Aeromexico reaches $40m deal with creditors in bankruptcy exit boost

Grupo Aeromexico has reached a $40m deal with a group of unsecured creditors to withdraw their objection to the airline's bankruptcy restructuring plan, Aeromexico's lead counsel said on Thursday. The move is the first step in what is likely to be a days-long Chapter 11 bankruptcy hearing out of New York. Despite the agreement with the unsecured creditors' committee, objections still remain from an ad hoc group of junior creditors, most notably Invictus Global Management. As part of the deal, Aeromexico offered the unsecured creditors potential distributions from a four-year, $40m "contingent value right" note which would dole out cash distributions as long as Aeromexico outperforms its targets, counsel Timothy Gaulich of Davis Polk & Wardwell said. "That is very good news indeed," U.S. Bankruptcy Judge Shelley Chapman said after the deal was announced. Aeromexico, which filed for Chapter 11 bankruptcy protection in New York in June 2020, on Thursday began making its case to Chapman for its restructuring proposal, which would infuse new capital into the company and make Apollo Global Management, a frequent investor in distressed companies, the largest shareholder. Though the airline has lined up the support it says it needs from its multiple creditor groups, some still say the plan should not be approved unless junior creditors, some of whom may see just pennies on the dollar, receive better recoveries.<br/>