translated from Spanish: Lawyers of Latam creditors who request litigation for US$1,300 million that the airline would have put in the Cayman Islands prior to proceedings in the U.S.: “It is inequitable and deserves to be solved”

For attorney Andres Mena, the problem is that “prior to Chapter 11, US$ 1,300 million was moved, and in the process, local bonds deteriorate.” Hence the motion for “substantive consolidation” requested by the represented creditors. In this regard, the lawyer stated that he dismisses that there is fraud in the actions of Latam, but that the information that was given to the market at the time was incomplete, which has a legal effect.
“No one here is alleging fraud, a malicious act, maldoing for the purpose of distracting property from one person from another. What we are claiming is that it needs to be solved,” Mena said in a conversation with El Mercurio. “What Latam did was move US$ 1,300 million to that desk, and in the process, take it away from all of us. That is inequitable, inconsistent with the information they provided to the market and deserves to be resolved,” the lawyer said.
“We know that Latam does not agree (…) If you are a Chilean creditor, this information is critical, it can increase what a creditor will recover from the parent. We think that this issue has to be decided before Latam can request votes in its plan,” added lawyer Pedro Jiménez.
Chilean lawyer Andrés Mena and his colleague Pedro Jimenez are part of the American firm Paul Hastings LLP that leads the legal strategy of local bondholders creditors in Latam, the holders of the five series of bonds issued in Chile by the airline, for a total of about US$ 490 million. Both are at the forefront of the claim, within the framework of the reorganization process of Latam in Chapter 11 of the bankruptcy law in the United States, at the request of these bondholders.
Recall that a group of Chilean creditors asked the judge who is carrying out the reorganization process of Latam, permission to litigate for US $ 1,300 million that the airline has in companies established in the tax haven of cayman Islands and that, according to accusations, would not have been properly informed, which would leave the millionaire amount out of the reach of these Chilean companies. If the litigation is accepted by the judge, the reorganization process of Latam would be paused for at least two months to resolve the matter, delaying in passing the departure of the airline from Chapter 11.
“What we are doing means that all those creditors, who in general are the vast majority —including employees, pilots, AFPs, the treasury—, have US$ 1,300 million more to recover, as opposed to that recovery being focused on the level of only certain foreign bondholders,” attorney Andres Mena summarized in a conversation with the morning newspaper.
According to the graduates, the reason the airline had for entering U.S. law was a tax optimization, “minimizing any taxes they have to pay in Chile,” Jimenez said, arguing that they also made it official in the documents given to Judge James Garrity — in charge of the case. This, they explain, had no benefit to international bondholders until the process under Chapter 11 crystallized, and local bondholders detected it.
If Judge James Garrity did not accept the claim, such a decision would be appealable in Federal District Court. Next week there will be a hearing in which the schedule for litigating this motion will be seen, which the lawyers expect to be by the end of August, before Latam comes out with its reorganization plan and request for votes for it.

Original source in Spanish

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