Court upholds decision to suspend Avianca state loan

A Colombian court has upheld its injunction barring the national government from participating in Avianca’s debtor-in-possession financing, but the airline is confident its latest proposal will still be approved by the US bankruptcy court. The Bogota-based carrier last month secured new funding commitments as part of a revised $2b financing package, after previously warning that a decision by the administrative court of Cundinamarca to suspend a $370m loan from the Colombian government had put its earlier DIP funding proposal at risk. In a 30 September filing to the US Securities and Exchange Commission, the airline states that the Colombian court has decided “not to lift its injunction”. While it “has already filed an appeal in respect of this ruling”, Avianca is confident that its restructured DIP proposal will still be given the go-ahead without the government loan. “As previously disclosed, Avianca’s DIP structure contemplates a backstop financing for the $240m portion reserved for the eventual participation by governments, and is not contingent on the injunction being lifted before DIP financing approval,” says the filing.<br/>