Creditors object to Delta’s role in Aeromexico bankruptcy financing

Numerous creditors are objecting to Aeromexico’s restructuring plan, claiming the plan is marred by conflicts of interest involving parties including Delta. Central to the objections is an arrangement between Delta Air Lines and Apollo Management Holdings, the finance company providing Aeromexico with $1b in financing as it works through restructuring. Specifically, in November 2020, Delta acquired rights to purchase from Apollo $185m of the $1b debt. Critically, Delta and Apollo have ability to convert debt into stock of the reorganised Aeromexico, and they intend to do so, court papers say. Seven months later, in a 30 June 2021 letter, Delta notified Aeromexico board chair Javier Arrigunaga of the financing arrangement, papers show. As it stands, the deal will leave Delta holding 20% of Aeromexico’s equity when Aeromexico emerges from bankruptcy protection. Apollo will have 22%, papers show. Delta currently owns about half of Aeromexico, and Delta holds two seats on Aeromexico’s board, including one occupied by Delta CE Ed Bastian. Aeromexico parent Grupo Aeromexico filed for bankruptcy protection on 30 June 2020 in US Bankruptcy Court for the Southern District of New York. Some creditors are now opposing the company’s restructuring and financing plans, alleging conflicts of interest. Those creditors have filed objections in court.<br/>