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A U.S. bankruptcy court will start considering Grupo Aeromexico SAB de CV's proposed reorganization plan on Thursday, as the Mexican carrier battles junior creditors who say they are being unfairly treated in a hearing likely to stretch over several days, Reuters reported. Aeromexico, which filed for chapter 11 protection in New York in June 2020, will make its case to U.S. Bankruptcy Judge Shelley Chapman for its proposal, which would infuse new capital into the company and make Apollo Global Management, a frequent investor in distressed companies, the largest shareholder. Though the airline has lined up the support it says it needs from its multiple creditor groups, some still say the plan should not be approved unless junior creditors, some of whom may see just pennies on the dollar, receive better recoveries. Judge Chapman has set aside several days for the hearing, so will likely not rule on the plan on Thursday. If she ultimately approves the deal, Aeromexico — one of three major Latin American airlines that filed for bankruptcy during the pandemic — will be able to exit bankruptcy. The plan, according to the airline, would reduce its debt by $1 billion and save around 13,000 jobs. But junior creditors argue it is overly beneficial to existing shareholders, including Delta Air Lines In. and four board members, at their expense.

Latam Airlines Group SA “flatly rejected” Azul SA’s offer to buy the bankrupt carrier even though the sale would be a better deal for creditors, Azul contends in new court filings, Bloomberg News reported. Azul for months has been expressing interest in a tie-up with Chile’s Latam, but the bankrupt airline has refused to seriously engage in talks, lawyers for Brazil-based Azul said in court papers. Azul said its deal outlined in a Nov. 11 term sheet values Latam at $13 billion and would provide more for creditors than Latam’s current proposal, which is on the verge of seeking court approval. Latam has said Azul’s offer lacked critical details — like how the deal would be executed, how long it would take and whether it could be approved by regulators — as well as the requisite support from creditors. Latam’s restructuring plan is backed by a key group of creditors — including SVPGlobal, Sculptor Capital Management and Sixth Street Partners — and its largest equity holders. Latam is approaching a critical juncture in its effort to exit the bankruptcy case, which began with a chapter 11 filing in May 2020 as COVID-19 lockdowns stymied international travel. On Thursday, the company will seek a bankruptcy judge’s permission to begin collecting creditor votes on its restructuring plan. Its official committee of unsecured creditors is opposing that step, alleging the plan violates U.S. bankruptcy law.

Embattled property developer China Evergrande Group said Wednesday that within six months, it aims to release a global restructuring plan that would respect offshore creditors’ legal rights, after a group of its bondholders threatened last week to sue the company for failing to engage with them, WSJ Pro Bankruptcy reported. During a call with offshore creditors, Evergrande promised to follow the rule of law and respect bondholders’ rights, which in some cases include claims on the company’s secured offshore assets, according to people familiar with the matter. Evergrande also said on the call that its founder and Chairman Xu Jiayin might provide additional financial support to the company as it navigates a prolonged restructuring. The company didn’t discuss any details of its restructuring plan, such as potential bondholder recoveries or asset-sale plans, according to the call participants. Evergrande, once China’s largest property developer, defaulted on its debt in December and is struggling to address more than $300 billion in liabilities, including nearly $20 billion in international bonds. Yesterday’s call came a week after a group of Evergrande’s foreign creditors threatened a legal enforcement plan that could potentially include liquidation of the company’s assets. The group said it was fully within its rights to do so after a continued lack of engagement from Evergrande’s side since the company defaulted. On Monday, Evergrande issued a statement asking the creditors for more time.

Grupo Aeroméxico SA B de CV is close to clinching court approval for a proposed corporate reorganization about 18 months after filing for chapter 11, although some creditors argue the bankruptcy plan unfairly enriches certain shareholders and shouldn’t be confirmed, WSJ Pro Bankruptcy reported. Some of Aeroméxico’s unsecured creditors — including Invictus Global Management LLC, Corvid Peak Capital Management LLC and Hain Capital Group LLC — say the proposed reorganization, which would recapitalize the business and bring in new owners, unfairly rewards certain insiders and creditors poised to own significant stakes in the airline after it exits bankruptcy. Objecting creditors said in court papers Tuesday they weren’t offered the same opportunity to subscribe to a planned sale of Aeroméxico equity as others with equal standing under bankruptcy law. “No bankruptcy court has ever approved…a plan of reorganization in which certain select creditors received a recovery on account of an investment opportunity while all other creditors in the same class were entirely excluded at the time of solicitation,” the objecting creditors said in a court filing.

Moby SpA, the ferry company that connects Italy’s mainland with its islands, filed for Chapter 15 bankruptcy proceedings in the U.S. as it seeks to complete a troubled restructuring process at home, Bloomberg News reported. Moby, owned by the Onorato family, has been under pressure from increasing regulation, tougher competition and weak freight traffic volumes in the last years, and was further hit by the pandemic travel restrictions. In June 2020, the company petitioned a court in Milan for a court-supervised restructuring procedure, but its revenue grew above expectations this summer. The company reached a non-binding restructuring deal with a group representing more than a third of bondholders on Sept. 24, but needs a majority of them to support it at a meeting scheduled for Jan. 20. As part of the plan, the group could provide new financing. In November, a Milan Court ordered the seizure of 20 million euros ($22.8 million) of assets of Moby’s parent company, Onorato Armatori Srl, at the request of Tirrenia di Navigazione SpA, an insolvent company whose assets were bought by beleaguered Moby in 2011. The Onorato Group said at the time that the seizure order would be appealed. Moby’s 300 million euros of bonds were indicated at 76 cents on the euro on Jan. 14, up from a record low of 28 cents reached in April, according to data compiled by Bloomberg.

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.

CannTrust Holdings Inc., the troubled Canadian cannabis producer whose former executives have been charged with fraud, is preparing to wind down if it can’t find a way to fix a default by the end of the month, Bloomberg News reported. The Vaughan, Ontario-based company breached a minimum earnings covenant on its C$22.5 million ($17.7 million) bankruptcy loan, and is currently in negotiations with potential investors and strategic partners over ways to address the default and its liquidity shortfall, according to a Thursday statement. The company filed to restructure under the Companies’ Creditors Arrangement Act, an approximate Canadian equivalent of chapter 11 bankruptcy, in March 2020 after it ran into compliance issues with Health Canada over its cannabis production facilities. CannTrust has until Jan. 31 to address the default. It’s developing a wind-down plan to maximize its asset value if it can’t reach a financing agreement or complete a strategic transaction, according to the statement. Its former chief executive officer and former chairman of the board were charged last June in Ontario with fraud and other offenses related to breaches of cannabis growing rules in Canada.

Philippine Airlines Inc. received approval to tap $150 million in additional financing and plans to cut its debt by $2 billion, after winning approval last month from a U.S. court for its reorganization plan, Bloomberg News reported. “There are immense challenges ahead, but we look forward to tackling them as a reinvigorated Philippine Airlines, better positioned for strategic growth to continue serving our customers,” President Gilbert Santa Maria said in an emailed statement Friday. The flagship carrier, majority owned by billionaire Lucio Tan, is one of several to enter debt restructuring in the U.S. Aeromexico and Colombia’s Avianca Holdings have both sought court protection in New York. Philippine Airlines received the go-ahead from the court after its reorganization plan didn’t face any major opposition from debt holders. The airline has the option to obtain up to $150 million in additional financing from new investors, it said in the statement. It had already been given permission to access $505 million worth of equity and debt financing to help it meet obligations.