The Colombian airline Avianca (AVHOQ) announced that the U.S Bankruptcy Court approved its financing plan for over $2 billion, which should help the airline avert its extinction. It seems that the ongoing airline’s battle for crucial financial injection slowly comes to the end.
Avianca (AVHOQ) received approval from the U.S. Bankruptcy Court for Southern District of New York which enabled the airline to get its financing package of $2 billion, the air carrier announced on October 5, 2020.
Adrian Neuhauser, the Chief Financial Officer of Avianca (AVHOQ) , said that the court’s approval of the debtor-in-possession (DIP) financing package would help the struggling air carrier to make a further step in exiting the Chapter 11 restructuring process.
“As COVID restrictions begin to ease, we are pleased to have safely resumed passenger flights to 21 cities in Colombia and 14 international destinations and look forward to adding more destinations to meet our customers’ travel needs over the coming months,” announced Anko van der Werff, the President and Chief Executive Officer of Avianca (AVHOQ) .
The Colombian airline filed a motion for the financing package in the U.S. Bankruptcy Court on September 22, 2020. At the time, van der Werff said that the airline had already received support from the third-party institutional investors as well as already existing lenders.
The airline got involved in legal disputes after the Colombian court blocked Avianca’s (AVHOQ) loan regarding scandalous information related to kinship ties between President of Colombia Ivan Duque Marquez and a Senior Executive at Avianca (AVHOQ) . The court had argued that the $370 million loan, a part of a $2 billion financing package, could give rise to a conflict of interest.
Avianca (AVHOQ) did not put up its weapons and filed an appeal on the Colombian court’s decision to suspend the payout of the loan. Following the most recent U.S. Bankruptcy Court’s decision to approve the DIP financing package, Avianca (AVHOQ) should have ample liquidity to continue its reorganization process and support its operations in the future.