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LATAM Airlines Group S.A. entered Chapter 11 in the Southern District of New York on May 26, 2020, listing consolidated assets and liabilities each between $10 billion and $50 billion and more than 100,000 creditors source filing. CFO Ramiro Alfonsin Balza described LATAM as South America’s largest passenger airline group, with $10.1 billion of 2019 revenue, more than 74 million passengers, 900,000 tons of cargo, roughly 42,000 employees and a 340-aircraft fleet; funded debt totaled about $7.57 billion, including a $600 million secured revolving facility, $1.5 billion of international bonds and $4.423 billion of fleet financing source filing.
The June 18 confirmation order set the exit milestone for that pandemic restructuring: the court confirmed LATAM’s joint plan after every impaired voting class accepted it, found the plan met the best-interests test, and approved the integrated settlements, backstop payments, extension payments and financing architecture behind the reorganization source filing. The order also authorized new plan securities, including ERO new common stock and New Plan Notes, and implementation of a revised RCF; the prepetition party landscape included the Cueto Group at 21.46% ownership and Delta Air Lines at about 19.99%, following Delta’s roughly $1.9 billion strategic investment source filing source filing.
The court approved two contested LATAM settlements that tightened the claims base and fleet assumptions behind the airline’s restructuring. The memorandum decision and order granted the SVP settlement and Sajama settlement motions, overruling objections from the Official Committee of Unsecured Creditors and Banco del Estado de Chile as Chilean local-bond indenture trustee after evidentiary hearings on January 21 and 24.
The SVP settlement authorized 16 new go-forward aircraft leases while allowing rejection of underlying Centaurus/Triton and SBI leases, replacing 76 asserted claims totaling about $4.941 billion with $850 million of allowed general unsecured claims. The Sajama settlement resolved 24 LATAM pass-through certificate/EETC-related claims from surrendered aircraft for one $695 million allowed general unsecured claim against LATAM Parent. The ruling mattered because it reduced disputed aircraft-related claim exposure, locked in aircraft needed for the business plan, and advanced settlements with creditors tied to the restructuring support agreement as LATAM moved toward plan confirmation.
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