Gol Linhas Aereas Inteligentes SA
Gol Linhas Aéreas Inteligentes Gets Go-Ahead for $350M Interim DIP Financing Draw; Debtors Say Competitor LATAM Sent ‘Disturbing Letter’ to Lessors, Warns Against ‘Poaching Assets’
Mon 01/29/2024 14:20 PM
Relevant Documents:
Agenda
First Day Hearing Presentation
Interim DIP Order
Judge Martin Glenn granted the Gol Linhas Aéreas Inteligentes SA debtors’ requested first day relief, including a $350 million interim DIP financing draw, at a hearing this morning. Debtors’ counsel Evan Fleck of Milbank said that no parties opposed interim approval of the $950 million new-money financing after the Abra noteholders serving as DIP backstoppers agreed to an “important concession” over the weekend: The 2026 noteholders’ collateral will not be primed in the interim DIP order.
The parties will return to court for a hearing this Wednesday, Jan. 31, at 2 p.m. ET, for the debtors to ask for relief that would allow the delivery of a Boeing 737 airplane “waiting for us in Seattle,” said Fleck. The final DIP hearing is slated for Feb. 20 at 2 p.m. ET.
During today’s proceedings, Judge Glenn gave the nod for interim DIP approval even though he called the financing “rich” and “expensive.” When the court asked about the fees that would be paid under the facility, Andrew Leblanc of Milbank said that “assuming a 15-month DIP, the total cost of the fees is approximately 25.5%” of the $950 million aggregate principal amount.
These fees “compare favorably to LATAM Airlines and Aeromexico and unfavorably to Avianca,” Leblanc said, defending the DIP terms as “incontrovertibly ‘market.’” The DIP fees include a 2% commitment fee due and payable on the closing date, a 2% exit fee due and payable on the termination date and a 3% backstop fee due and payable on the closing date. Leblanc asked the court to enter the interim DIP order today to allow the debtors to “hit a 12 o’clock funding wire deadline”; the order was entered shortly after the hearing.
“What’s your exit strategy?” Judge Glenn asked the debtors today. Fleck answered that reaching agreements with aircraft lessors is “items one, two and three on the agenda.” He remarked that “airline cases take time” and that “we negotiated for a DIP that gives us enough time.” The DIP milestones include an April 24 deadline for the debtors to enter “stipulation agreements for no less than 90 aircraft,” a May 24 deadline to propose a business plan and an Oct. 11 deadline to file a plan.
In an opening presentation to the court, Fleck said that “we became aware of a letter” sent on Friday, Jan. 26, to Gol’s lessors from competitor LATAM Airlines. The letter alludes to “recent events” in the industry - an obvious reference to Gol’s bankruptcy filing, according to Fleck - and explains that LATAM is looking to lease certain Boeing 737 aircraft. The letter “encourages lessors to reach out to them about leasing” 20 to 25 of these aircraft, he added.
Fleck said that the letter is “very disturbing to us” and “fully inconsistent” with the breathing space that companies should receive in chapter 11. “We needed to make sure your honor and the public are aware we don’t believe parties should poach assets,” he asserted. “Is the letter real?” Judge Glenn asked. Fleck stated that the debtors believe the letter to be real and will investigate.
Fleck also said that since the chapter 11 filing, certain media outlets in Brazil have incorrectly stated that Gol has approximately $8 billion of funded debt and suggested that this figure is inconsistent with the company’s previous public disclosures. These media outlets hinted that Gol misstated its financials like Americanas SA did, Fleck said, but the debtors’ figures in the first day papers are “entirely consistent with public disclosures.”
Fleck pointed to the following presentation slide:
Fleck further noted that Gol filed chapter 11 in the U.S. bankruptcy court but does not intend to file a proceeding in Brazil. “We don’t think it’s required,” he said. Describing Gol’s business and events that spurred the chapter 11 filing, Fleck reviewed the debtors’ relationship with 53% equityholder Abra, which is also the principal shareholder of Avianca. He noted that Abra is advised by Wachtell and Rothschild.
As described above, Judge Glenn ultimately signed the interim DIP order although he told the parties that he found the interest and fees “rich.” The judge also directed debtors’ counsel to add language regarding the ability of the Office of the U.S. Trustee and the official committee of unsecured creditors (if one is appointed) to review the payment of professional fees pursuant to the DIP. Judge Glenn said that the debtors propose to “pay the expenses of seven counsel” under the DIP order and warned, “I’m not signing a blank check for all of the lawyers feeding at the trough.”
The court also approved the debtors’ other customary customary first day relief. Judge Glenn green-lighted the lien claimants motion on an interim basis, including up to $70 million in payments during the interim period, but emphasized that he expects the debtors to provide the UST and UCC with a “sufficient paper trail” as to “where the money went.”
Bryan Uelk, Justin Cunningham and Dani Lee Sauer of Milbank also spoke on behalf of the debtors today. Allan Brilliant of Dechert represented the ad hoc group of Abra noteholders, and John Beck of Hogan Lovells appeared as counsel to the ad hoc 2026 notes group.
Agenda
First Day Hearing Presentation
Interim DIP Order
Judge Martin Glenn granted the Gol Linhas Aéreas Inteligentes SA debtors’ requested first day relief, including a $350 million interim DIP financing draw, at a hearing this morning. Debtors’ counsel Evan Fleck of Milbank said that no parties opposed interim approval of the $950 million new-money financing after the Abra noteholders serving as DIP backstoppers agreed to an “important concession” over the weekend: The 2026 noteholders’ collateral will not be primed in the interim DIP order.
The parties will return to court for a hearing this Wednesday, Jan. 31, at 2 p.m. ET, for the debtors to ask for relief that would allow the delivery of a Boeing 737 airplane “waiting for us in Seattle,” said Fleck. The final DIP hearing is slated for Feb. 20 at 2 p.m. ET.
During today’s proceedings, Judge Glenn gave the nod for interim DIP approval even though he called the financing “rich” and “expensive.” When the court asked about the fees that would be paid under the facility, Andrew Leblanc of Milbank said that “assuming a 15-month DIP, the total cost of the fees is approximately 25.5%” of the $950 million aggregate principal amount.
These fees “compare favorably to LATAM Airlines and Aeromexico and unfavorably to Avianca,” Leblanc said, defending the DIP terms as “incontrovertibly ‘market.’” The DIP fees include a 2% commitment fee due and payable on the closing date, a 2% exit fee due and payable on the termination date and a 3% backstop fee due and payable on the closing date. Leblanc asked the court to enter the interim DIP order today to allow the debtors to “hit a 12 o’clock funding wire deadline”; the order was entered shortly after the hearing.
“What’s your exit strategy?” Judge Glenn asked the debtors today. Fleck answered that reaching agreements with aircraft lessors is “items one, two and three on the agenda.” He remarked that “airline cases take time” and that “we negotiated for a DIP that gives us enough time.” The DIP milestones include an April 24 deadline for the debtors to enter “stipulation agreements for no less than 90 aircraft,” a May 24 deadline to propose a business plan and an Oct. 11 deadline to file a plan.
In an opening presentation to the court, Fleck said that “we became aware of a letter” sent on Friday, Jan. 26, to Gol’s lessors from competitor LATAM Airlines. The letter alludes to “recent events” in the industry - an obvious reference to Gol’s bankruptcy filing, according to Fleck - and explains that LATAM is looking to lease certain Boeing 737 aircraft. The letter “encourages lessors to reach out to them about leasing” 20 to 25 of these aircraft, he added.
Fleck said that the letter is “very disturbing to us” and “fully inconsistent” with the breathing space that companies should receive in chapter 11. “We needed to make sure your honor and the public are aware we don’t believe parties should poach assets,” he asserted. “Is the letter real?” Judge Glenn asked. Fleck stated that the debtors believe the letter to be real and will investigate.
Fleck also said that since the chapter 11 filing, certain media outlets in Brazil have incorrectly stated that Gol has approximately $8 billion of funded debt and suggested that this figure is inconsistent with the company’s previous public disclosures. These media outlets hinted that Gol misstated its financials like Americanas SA did, Fleck said, but the debtors’ figures in the first day papers are “entirely consistent with public disclosures.”
Fleck pointed to the following presentation slide:
Fleck further noted that Gol filed chapter 11 in the U.S. bankruptcy court but does not intend to file a proceeding in Brazil. “We don’t think it’s required,” he said. Describing Gol’s business and events that spurred the chapter 11 filing, Fleck reviewed the debtors’ relationship with 53% equityholder Abra, which is also the principal shareholder of Avianca. He noted that Abra is advised by Wachtell and Rothschild.
As described above, Judge Glenn ultimately signed the interim DIP order although he told the parties that he found the interest and fees “rich.” The judge also directed debtors’ counsel to add language regarding the ability of the Office of the U.S. Trustee and the official committee of unsecured creditors (if one is appointed) to review the payment of professional fees pursuant to the DIP. Judge Glenn said that the debtors propose to “pay the expenses of seven counsel” under the DIP order and warned, “I’m not signing a blank check for all of the lawyers feeding at the trough.”
The court also approved the debtors’ other customary customary first day relief. Judge Glenn green-lighted the lien claimants motion on an interim basis, including up to $70 million in payments during the interim period, but emphasized that he expects the debtors to provide the UST and UCC with a “sufficient paper trail” as to “where the money went.”
Bryan Uelk, Justin Cunningham and Dani Lee Sauer of Milbank also spoke on behalf of the debtors today. Allan Brilliant of Dechert represented the ad hoc group of Abra noteholders, and John Beck of Hogan Lovells appeared as counsel to the ad hoc 2026 notes group.
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