Since the day Avianca filed for bankruptcy Azul Brazil is trying to posses its well operate routes, for this the big aviation has also bidded an hefty amount of 145 million dollar. But Elliott Management – a hedge fund based in US is opposing a new plan by Brazilian airline Azul.
Previously Elliott had forced Argentina for repayments on defaulted bonds.
Avianca Brasil filed bankruptcy protection in December, setting off a dispute for its routes among Brazil’s top three airlines. Now everyone have eyes on the routes and how the routes of Avianca Brasil us going to be divided, the routes are controlled by the same holding company as publicly traded Colombia-based Avianca Holdings SA, have become fiercely sought after despite the financial woes that sent it into bankruptcy protection.
Elliott has used its dominance as a creditor to influence the dispute over the routes. Legal documents show that Elliott crafted the current bankruptcy reorganization plan, which Azul has countered with its own new proposal this month.
Although the final verdict is about to release and its in hands of Brazilian judge, the hedge fund is asking the court to dismiss Azul’s proposal and keep its own plan intact, which would benefit Azul’s two larger Brazilian rivals. Gol Linhas Aereas Inteligentes SA and LATAM Airlines Group. Gol and LATAM have signed agreements with Elliott to pay the hedge fund a combined $70 million if this proposal get approved.
Elliott’s participation in the bankruptcy process has raised questions among creditors regarding the origin of its loans, including by airport handling operator Swissport International AG, which Elliott now accuses of working to further Azul’s agenda.
Documents show Elliott has not lent money directly to Avianca Brasil, but instead to companies controlled by the same holding group, including a palm oil field in Colombia and a shipyard based in Rio de Janeiro.
While Azul has previously accused Elliott.
Azul stated in a statement on Monday that its plan offers Avianca Brasil’s workers, clients and creditors good opportunities and perks The spokesperson also added that Elliott is against out proposal because the hedge fund has already received payment, from other major airlines operating in Brazil, hence Elliot is opposing the proposed plan.