Local creditors of Latam Airlines Group SA are up in arms over a bankruptcy plan that would leave them with next to nothing even as holders of overseas bonds get almost all their money back, Bloomberg News reported. BancoEstado SA, a Santiago-based bank acting on behalf of local noteholders, has asked Latin America’s largest airline to improve its terms. The investors are threatening to sue if their demands aren’t meant, and contend that as a Chilean company, Latam should have filed for protection in local courts — instead of New York — that would have treated domestic creditors better. Local bonds have plunged since the airline’s latest plan to exit bankruptcy was filed in November, with inflation-linked notes due in 2029 trading at 10 cents, according to extrapolated prices calculated by data provider LVA Indices. Overseas bonds, meanwhile, have been among the country’s best performers. Securities due in 2024 have surged to 96 cents on the dollar, from as low as 20 cents in the weeks after the bankruptcy filing in May 2020.
