US Justice Bars Credit to Latam

The American court did not authorize the financing that Latam expected to receive from shareholders and investors. In bankruptcy in the US since May, the company had closed $ 2.45 billion loans with Oaktree Capital Management (specializing in venture capital), with Qatar Airways and with the shareholder families Cueto (Chilean) and Amaro (Brazilian) ). The deal was made using the DIP model, in which the creditor who grants the financing has priority to receive before others.

Latam can appeal the decision, but its situation gets more complicated as time goes by. The group has been experiencing difficulties since the beginning of the pandemic because of the drop in demand in the airline industry. “The decision is bad for Latam because it requires that it resort to or be able to approve new terms for a new DIP financing at a time when access to capital is urgent. This can harm the company’s financial health in the short and medium term,” said the attorney Felipe Bonsenso.

In the ruling, Judge James Garrity Jr, of the New York bankruptcy court, did not agree with the mechanism for converting shares to pay the loan to Qatar and families. Latam said it was evaluating the sentence.

Reviewer overview

US Justice Bars Credit to Latam - /10

Summary

0 Bad!