Spirit Airlines Inc. bondholders, growing increasingly worried about the company’s ability to manage its more than $3 billion of borrowings, are mapping out a strategy that they think may insulate them from devastating losses in the event the air carrier can’t repay its obligations, Bloomberg News reported. The plan, dubbed a “triple-dip” by some of the creditors, would aim to capitalize on a series of moves the airline made during a 2020 bond sale. Certain company units sold notes backed by Spirit’s loyalty program and intellectual property, and sent proceeds of the deal to the airline’s parent company, which also guaranteed the debt. The mechanics of the deal resemble a structure known as the “double-dip” that has helped struggling companies raise fresh financing in exchange for giving lenders two claims on the company’s assets. In Spirit’s case, the bondholders believe they have three claims — to Spirit’s guarantee, the intercompany loan and the loyalty program and related assets. A “triple-dip” hasn’t yet been tested in court, but “double-dip” creditors have ended up with improved recoveries in past bankruptcies.
