Latam Airlines disclosure statement draws objection from U.S. trustee

By Sarah Lizee

Olympia, Wash., Jan. 7 – Latam Airlines Group, SA’s disclosure statement for its Chapter 11 plan drew an objection on Friday from Region 2 U.S. trustee William K. Harrington, according to a filing with the U.S. Bankruptcy Court for the Southern District of New York.

Harrington said the statement should be denied because the plan fails to provide an opt-in procedure in order to impose non-consensual third-party releases upon creditors and equity interest holders.

The U.S. trustee said that while seeking to implement the “disfavored” opt-out procedure, the disclosure statement fails to provide creditors and equity interest holders with enough information to allow them to make an informed choice as to whether to approve or reject the plan.

The statement should also provide more information to determine whether the management incentive plan complies with bankruptcy code, Harrington added.

Latam Airlines is a Santiago, Chile-based airline. The company filed bankruptcy on May 25, 2020 under Chapter 11 case number 20-11254.

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