Two key groups of Latam Airlines Group SA creditors, frustrated by a bankruptcy process that has dragged on for almost 18 months, are asking for a mediator to help devise an exit plan for the Chilean carrier, Bloomberg News reported. The airline’s unsecured creditors and a consortium holding billions of dollars in claims complained on Thursday about the lack of progress and asked the court to order mediation. A mediator would facilitate talks about how creditors will be repaid and where existing shareholders fit into that plan. “It has become abundantly clear that the parties are in fundamental disagreement regarding key legal issues,” Rachael Ringer, a lawyer for a group of Latam creditors, said in court papers. A “massive economic gulf” exists that requires the help of a mediator, said Ringer, whose group included Strategic Value Partners and Sixth Street Partners as of early July. A key issue is whether Santiago-based Latam’s current shareholders are entitled to anything when the bankruptcy ends. In the U.S., where the bankruptcy is playing out, shareholders are dead last in line for repayment and usually get wiped out. But in Chile, shareholders have certain legal rights that may be at odds with U.S. rules. Latam’s major shareholders include the Cueto family, Delta Air Lines Inc. and Qatar Airways.
