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Latam Airlines, creditors object to motion for equity committee
By Sarah Lizee
Olympia, Wash., April 16 – Latam Airlines Group, SA and its official committee of unsecured creditors objected to an informal group of equity holders’ motion to form an official equity committee, according to filings made Thursday with the U.S. Bankruptcy Court for the Southern District of New York.
The company said the equity holders’ motion relies on “rosy optimism” regarding the return of passenger air travel based on the development of the Covid-19 vaccine to argue that Latam is on a path to recovery.
“An official committee of equity holders should be appointed to advocate for the interests of shareholders because Latam is not ‘hopelessly insolvent,’” Latam said in its objection.
The company said the motion ignores that the appointment of an equity committee is a rare and exceptional practice in complex Chapter 11 cases, and that at this stage of Latam’s cases, such a request is premature at best.
Latam said the U.S. trustee has also informed the debtors that it has decided not to appoint an equity committee at this time.
The unsecured creditors committee said in its objection that the equity holders have failed to demonstrate a substantial likelihood that equity will receive a meaningful distribution, consistent with principles of absolute priority.
“At this stage, it would be inappropriate to burden the estates and their creditors with the costs and additional administrative complications associated with the appointment of an additional official committee,” the group added.
Latam is a Santiago, Chile-based airline. The company filed bankruptcy on May 25, 2020 under Chapter 11 case number 20-11254.
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