Aeromexico said on Friday a group of Mexican shareholders and business people had informed the airline they aimed to participate in a major capital raising as part of the company's chapter 11 restructuring process in the United States, Reuters reported. Aeromexico in a statement said it was unaware that any agreement had been reached so far, but would provide details as and when one was in place. It also noted it expected the investment to be "substantial, controlling and long-term." Delta Airlines, which owned a noncontrolling 51% stake in Aeromexico as of Dec. 31, declined to comment. Delta took a $770 million charge on its investment last year after the carrier's chapter 11 bankruptcy filing. Aeromexico did not provide details on the identity of the shareholders and business people.
Distressed-investment manager MatlinPatterson Global Advisers LLC placed two of its funds in bankruptcy in an effort to shield their assets from foreign litigation while it liquidates them and returns the proceeds to investors, WSJ Pro Bankruptcy reported. Yesterday’s bankruptcy filing covers MatlinPatterson Global Opportunities Partners II LP, as well as an affiliated Cayman Islands fund, which face legal actions in Brazil that have prevented them from returning money to investors, according to papers filed in the U.S. Bankruptcy Court in New York. The funds raised $1.65 billion, primarily from insurance companies, pension funds and other institutional investors to invest in financially distressed companies across industries including chemicals, security, fashion, and electronics, according to a declaration filed by the funds’ chief restructuring officer Matthew Doheny. Beginning in 2013, MatlinPatterson began to wind up the funds, liquidating their investments to return money to their investors. As of June 30, the funds had approximately $142 million in cash, held in bank accounts in the U.S., and $58 million of debt in the form of intercompany promissory notes, Mr. Doheny said. The two funds are facing an arbitration award against them in Brazil that has been upheld by a Cayman Islands court. The funds are also targets of litigation over their former Brazilian investment vehicle, as well as an enforcement proceeding in a Brazilian court based on an allegation they were responsible for the “disappearance” of some money in a Brazilian bankruptcy proceeding, according to Mr. Doheny. The three Brazilian legal claims amount to more than $400 million, surpassing the amount of cash in the funds’ bank accounts, Mr. Doheny said. He said the claims were meritless and that some have been fully released in accordance with U.S. law. The litigation in Brazil could drag on for years, he added.
Treasury Secretary Janet Yellen announced that a group of 130 nations has agreed to a global minimum tax (GMT) on corporations, part of a broader agreement to overhaul international tax rules, CNBN reported. If widely enacted, the GMT would effectively end the practice of global corporations seeking out low-tax jurisdictions like Ireland and the British Virgin Islands to move their headquarters to, even though their customers, operations and executives are located elsewhere. The deal also reportedly includes a framework to eliminate digital services taxes, which targeted the biggest American tech companies. In their place, officials agreed to a new tax plan that would be linked to the places where multinationals are actually doing business, rather than where they are headquartered. Much of the groundwork for adopting a GMT has already been laid by the Organization for Economic Cooperation and Development (OECD), which released a blueprint last fall outlining a two-pillar approach to international taxation. The OECD Inclusive Framework on Base Erosion and Profit Shifting (BEPS) is the product of negotiations with 137 member countries and jurisdictions. Yellen’s announcement did not include the actual rate at which the GMT would be set, but the Biden administration has pushed for at least 15 percent. G-20 finance ministers and central bank governors are scheduled to meet in Venice, Italy, later this month, and the international tax plan is expected to be high on the agenda. The GMT agreement represents a key part of what President Joe Biden has called “a foreign policy for the middle class.” The strategy emphasizes how foreign policy and domestic policy can be integrated into a new middle ground between the traditional conservative and liberal approaches to global affairs.
Corp Group Banking SA, a Chilean financial holding company controlled by billionaire Alvaro Saieh, filed for bankruptcy after the coronavirus pandemic sparked an economic slowdown that worsened fortunes in the banking sector, Bloomberg News reported. The Santiago-based company on Friday sought chapter 11 protection from creditors in the Bankruptcy Court for the District of Delaware. The move was expected after the company skipped an interest payment last year on $500 million of 6.75% notes due 2023 and didn’t cure it when a grace period expired Oct. 15. Corp Group Banking failed to meet its payments after the pandemic and social unrest in Chile affected operations at its main operating unit, lender Itau CorpBanca, a bank in which it owns a 26.6% stake. Amid a severe economic downturn, Itau suspended dividend payments that Corp Group relied on to meet obligations. Saieh, who owns one of Chile’s largest conglomerates with stakes in media, retail, real estate, and hotels, agreed in 2014 to sell his controlling stake in Corpbanca to Itau Unibanco Holding SA for $1.8 billion. Itau Corpbanca announced earlier this month a plan to sell as much as $1.15 billion in new shares to meet Basel III capital requirements.
Mexican airline Grupo Aeromexico said on Tuesday the U.S. Bankruptcy Court for the Southern District of New York, presiding over its chapter 11 restructuring process, gave it 75 more days to present a reorganization plan, Reuters reported. “The court approved the extension because, among other reasons, of the good progress the company has made with its restructuring,” Aeromexico said.
EAGLE Hospitality Real Estate Investment Trust (EH-Reit), which is part of Singapore-based Eagle Hospitality Trust (EHT), has received net proceeds of about U.S. $153.9 million following the sale of five chapter 11 properties, the Singapore Business Times reported. The net proceeds have been partially used to repay the debtor-in-possession facility and the stalking horse "break up" fee, EH-Reit trustee DBS Trustee said in a bourse filing on Thursday. The balance remaining is around $109.7 million, which will go to repaying ongoing post-petition expenses and pre-petition creditors. This includes some $380 million under a pre-petition facilities agreement, as well as claims from trade creditors against these entities which DBS Trustee said cannot be quantified at this time. "To the extent any value remains, other junior creditors would be paid," it added. The sale of four properties under chapter 11 protection for $117.2 million was completed on June 3. These assets were Sheraton Denver Tech Center, Four Points by Sheraton San Jose Airport, Embassy Suites by Hilton Anaheim North, and Double Tree by Hilton Salt Lake City. Hilton Atlanta Northeast was later sold for $37.9 million on June 8.
LATAM Airlines Group, the region’s largest carrier, said on Wednesday that it had sought to extend until September the deadline to present its restructuring plan as part of the bankruptcy protection process initiated in 2020, Reuters reported. LATAM filed for bankruptcy protection in the U.S. in May of last year, hammered by the world travel crisis generated by the coronavirus pandemic. At the time, it was the world’s largest airline to take such action due to COVID-19. A judge had previously ordered the company deliver its restructuring plan by the end of June, and the company has said it hopes to wrap up the process in 2021. Latam also told Chilean securities regulators it has requested a second disbursement for $500 million under its DIP credit agreement. The airline said that the additional funds were necessary given “the extension of the health and mobility restrictions imposed by the authorities in the different countries in that the Company operates, as well as the analysis of the Company’s liquidity projection." The company also received a $1.15 billion debtor-in-possession loan in October last year. Earlier on Wednesday Latam said it expects to ramp up its June operations to 36% of their pre-coronavirus pandemic levels, bolstered by the quickening pace of vaccination in some countries in the region.
Recent Supreme Court authority supports the conclusion by Delaware’s Judge Sontchi that law from the jurisdiction of incorporation, not federal common law, determines what is or isn’t a business trust eligible for chapter 11.
Latam Airlines Group SA Chief Executive Roberto Alvo, seeking to stave off an overture from rival Azul SA, said the bankrupt air carrier’s Brazilian operations aren’t for sale, Bloomberg News reported. Santiago-based Latam, which has now been in U.S. bankruptcy for more than a year, has its sights set on a strong chapter 11 exit — not a piecemeal sale of the business, Alvo said in an interview Wednesday. The carrier’s shares briefly slumped last week after it denied reports that Azul SA planned to buy Latam’s Brazilian subsidiary. While Alvo said he is “absolutely not” selling the Sao Paulo-based unit to the low cost competitor, Azul is now waiting to evaluate Latam’s bankruptcy exit plan and may propose the acquisition offer directly to Latam creditors. Azul has unsuccessfully floated to Latam executives the idea of carving out the domestic Brazil network, according to the person. Under the proposal, Latam, the largest airline in Latin America, would have been left to focus on business elsewhere in the region while maintaining links to the route network in Brazil.
