Latam Airlines Group SA can send its $5.4 billion bankruptcy-exit plan to creditors for a vote, a judge said Tuesday, handing the airline a partial victory over debtholders who want to pursue alternatives, including a takeover by rival Azul SA, Bloomberg News reported. The decision means the company can seek final court approval for its reorganization plan in April and possibly exit bankruptcy several months after that, should it get support from securities regulators in Chile, where Latam is based. Bankruptcy Judge James Garrity rejected arguments that Latam’s proposal is so obviously flawed that it could never win final court approval. Judge Garrity’s decision still allows holdout creditors, including Avenue Capital Management and Pentwater Capital Management, to bring up their objections again when the reorganization comes back to the judge for a final decision. Several obstacles remain before Latam can ask Judge Garrity to bless the reorganization. Later this month, the judge has scheduled a hearing on whether to approve a restructuring support agreement. That deal would help Latam gets its plan approved by guaranteeing support from key creditors, but has drawn scrutiny because it calls for paying those creditors hefty fees. The company must also either refinance, or get an extension of a loan that it took out to help pay for its reorganization. That so-called debtor in possession loan matures in April, company attorney Lisa M. Schweitzer said during a virtual court hearing.
