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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.

Aeromexico on Friday won court approval of its restructuring plan after the airline struck a deal with the remaining holdouts among its creditors, clearing the way for it to emerge from bankruptcy with new controlling shareholders, Reuters reported. "I could not be more pleased to tell you the plan of reorganization is confirmed," U.S. Bankruptcy Judge Shelley Chapman said soon after the agreement to pay a settlement to the creditors was announced during a court hearing. Her approval of the plan allows Aeromexico, one of three major Latin American airlines to seek court protection from creditors during the pandemic, to complete the bankruptcy process, which has been ongoing since June 2020. Aeromexico shares were up 17% on Friday, although those gains did not appear to reflect the creditor deal and final approval, which came as the market was about to close. The plan provides for new infusions of capital into Aeromexico. Apollo Global Management, a frequent investor in distressed companies, will be the largest shareholder. Delta Air Lines Inc., an existing equity holder, is expected to have a 20% stake in the company once the plan is implemented. The deals struck on Friday brought in support from a group of junior creditors who had opposed what they argued was overly beneficial treatment for Delta and four Mexican individual investors.

Grupo Aeromexico SAB de CV is nearing the finish line of its restructuring with a proposed plan to reduce debt by more than $1 billion, but must first overcome opposition from junior creditors who say existing shareholder Delta Air Lines, among others, is benefiting from the deal at their expense, Reuters reported. The Mexican airline, after nearly two years in bankruptcy, will make its case for the plan in a New York bankruptcy court on Jan. 27. Aeromexico, which in June 2020 filed for chapter 11 protection in the United States with $2 billion in debt, says it has secured the votes needed from its creditor classes to move forward with the deal despite lingering objections from some groups. The plan, which Aeromexico says will result in a total enterprise value of $5.4 billion and preserve 13,000 jobs, would give its largest creditor, Apollo Global Management, the largest stake here in the company. But the committee representing general unsecured creditors, some of whom could see just pennies on the dollar, says the plan unfairly benefits insiders. The committee, which includes a pilots union, Falko Regional Aircraft Limited, Nordic Aviation Capital and the trustee to a group of noteholders, argues that the deal must be held to higher standards than a typical chapter 11 settlement because insiders are involved. It said the voting results only show one class of general unsecured creditors in support of the plan because the company used a “loophole” to value certain claims lower than what the creditors say they are worth. Aeromexico, however, said creditors could have challenged that arrangement before the voting procedures were approved but failed to do so.