Published on Friday, September 11, 2020
A US bankruptcy court rejected a $2.4 billion rescue package for cash-strapped LATAM Airlines.
The financing plan included a convertible loan which the judge deemed would result in ‘improper’ treatment of other shareholders.
The proposal was pesented to the court in July but was challenged by other creditors who came up with their own counter proposal.
Judge James Garrity Jr. says the airline can come back with a similar financing plan as long as it does not include converting part of the loan into equity.
The original proposal included a $1.3 billion loan from asset management firm Oaktree Capital Management and a $900 million convertible loan from various LATAM shareholders.
The airline filed for bankruptcy protection in May after being hammered by the slump in travel across the Americas region.
One major LATAM shareholder is Delta Air Lines which invested nearly $2 billion in the Chile based carrier.
Delta said it had ‘utmost confidence’ in LATAM as it entered bankruptcy proceedings.
Meanwhile, LATAM has announced it has appointed former JetBlue executive Marty St George as its new Chief Commercial Officer.
St George spent 13 years at JetBlue before leaving last year.
Written by Ray Montgomery, US editor