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After Avianca communicated its Voluntary Filing for Chapter 11 Bankruptcy Code in the United States in the Court of the Southern District of New YorkDue to its complicated financial situation, a lot of uncertainty has been generated in the country about what will be the future of the Colombian airline, which is, in turn, the second largest in Latin America.
This is due to its multiple debts with international and Colombian creditors, which have been complicated due to the travel restrictions imposed to stop the expansion of the Covid-19, which has ostensibly damaged Avianca’s box, leading it to declare bankruptcy.
Also read: Avianca shares will continue to be traded on the Colombian Stock Exchange
Among the main creditors are Wilmington Savings Fund Society who has guarantees for US $ 484 million due to a high bond holding with Avianca, UMB Bank with US $ 325 million, Wells Fargo Bank with $ 271 million, ING Capital LLC with US $ 124 million and Banco de Bogotá with US $ 107 million, as consolidated by an analysis of Davivienda Corredores.
Other minor creditors without specific guarantees include Agricultural bank (a subsidiary of Bancolombia in Central America), Bancolombia and Terpel.
Davivienda Corredores analyzed the situation for the airline and explained that this is a temporary process that, according to United States legislation, allows a company to reorganize and complete a financial restructuring under the supervision of the country’s judicial system, while It continues its operations under the leadership of its Board of Directors and management team.
Avianca’s reorganization process under Chapter 11 consists of three phases that would take place over an estimated period of 12-18 months.
The first of these corresponds to the request of Chapter 11 that has already been accepted, would follow with a negotiation plan and reorganization plan and, finally, the confirmation of this plan.
Also read: Avianca decides to liquidate its subsidiary in Peru
As of 2019, Avianca accumulated debts of nearly US $ 5 billion, total assets of US $ 7,274 million and net worth of US $ 5.2 million, for which reason we consider that once the reorganization of the company ends, the current shareholders would be highly affected and even the possibility that there would be a remaining capital to the shareholders is practically null. Additionally, its current creditors, especially bondholders, may incur lengthening of the debt amortization dates, as well as financial losses, “concluded Davivienda Corredores.
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