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Law360 (August 20, 2020, 7:01 PM EDT) -- Bankrupt Mexican airline Grupo Aeromexico SAB de CV received interim approval Wednesday from a New York bankruptcy judge to borrow a portion of a $1 billion Chapter 11 loan being provided by Apollo Global Management Inc.
U.S. Bankruptcy Judge Shelley C. Chapman gave her permission for Aeromexico to access $100 million of the debtor-in-possession financing being extended by Apollo Global that will help fund the debtor's operations during the bankruptcy case.
"The court approval obtained today was a critical milestone in the ongoing restructuring process for Aeromexico, and a recognition from all interested parties of Aeromexico's solid operating business and proven strategy," Aeromexico CEO Andres Conesa said in a statement. "The DIP facility will provide us with liquidity to meet our future obligations in a timely and orderly fashion, and to continue with our operations during and after the voluntary restructuring process. We recognize and appreciate the continuing support from all stakeholders."
The DIP package consists of two tranches of loans. The interim advance will come out of a $200 million Tranche 1 facility, while the remainder of that tranche as well as an $800 million Tranche 2 facility will be made available upon final court approval of the entire package. Aeromexico anticipates receiving that final approval by the end of September.
Judge Chapman also approved the debtor's request to pay the claims of its critical vendors and to honor existing agreements with airlines that form the backbone of Aeromexico's international operations.
Aeromexico filed for bankruptcy June 30, saying COVID-19 travel restrictions had drastically reduced the demand for air travel.
Last month, the company got the nod from the bankruptcy court to reject leases for 19 aircraft — or 15% of its fleet — that it said it doesn't need for its go-forward business plans.
Aeromexico is represented by Marshall S. Huebner, Timothy Graulich, James I. McClammy and Stephen D. Piraino of Davis Polk & Wardwell LLP.
The case is In re: Grupo Aeromexico SAB de CV, case number 1:20-bk-11563, in the U.S. Bankruptcy Court for the Southern District of New York.
--Additional reporting by Rick Archer. Editing by Stephen Berg.
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