LATAM makes progress in court and may start voting on its reorganization plan

LATAM Airlines Group SA (“LATAM”) (SSE: LTM) and its affiliates in Brazil, Chile, Colombia, Ecuador, Peru and the United States today achieved an important advance in the Chapter 11 Proceeding, after the approval of the Disclosure Statement by the Court in the United States. In the rigorous resolution, it is established that the information provided by LATAM to the process is sufficient for the creditors to start voting on the Reorganization Plan presented to the Court on November 26, 2021.

In this way, it is expected that in the coming weeks LATAM will begin the process of requesting votes regarding the Reorganization Plan (Solicitation Period), during which time it will seek its approval. This represents a fundamental step for LATAM’s exit from Chapter 11.

The Court also set the Confirmation Hearing for May 17 and 18, 2022, at which time the Court will evaluate the Reorganization Plan. This constitutes the last milestone of the process in the United States. LATAM expects to successfully emerge from the Chapter 11 Procedure during the second half of 2022.

It should be remembered that said resolution occurs after the Court approved the modification and the new consolidated text of the DIP loan agreement between LATAM and its financiers dated March 15, 2022 (Super-priority Debtor-in-Posession Term Loan Agreement) , which will allow the LATAM group to access US$3.7 billion in liquidity and refinance its existing DIP credit agreement. In addition, the new credit agreement extends the expiration date of the former, in accordance with the calendar that LATAM aims to emerge from the Chapter 11 Procedure.

In turn, last week, the Court approved the backstop commitment agreements in support of the reorganization and financing plan proposed by LATAM and some of its direct and indirect subsidiaries. These agreements represent approximately $5.4 billion in committed funds.