

As Reuters Updated in May, LATAM Airlines Group filed for US bankruptcy protection aimed at reordering $ 18 billion in debt. It is the largest airline in the world to date to seek emergency reorganization due to the coronavirus pandemic.

As was announced, the requested restructuring was submitted in May, involving subsidiaries in Chile, Colombia, Peru, Ecuador, the United States, the Cayman Islands and the Netherlands. Subsidiaries from Argentina, Brazil and Paraguay are not included in this procedure. Then, in June, LATAM Airlines Group was announced it is closing Argentinian Airlines LATAM. After this announcement, the only branch of LATAM that is not under the protection of Chapter 11 and has not yet been closed is LATAM Airlines Paraguay.

In spite of all these bankruptcy measures, the Brazilian subsidiary will continue to operate passenger and cargo flights normally because other branches involved in bankruptcy issues continue operations.

Latam Airlines Group announced to the public a pers conference, in which he explained that his party submitted the second stage (Tranche A) of its DIP financing proposal (debtor-in-possession) to the Southern District Court of New York, as part of the Chapter 11 process. Until now the two tranche amounted to $ 2, 2 billion, Tranche C consists of $ 900 million made by Qatar Airways shareholders, the Cueto and Amaro families; and Tranche A consists of $ 1.3 billion conducted by Oaktree Capital Management LP.

Combined, this stage fulfills LATAM financing requirements in the context of the COVID-19 crisis and, as a result, it is hoped that financial support will not be needed from the government. Nevertheless, LATAM Airlines Brazil will continue negotiations with the Brazilian National Bank for Economic and Social Development (BNDES).

LATAM Airlines Group CEO, Roberto Alvo, stated that “LATAM has taken a significant step in ensuring the continuity of its operations by securing the commitment of Oaktree Capital Management and its affiliates to the total financing of Tranche A. We hope, together with Tranche C, it will be approved by the court within a few weeks future.

“The support of our two main shareholders is very important, sparking interest and commitment from investors that we did not have a month ago. Demonstration of confidence in the future of this group allows us to secure all the resources needed to continue operating during the crisis and when demand recovers, to successfully complete the Chapter 11 process, “he concluded.

Juan Pedro Sanchez Zamudio
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