Aeromexico creditors claim restructuring plan undervalues airline by $1b

Unsecured creditors in Aeromexico’s US bankruptcy reorganization oppose a modified plan that, they claim, unfairly benefits Delta and other more senior creditors. The unsecured creditors committee argue that the plan, which includes nearly $1.5b in new equity and debt and estimates an enterprise value of $5.4b, understates the value of Aeromexico, according to documents filed with the US Bankruptcy Court for the Southern District of New York late on Thursday. By its estimates, the proposal undervalues the restructured carrier by roughly $1b. “The committee believes that the plan does not reflect the fair market value of [Aeromexico] due to the debtors’ flawed exit financing process,” they said. In addition, the committee claims that “insiders” in the restructuring process — including Delta and Mexican institutional investors — had undue sway in the formulation of the plan that will give them payouts in excess of their claims while short-changing less senior creditors. Aeromexico is not alone in struggling to find a mutually agreed upon restructuring plan. Latam Airlines Group, which is also operating under US Chapter 11 protection, faces similar strife in its own reorganization. After successfully fending off a hostile takeover attempt by Brazil’s Azul, Latam faces objections to its restructuring plan from a number of Chilean creditors. They too claim that the plan under values their claims to the benefit of others, including Delta that also owns an equity stake in the Chilean airline group. <br/>