The United States justice has approved the payment plan and LATAM is one step away from abandoning the competition

LATAM airline has obtained US justice approve the payment plan who had proposed to exit the preventive competition, which It will result in a nearly 40% cut of your debt.

According to a statement released Saturday evening, the US Court of Auditors. for the Southern District of New York “approved the Reorganization Plan” of the airline, which had been presented as part of the so-called “Chapter 11” of that country, which is equivalent to preventive competition in Argentina.

LATAM is controlled by the family nodfrom Chile, which are its main shareholders together with the airlines Delta, from the United States, e Qatar Airways. It also has former owners of the Brazilian airline as shareholders CUT ITsince the current airline is the product of the merger between LAM and TAM, a decade ago and is listed on the stock exchange.

When registering for the competition it had 43,000 employees across the continent. During these two years, according to market sources, he would have negotiated the departure of some 6,000 employeesincluding all of its Argentine subsidiary.

The airline entered the competition in May 2020, weeks after the pandemic forced all airlines to ground their planes.

One month after applying for the competition, LATAM announced the closure of its subsidiary LATAM Argentina and in the following months negotiated the voluntary withdrawal of almost all of its 1,700 employees. It also returned to its owners the fleet of Airbus A320 aircraft they flew in the local cabotage market.

LATAM requested the competition with a debt of nearly 11,000 million dollarsbefore the pandemic and the payment plan it offered contemplates the payment between cash and new debt, 7.5 billion dollarswith a clipping of 4 billion dollars.

According to the statement, such a payment plan it was supported by “almost” all creditorsyes “The plan is the result of months of negotiations between key stakeholders, who also considered a long period of mediation,” the statement added.

“We are very pleased with the judge’s confirmation of our restructuring plan,” said the airline’s CEO. Roberto Alvo. “We will continue to work hard to complete the remaining steps in the coming months,” she added. According to the company, the exit from Chapter 11 in the United States “is expected during the second half of 2022”.

In Argentina, LATAM’s withdrawal from the competition does not substantially change its current situation, which is that of another international operator. After the closure of LATAM Argentina, the company remained with a reduced structure, of approx 500 employeesfollowing the sales and operations of the subsidiaries LATAM Chile, LATAM Brazil and LATAM Peru, which currently land at the airport of Ezeiza and they also have some direct flights to airport.

The notice

Santiago, June 18, 2022 – The LATAM Airlines Group and its subsidiaries in Brazil, Chile, Colombia, Ecuador, Peru and the United States have announced that the United States Bankruptcy Court for the Southern District of New York has approved the Reorganization Plan of the group presented by LATAM as part of its reorganization procedure pursuant to chapter 11.

Backed by almost all of LATAM’s creditors, the Plan is the result of months of negotiations between the main stakeholders, who also considered a long period of mediation. The Plan complies with the legal requirements of the United States and Chile. The confirmation order issued today by the United States Court represents the latest milestone in the United States of the Chapter 11 process initiated by LATAM to ensure its long-term sustainability. .

“We are very pleased with the judge’s confirmation of our restructuring plan. This is a very important step in the process of exiting Chapter 11 and we will continue to work hard to complete the remaining steps in the coming months, “said Roberto Alvo, CEO of LATAM Airlines Group SA.

LATAM is now focused on concluding the pending phases in Chile, which include the Extraordinary Shareholders’ Meeting for the approval of the new capital structure, the registration of shares and convertible bonds with the Financial Market Commission (CMF) and the Offer in Option. which will be offered in accordance with the law on a preferential basis to all shareholders who wish to participate in the new equity structure and thus avoid the consequences of the dilution of ownership that the planned capital increase entails.

Once in effect, the LATAM Plan will inject approximately $ 8 billion through a combination of capital increase, convertible bond issue and new debt. This includes $ 5.4 billion in loans backed by major shareholders (Delta Air Lines, Qatar Airways and Grupo Cueto) and LATAM’s major creditors (i.e. creditors represented by the Ad hoc group of guarantors and some bondholders). Local). LATAM is expected to leave the Chapter 11 process in the second half of 2022.