Latvian government reports airBaltic Chapter 11 proceedings in US court
The Latvian government reported that Latvia’s national airline airBaltic initiated Chapter 11 proceedings in a US court on September 14 to review its debt burden and restructure its obligations. LSM English reports.
Protection from creditors’ claims
Latvian Prime Minister Andris Kulbergs said that the Chapter 11 procedure is intended to provide the airline with protection from lenders’ and creditors’ claims, as well as time to implement a restructuring plan. According to him, airBaltic will be able to continue its daily operations throughout the process.
Chapter 11 is a court procedure in the United States that allows companies to continue operating, restructure contracts, and obtain financing. airBaltic is based in the European Union and does not operate flights to or within the United States.
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Restructuring plan
Kulbergs said that the restructuring plan was developed by airBaltic’s strategic and financial adviser Seabury Securities, with the involvement of Barclays, Hayfin Capital Management, Morgan Stanley, Oaktree Capital, and Strategic Value Partners. He also noted that negotiations with bondholders holding 70% of the debt had been difficult.
According to the prime minister, a proposed loan of up to €257 million at an annual interest rate of 25% could have been only a short-term solution and would not have resolved the problems of old debts and leasing obligations. The Latvian government sought to find a mechanism that would allow the carrier to continue operating without repeated emergency loans.
airBaltic CEO Erno Hilden had previously successfully managed SAS’s restructuring together with Seabury Securities consultants under the Chapter 11 procedure, LSM English notes. Kulbergs assured that airBaltic flights would continue, purchased tickets would remain valid, and employees would continue working.
