LATAM Airlines Successfully Exits Landmark Cross-Border Restructuring
November 3, 2022
Cleary Gottlieb represented LATAM Airlines Group S.A. (LATAM), Latin America’s largest air carrier, and certain of its affiliates in Chile, Brazil, Peru, Colombia, Ecuador, the Cayman Islands, and the United States, in the company’s successful exit today from a first-of-its-kind cross-border debt restructuring before the United States Bankruptcy Court for the Southern District of New York.
LATAM’s Chapter 11 cases represent one of the largest bankruptcies filed in recent times, involving over $16 billion in liabilities and ultimately involving thirty-eight debtors, including LATAM’s largest passenger and cargo airline affiliates. This restructuring involved a series of heavily contested matters, including four, multi-billion-dollar trial-like hearings in 2022 alone, in each of which LATAM ultimately prevailed and obtained the approval of an innovative DIP Financing structure (that has since been adopted in several other complex restructurings), and its plan and related multi-billion dollar backstop financing arrangements. Cleary also has defended confirmation of LATAM’s plan of reorganization in a series of expedited appeals.
At their core, these cases involved a series of interrelated, complex cross-border issues that have resulted in precedent-setting recognition proceedings in Chile and Colombia, as well as one of the first Brazilian-incorporated companies to seek Chapter 11 relief, and a comprehensive restructuring of LATAM’s fleet. Throughout the cases, the cross-border nature of LATAM’s operations and restructuring required creative solutions from the Cleary team to harmonize international legal regimes that often were in tension and the dedication of significant resources to overcome challenges and opposition brought at nearly every major stage of the case. Ultimately, this led to the confirmation and consummation of a plan of reorganization widely supported by LATAM’s stakeholders that, as of today, has raised more than $8 billion in new money, principally through a series of complex, multi-tranche securities offerings that were carefully crafted to honor Chilean corporate law while complying with U.S. securities and bankruptcy requirements. Today’s successful exit is particularly noteworthy, given the ongoing challenges other airlines in the industry continue to face and the overall turbulent global markets.
Today’s exit marks LATAM’s successful completion of its reorganization after more than two-and-one-half years, and its emergence from Chapter 11 as a stronger and more streamlined global enterprise.
Cleary partners Richard Cooper, Lisa Schweitzer and Luke Barefoot led the LATAM team in our client’s path to confirmation, with invaluable contributions from partners Duane McLaughlin and Adam Brenneman and counsel Kara Hailey, who led the exit financing effort, and partners Jeffrey Rosenthal, David Herrington, Abena Mainoo, who worked closely with the core team on leading the various litigation and appeals, as well as a broad Cleary team reflecting the breadth and depth of transactional, litigation and regulatory expertise, coupled with extensive airline industry experience, required to craft and complete a global restructuring of this magnitude.