New York court endorsed Avianca to continue paying its employees | ECONOMY

The Southern District Court of New York approved the first requests for Avianca Holdings after submitting to the bankruptcy law of the United States for a reorganization, which includes the guarantee to “continue paying its employees, agencies and allied suppliers,” the company reported.

“Avianca’s successful first hearing denotes an important achievement in relation to the application for protection under Chapter 11, which will allow it to comply with several urgent payments and maintain operational continuity during the reorganization,” the Colombian flag company said in a statement.

The next hearing will take place on June 11 and the company hopes to “obtain final approvals for all its interim orders,” he added.

“We are very satisfied with the prompt approval of our requests by the Court just one day after starting this process. For Avianca this step means the first of all we will take to keep flying,” said Avianca’s executive president. Holdings, Anko van der Werff, in a statement.

Continuity of operations

Van der Werff acknowledged that the first news about the decision to file for Chapter 11 of the bankruptcy law, “could generate some confusion”, but stressed: “the only thing we want is to protect the continuity of our business by honoring our history” .

The Colombian company announced on Sunday that it decided to file for Chapter 11 of the United States Bankruptcy Code in the Bankruptcy Court of the Southern District of New York due to the “irreversible impact” that the pandemic of coronavirus on your finances.

The company, which since March 23 has been with its planes on the ground due to the ban on flights ordered by the Government, indicated that it took advantage of that instance because this is the most recognized legal procedure in the world and will allow it to restructure under the supervision of the judicial system of U.S.

“We will continue our governmental discussions, and we are confident that, protected by Chapter 11, and with the support of our commercial allies, whom we thank immensely for their unconditionality, we will be able to have a successful result that will strengthen us to continue providing our air transport service. essential in Colombia and Latin America, “added Van der Werff.

Avianca had already filed for Chapter 11 in March 2003 due to another financial crisis that had it on the brink of bankruptcy but successfully concluded that process at the end of 2004, which included an investment agreement with the Brazilian group Synergy, which became the controller.

Approved measures

Among the first applications approved this time to the airline, which last December turned 100, is the one that allows it to meet the work commitments that were due before the application.

Avianca Holdings generates more than 21,000 direct and indirect jobs throughout Latin America, of which more than 14,000 are in Colombia, and works with a network of more than 3,000 suppliers.

In the same way, you will be able to maintain your client programs throughout the process, so that passengers will be able to continue using the company’s services.

It will also be allowed to meet “various obligations prior to May 10, 2020 that are owed to some of its travel agency partners and their suppliers.”

Recovery in three phases

Avianca Holdings assures that it is in the first phase of “the milestones of Chapter 11”, in which it will be able to obtain financing from third parties to obtain additional funds for ongoing operations and to maintain its businesses.

You will then move on to Phase 2, which is the negotiation and development of a reorganization plan, which includes meetings with the official committee of unsecured creditors and the finalization of a long-term strategic business plan.

Phase 3 is the confirmation of the reorganization plan, after which the company will exit Chapter 11 as a reorganized entity.

The company explained that the coronavius ​​pandemic has caused a 90% decrease in global passenger traffic and is expected to reduce industry revenues worldwide by US $ 314 billion, according to estimates by the International Air Transport Association (IATA).

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