Grupo Aeroméxico, S.A.B. de C.V. – Further to Apollo/Delta Backed “Alliance Proposal,” Files Second Revised Plan and Disclosure Statement with Revised Exit Financing Already Facing Opposition; Aims for January 27th Plan Confirmation Hearing

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November 29, 2021 – The Debtors filed a second revised Plan and Disclosure Statement [Docket No. 2184 and 2186, respectively]; and separately filed blacklines of each showing changes to the versions filed on October 15, 2021 [Docket Nos. 2187 and 2188].

On November 11th (U.S. press release dated the 12th), Aeroméxico announced that it had: "received a joint proposal (the 'Alliance Proposal') from its lenders under Tranche 2 of our DIP financing facility [ie Apollo] and from certain existing creditors and new money investors with whom the Company was prepared to enter into commitment papers upon court approval thereof. The Alliance Proposal has the support of our strategic partner Delta Air Lines and provides an implementable solution, through a solid group of long-term Mexican investors, to comply with foreign ownership requirements.  The Board of Directors of the Company has approved, among other matters, instructing the Company's restructuring advisors to prepare, in coordination with advisors for the key stakeholders, a revised version of the Chapter 11 Joint Plan of Reorganization (the 'Plan') and the disclosure statement with respect to the Plan (the 'Disclosure Statement'), including any supplements and exhibits related thereto, reflecting the terms of the Alliance Proposal."

As proposed, the Plan would leave the "Equity Financing Commitment Parties," Apollo, Delta and the Mexican Investors with 26.9%, 22.38%, 20.0% and 4.1%, respectively, of the emerged Debtors new common stock. The Equity Financing Commitment Parties (ie Delta, the BSPO  Investors, the Noteholder Investors, the Claimholder Investors, the Mexican Investors and any parties to the Debtors' "Equity Financing Commitment Letter") are in line for a 15% "Equity Commitment Premium" based on their contributions to the $720.0mn of equity financing. Apollo is also in line for "(i) $150 million in cash and (ii) accrued interest under the DIP Credit Agreement at the Applicable Margin (as defined in the DP Credit Agreement) of 14.5% on the outstanding obligations to Apollo under the Tranche 2 DIP Facility commencing December 31, 2021 through the Effective Date, payable in Cash."

The Debtors' aspirations for the amended Plan (and its proposed exit financing) are somewhat complicated by the November 26th filing [Docket No. 2178] of an objection to that exit financing by an ad hoc group of OpCo creditors (the “Ad Hoc Group,” comprised of Invictus Global Management, LLC, Corvid Peak Capital Management LLC, Hain Capital Group, LLC and Livello Capital Management LP and holding in aggregate an estimated $131.0mn of debt [Docket No. 2179]) which argues that its own alternative exit financing proposal "provides a consensual path towards exiting chapter 11 while at the same time distributing value fairly across the capital structure, including to fulcrum general unsecured claims holders ('GUC Holders') and increasing plan value by $450 million…[and] leaves unaltered the negotiated economic rights of certain key parties (Delta, Apollo, and significant Mexican shareholders) and provides markedly improved recoveries for the fulcrum class of GUC Holders — i.e., increasing the recovery range from 14-14.5% to up to 29-31%." The objection attaches a comparison chart and the November 21st alternative exit term sheet that the Ad Hoc Group shared, without result, with the Debtors.

Plan Overview

On June 30, 2020. Grupo Aeroméxico, S.A.B. de C.V. and three affiliated Debtors (BMV: AEROMEX; “Aeroméxico” or the “Debtors,” the holding company for Mexico’s largest airline and 51.3% owned by Delta Airlines, Inc.) filed for Chapter 11 with estimated assets between $1.0bn and $10.0bn; and estimated liabilities between $1.0bn and $10.0bn (funded debt of almost $2.1bn, see chart below). 

Aeroméxico was the third Latin American airline to file for Chapter 11 protection in a short span, with Colombia’s flag carrier Avianca Holdings SA filing for chapter 11 on May 10th (NYSD: 20-11133) and Chile’s Latam Airlines Group SA following suit two weeks later (NYSD: 20-11254). In each case, the debtors cited the near complete cessation of activities resulting from the COVID-19 pandemic as the catalyst for the Chapter 11 filings. Also true, however, was that each airline arrived at Chapter 11 with similar pre-existing conditions: fleet and debt structures that were unsustainable…with Chapter 11 offering a solution to this “too many planes” problem through the rejection of onerous contractual relationships and the enhanced negotiating strength that accompanies that ability to reject.

Aeroméxico now becomes the second of the trio to file a plan over the course of the last few days (Latam having filed on November 26th), with each of the two Plans detailing considerably evolved post-emergence capital structures. No mention in either as to the potential impact of the Omicron variant; fingers clearly crosses that that potential turbulence will be avoided. 

The Aeroméxico Debtors will ask the Court to approve the Apollo led exit financing at a December 6th hearing and are now targeting a January 17, 2022 Plan confirmation hearing.

The Second Revised Disclosure Statement [Docket No. 2186] states, “As part of the restructuring:

  • The Debtors performed a robust market-check to determine the value of the Reorganized Debtors. As a result, the Debtors received multiple exit financing proposals from various creditors, groups of creditors and third-party investors. In fact, the Debtors and their advisors spent the past several months negotiating with the various exit financing proponents, the Creditors’ Committee, Delta and certain Mexican Investors so that the Debtors could emerge from these Chapter 11 Cases positioned for long-term success, while also maximizing recoveries for all creditors.
  • The Board of Directors authorized the Company to proceed with the Apollo-Creditor Exit Financing Proposal (as defined below) based on the advice from all of its restructuring advisors, as it contemplates the greatest recovery to the Debtors’ creditors, has the broadest creditor support and, importantly, is fully implementable.
  • As more fully explained in Article IV below, the Apollo-Creditor Exit Financing Proposal will provide the Reorganized Debtors with $720 million of new equity capital through the issuance of new equity and up to $762.5 million of new debt capital through the issuance of senior secured first lien notes. The Apollo-Creditor Exit Financing Proposal is the best available source of liquidity for the Debtors to repay the Tranche 1 DIP Loan and any portion of the Tranche 2 DIP Loan that is not converting into reorganized equity, convert the already invested Tranche 2 DIP Loan into reorganized equity, maximize creditor recoveries, sustain ongoing operations and emerge successfully from chapter 11 with sufficient capital.
  • The proceeds of the Equity Financing and Debt Financing (collectively, the ‘Exit Financing’) will be used to, among other things, (i) repay the Tranche 1 DIP Facility, (ii) fund a $150 million cash payment to Apollo to, in part, discharge Tranche 2 DIP Facility Claims, (iii) fund a cash payment of $450 million to unsecured creditors, and (iv) finance the PLM Stock Participation Transaction, if consummated.
  • As discussed in greater detail below, the Plan authorizes (but does not require the Debtors to consummate) the PLM Stock Participation Transaction, pursuant to which PLM would become a wholly-owned subsidiary of Grupo Aeroméxico. In addition, the Plan provides for the Debtors’ assumption of the Club Premier Agreements. If the Company elects to consummate the PLM Stock Participation Transaction, the Exit Financing provides $375 million in financing to fund such transaction.
  • Holders of General Unsecured Claims are entitled to vote and receive, depending on the Debtor or Debtors against whom such Holder has a Claim or Claims, New Stock or Cash (or in certain circumstances a combination thereof) under the Plan. If confirmed and consummated, the Plan will provide Holders of:
    1. Aerovías and Grupo Aeroméxico Recourse Claims against Aerovías and Grupo Aeroméxico an aggregate recovery of 100%
    2. General Unsecured Claims against Grupo Aeroméxico a projected recovery of between approximately 84% to 85%;
    3. General Unsecured Claims against Aerovías with a projected recovery of between approximately 16% to 15%;
    4. General Unsecured Claims against Aeroméxico Connect with a projected recovery of between approximately 3% to 3%; and
    5. General Unsecured Claims against Aeroméxico Cargo with a projected recovery of 17% – 16%.
  • Holders of Unsecured Convenience Class Claims are entitled to vote and receive, depending on the Debtor or Debtors against whom such Holder has a Claim or Claims, Cash under the Plan. If confirmed and consummated, the Plan will provide Holders of:
    1. Unsecured Convenience Class Claims against Grupo Aeroméxico a projected recovery of between 100%;
    2. Unsecured Convenience Class Claims against Aerovías a projected recovery of between approximately 30% to 29%;
    3. Unsecured Convenience Class Claims against Aeroméxico Connect a projected recovery of between approximately 30% to 29%;
    4. Unsecured Convenience Class Claims against Aeroméxico Cargo a projected recovery of between approximately 30% to 29%.
  • Aeroméxico has been able to leverage the chapter 11 process to effectively transform its businesses and simplify its balance sheet. As contemplated by the Plan, the Company will eliminate approximately $1.1 billion of debt from the Debtors’ consolidated balance sheet. At the same time, as a result of its reorganization Grupo Aeroméxico has improved the customer experience and expects to emerge from bankruptcy as a strong, competitive and global airline that continues to connect Mexico with the world. In particular, Aeroméxico expects to be the airline of choice for business and leisure customers by offering a best-inclass customer experience on the ground and in the air. Aeroméxico expects to remain focused on maintaining the competitive cost structure it has obtained through its reorganization in order to improve its financial position and pursue long-term stability and growth.”

Exit Financing Outcome 

The Disclosure Statement now provides: “After many months of tireless negotiations, on November 11, 2021, the Debtors received a joint proposal from Apollo, certain members of the Ad Hoc Group of Senior Noteholders and the BSPO Investors. Further, on November 19, 2021, the Debtors filed the Supplement to Debtors’ Exit Financing Motion and Notice of Filing of Revised Equity and Debt Commitment Letters [ECF No. 2168] (the ‘Revised Exit Financing Documents’), which provides for exit financing (the ‘Apollo-Creditor Exit Financing Proposal’) from certain members of the Ad Hoc Group of Senior Noteholders, the BSPO Investors, Apollo, certain members of the Unsecured Claimholders Group, certain other holders of unsecured claims, the Mexican Investors and Delta. The Debtors’ Board of Directors elected to proceed with the Apollo-Creditor Exit Financing Proposal as the basis for the Plan since it is executable, provides robust creditor recoveries and ensures the highest likelihood of a timely exit from bankruptcy. Broadly, the Apollo-Creditor Exit Financing Proposal will provide for, among other things, the following:

  • Electing Tranche 2 DIP Lenders will convert their Tranche 2 DIP Facility Claims into New Stock.
  • The DIP Credit Agreement Amendment that, among other things, permits the proposed restructuring on the terms set forth in the Term Sheet annexed to the Equity Financing Commitment Letter and amends the Milestones (as defined in the DIP Credit Agreement) under the DIP Credit Agreement to the extent necessary to comply with the timeline as set forth in the Term Sheet.
  • New equity commitments of $720 million of new equity (the ‘Equity Commitments’). The Equity Financing Commitment Parties will receive, in aggregate, 15.0% of the Committed Equity Amount, payable in New Stock on the Effective Date (the ‘Equity Commitment Premium’) in exchange for their Equity Commitments.
  • The Equity Financing Commitment Parties, Apollo, Delta and the Mexican Investors shall receive 26.9%, 22.38%, 20.0% and 4.1%, respectively, of the New Stock on the Effective Date (in each case subject to the Specified Dilution).
  • New debt commitments to purchase New First Lien Notes in the aggregate principal amount of up to $762.5 million (the “Exit Debt Commitments”); provided, however, that certain Debt Financing Commitment Parties and/or other third party investors may provide alternative exit debt financing in lieu of the Exit Debt Commitments contemplated by the Debt Financing Commitment Letter through a syndication expected to be arranged by JPMorgan on terms reasonably satisfactory to the Debtors, the Required Equity Commitments Parties, Delta and Apollo (such exit financing, if applicable, the ‘Alternative Exit Debt Financing’).
  • In connection with the commitment to purchase the New First Lien Notes, the Debt Financing Commitment Parties are entitled to a commitment premium (the ‘Debt Commitment Premium’ and, together with the Equity Commitment Premium, the ‘Commitment Premiums and Fees’) payable to such Debt Financing Commitment Parties in cash, equal, in the aggregate to 1.0% of the Exit Debt Commitments. Further, the Debtors are responsible for the payment in cash of all reasonable fees and reasonable documented out-of-pocket expenses of the Debt Financing Commitment Parties and their professionals, in each case as set forth in the Debt Financing Commitment Letter (the ‘Debt Commitment Party Expense Reimbursement’). Finally, the Debt Financing Commitment Letter contains certain customary indemnification provisions.
  • The payment in cash of all reasonable and documented fees, costs and expenses, of each of the Equity Financing Commitment Parties or of the advisors, consultants and other professionals, including counsel, financial advisors and investment banking professionals engaged by the Equity Financing Commitment Parties in connection with, among other things, the Plan, the Chapter 11 Cases, the Mediation, and the Exit Financing Documents; provided, however, with respect to the Unsecured Claimholder Group professionals, the Debtors shall only pay the reimbursed fees and expenses of Gibson, Dunn & Crutcher LLP, Rico, Robles Libenson S.C., Glenn Agre Bergman & Fuentes LLP (in an aggregate amount not to exceed $350,000) and KPMG Cardenas Dosal, S.C. (in an aggregate amount not to exceed $40,000). Moreover, the Debtors shall pay (a) an additional financing fee in the aggregate amount of $4.5 million to Ducera Partners LLC and Banco BTG Pactual SA and (b) an all-in-fee in the aggregate amount of $1.7 million to Moelis & Company.
  • The reimbursement and payment of the Mexican Investors’ reasonable costs and expenses, incurred in connection with, among other things, the Plan, the Term Sheet and the Restructuring Transactions generally.
  • Apollo shall receive on the Effective Date, in addition to its allocation of New Stock, (i) $150 million in cash and (ii) accrued interest under the DIP Credit Agreement at the Applicable Margin (as defined in the DP Credit Agreement) of 14.5% on the outstanding obligations to Apollo under the Tranche 2 DIP Facility commencing December 31, 2021 through the Effective Date, payable in Cash.
  •  Finally, the Equity Financing Commitment Letter and Subscription Agreement contain certain customary indemnification provisions."

The following is an amended summary of classes, claims, voting rights and expected recoveries (defined terms are as defined in the Plan and/or Disclosure Statement, see changes in bold, see also the Liquidation Analysis below). Under the Plan, Holders of claims in Classes 3(a), 3(b), 3(c), 3(d), 3(e) 4(b), 4(c), and 4(d) are impaired and are entitled to vote on the Plan. :

  • Class 1 (“Secured Claims against the Debtors”) is unimpaired, presumed to accept and not entitled to vote on the Plan. The aggregate amount of claims is $635.0mn – $656.0mn and expected recovery is 100%.
  • Class 2 (“Other Priority Claims against the Debtors”) is unimpaired, presumed to accept and not entitled to vote on the Plan. The aggregate amount of claims is $200k – $1.0mn and expected recovery is 100%.
  • Class 3(a) (“Aerovías and Grupo Aeroméxico Recourse Claims”) is impaired and entitled to vote on the Plan. Estimated claims are $685.6.0mn – $686.0mn and estimated recovery is 100%-100%. Each Holder of an Allowed Aerovías and Grupo Aeroméxico Recourse claim shall receive, at its option, either its Pro Rata share of (i) each of the Grupo Aeroméxico New Stock Allocation and the Aerovías New Stock Allocation or (ii) the Aerovías/Grupo Claimholder Cash Pool; provided that if the elections made by holders of Class 3(a) Claims would result in (x) less than the full amount of the Aerovías/Grupo Claimholder Cash Pool being distributed, such remaining amount (the “Remaining Cash Pool”) shall be allocated to Classes 3(b), 3(c), 3(d) and 3(e) based upon the same allocation of New Stock to such Classes and correspondingly reduce the amount of New Stock to be received by the Holders of Allowed Claims in such Classes in an amount equal to such portion of the Remaining Cash Pool allocated to such Classes, and such New Stock instead shall be distributed to the Holders of Allowed Class 3(a) Claims that elect to receive New Stock so as to effectuate the last sentence of this paragraph or (y) more than the full amount of the Aerovías/Grupo Claimholder Cash Pool being distributed, such elections shall be reduced Pro Rata and each Holder of an Allowed Class 3(a) Claim shall receive additional New Stock in lieu of such reduced amount received from the Aerovías/Grupo Claimholder Cash Pool]. [The aggregate value of the consideration to be received by Holders of Allowed Class 3(a) Claims will be in an amount equal to the full amounts due and owing on account of such Claims as of the Petition Date, including any accrued and unpaid interest as of the Petition Date, but excluding any interest accruing after the Petition Date].
  • Class 3(b) (“General Unsecured Claims against Grupo Aeroméxico”) is impaired and entitled to vote on the Plan. Estimated claims are $95.0mn – $100.0mn and estimated recovery is 84% – 85%. Each Holder of an Allowed General Unsecured Claim against Grupo Aeroméxico shall receive its Pro Rata share of the Grupo Aeroméxico New Stock Allocation, and, if applicable, its Pro Rata Share of the Remaining Cash Pool allocated to Class 3(b); provided, that cash received from the Remaining Cash Pool will correspondingly reduce the amount of New Stock to be received.].
  • Class 3(c) (“General Unsecured Claims against Aerovías”) is impaired and entitled to vote on the Plan. Estimated claims are $1.719bn – $1.939bn and estimated recovery is 16% – 15%. Each Holder of a General Unsecured Claim against Aerovías shall receive its Pro Rata share of the Aerovías New Stock Allocation and, if applicable, its Pro Rata Share of the Remaining Cash Pool allocated to Class 3(c); provided, that cash received from the Remaining Cash Pool will correspondingly reduce the amount of New Stock to be received.]
  • Class 3(d) (“General Unsecured Claims against Aeroméxico Connect”) is impaired and entitled to vote on the Plan. Estimated claims are $419.0mn – $457.0mn and estimated recovery is 3% – 3%. Each Holder of a General Unsecured Claim against Aeroméxico Connect shall receive its Pro Rata share of the Aeroméxico Connect New Stock Allocation and, if applicable, its Pro Rata Share of the Remaining Cash Pool allocated to Class 3(d); provided, that cash received from the Remaining Cash Pool will correspondingly reduce the amount of New Stock to be received.].
  • Class 3(e) (“General Unsecured Claims against Aeroméxico Cargo”) is impaired and entitled to vote on the Plan. Estimated claims are $1.2mn – $1.5mn and estimated recovery is 17% – 16%. Each Holder of a General Unsecured Claim against Aeroméxico Cargo shall receive its Pro Rata share of the Aeroméxico Cargo New Stock Allocation and, if applicable, its Pro Rata Share of the Remaining Cash Pool allocated to Class 3(e); provided, that cash received from the Remaining Cash Pool will correspondingly reduce the amount of New Stock to be received.].
  • Class 4(a) (“Unsecured Convenience Class Claims against Grupo Aeroméxico”). is unimpaired, presumed to accept and not entitled to vote on the Plan. The aggregate amount of claims is $100.0K – $200.0K and expected recovery is 100%.
  • Class 4(b) (“Unsecured Convenience Class Claims against Aerovías”) is impaired and entitled to vote on the Plan. Estimated claims are $42.2mn – $43.4mn and estimated recovery is 30% – 29% [30-29 is how this appears in the Disclosure Statement].
  • Class 4(c) (“Unsecured Convenience Class Claims against Aeroméxico Connect”) is impaired and entitled to vote on the Plan. Estimated claims are $6.1mn – $6.5mn and estimated recovery is 30% – 29%.
  • Class 4(d) (“Unsecured Convenience Class Claims against Aeroméxico Cargo”). is impaired and entitled to vote on the Plan. Estimated claims are $1.6mn – $1.9mn and estimated recovery is 30% – 29%.
  • Class 5 (“Customer Claims against the Debtors”) is unimpaired, presumed to accept and not entitled to vote on the Plan. The aggregate amount of claims is $3.5mn – $8.1mn and expected recovery is 100%.
  • Class 6(a) (“Intercompany Claims against Grupo Aeroméxico”) is unimpaired/impaired, presumed to accept or reject and not entitled to vote on the Plan. The aggregate amount of claims is $15K and expected recovery is 0% – 100%.
  • Class (6b) (“Intercompany Claims against Aerovías”) is unimpaired/impaired, presumed to accept or reject and not entitled to vote on the Plan. The aggregate amount of claims is $299K and expected recovery is 0% – 100%.
  • Class 6(c) (“Intercompany Claims against Aeroméxico Connect”) is unimpaired/impaired, presumed to accept or reject and not entitled to vote on the Plan. The aggregate amount of claims is $646K and expected recovery is 0% – 100%. 
  • Class 6(d) (“Intercompany Claims against Aeroméxico Cargo”) is unimpaired/impaired, presumed to accept or reject and not entitled to vote on the Plan. The aggregate amount of claims is $10.0K and expected recovery is 0% – 100%.
  • Class 7 (“Intercompany Interests”) is unimpaired, presumed to accept and not entitled to vote on the Plan. The aggregate amount of claims is N/A and expected recovery is N/A.
  • Class 8 (“Interests in Grupo Aeroméxico”) is impaired, deemed to reject and not entitled to vote on the Plan. Estimated claims are N/A and estimated recovery is 0%.

Key Documents

The Second Revised Disclosure Statement [Docket No. 2186] attached the following appendices:

  • Appendix A: Plan of Reorganization 
  • Appendix B: Liquidation Analysis 
  • Appendix C: Financial Projections 
  • Appendix D: Valuation Analysis 
  • Appendix E: Organizational Chart

Proposed Key Dates:

  • Voting Deadline: January 10, 2022
  • Plan Objection Deadline: January 10, 2022
  • Confirmation Hearing Date: January 17, 2022

Events Leading to the Chapter 11 Filings

The Disclosure Statement reads: “Prior to the COVID-19 pandemic, the Debtors were well-capitalized and positioned for success. In short, the singular reason the Debtors sought chapter 11 relief was to mitigate the effects of the pandemic.

The Effects of the COVID-19 Pandemic on the Travel Industry

Entering 2020, Aeroméxico was the leading airline in Mexico and sufficiently capitalized to continue its operational initiatives and take advantage of its strategic partnerships. However, due to worldwide travel restrictions and a collapse in consumer demand due to the COVID-19 pandemic, the airline industry generally and Aeroméxico specifically were suddenly faced with ‘the most disruptive financial crisis in the history of aviation.’ Shortly after the World Health Organization declared the outbreak of the novel COVID-19 virus a global pandemic, countries around the world, including each of those in which Aeroméxico primarily operates, announced severe travel restrictions and/or outright closure of their borders—restrictions that continue in some capacity or another to today. And upon borders closing and air travel drying up almost completely, airlines started seeking governmental bail-outs or court-supervised restructuring processes to avoid liquidation. Aeroméxico’s experience during the pandemic is a microcosm of what has happened in the airline industry more broadly.

The COVID-19 crisis’ impact on travel restrictions and thereby airline demand was almost instantaneous. Almost overnight, by April 15, 2020, Mexican domestic capacity was reduced by as much as 75% and international capacity was reduced as much as 90%. As of the Petition Date, Aeroméxico’s passenger flight operations were drastically limited to approximately 12% of the number of flights operated before the COVID-19 crisis. Moreover, at the beginning of the crisis, Argentina, Brazil, Colombia, Chile, and Canada each closed their borders to international travel and there were severe restrictions on travel for non-nationals to Schengen countries and Japan. Each of these countries and regions is an important market for the Company, and with the travel restrictions in place demand was almost entirely eliminated overnight. And as intra- and intercountry shutdowns remained in place across the globe, demand for Aeroméxico flights remained severely depressed.

The Response to the COVID-19 Pandemic

Pre-pandemic, Aeroméxico’s balance sheet was strong and it reflected Aeroméxico’s position in the marketplace and the results of its employees’ hard work. Moreover, over recent years, Aeroméxico had reinvested all of its profits back into the Company to acquire its own aircraft and easily satisfy its financial obligations. Even still, this was not enough to mitigate the effects of the COVID-19 crisis, so the Company had to take additional steps to protect itself while continuing to serve its customers, employees, and other stakeholders. As the crisis unfolded, the Company promptly implemented a range of mitigation measures, including to: (a) stop incurring costs considered not absolutely necessary for the running of the Company’s business; (b) postpone all non-critical expenses for its operations and capital goods; (c) engage with supplier, aircraft lessors, and airport groups to obtain various payment concessions; and (d) consensual salary reductions and a voluntary unpaid leave program.

In addition, with these efforts, Aeroméxico retained Davis Polk & Wardwell LLP as legal counsel, AlixPartners, LLP to provide management support and strategic advice, Rothschild & Co and SkyWorks Capital, LLC to provide financial advice, and Cervantes Sainz, S.C. (subsequently substituted for Sainz Abogados, S.C.), as local Mexican counsel to help the Company plan the most responsible path through and ultimately out of the COVID-19 crisis. Notwithstanding, as the pandemic continued to hamper demand, the Company’s liquidity position continued to deteriorate significantly. Therefore, in order to, among other things, prevent the exercise of self-help and other remedies against the Debtors’ assets, including with regard to its leased aircraft, the Company decided that filing these Chapter 11 Cases provided the best option for obtaining the necessary funding to sustain operations and preventing any avoidable disruption for the Company’s vendors and customers.”

Prepetition Debt

An overview of the Debtors’ funded indebtedness as of the Petition date is as follows:

Liquidation Analysis (see Appendix B to the Disclosure Statement for notes)

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