airBaltic forms unsecured creditor committee amid Chapter 11 restructuring

An official committee of unsecured creditors has been established for airBaltic as part of its Chapter 11 restructuring process in the U.S. Bankruptcy Court for the Southern District of New York. The committee includes five unsecured creditors: aircraft manufacturer Airbus Canada Limited Partnership, aircraft leasing companies Jackson Square Aviation Ireland and AVAP Leasing (Europe), and the airports of Tallinn and Lithuania.

The first creditor meeting is scheduled for October 22 via Zoom. Under Chapter 11, the filing automatically stays most debt collection actions. The restructuring plan, which requires court approval, may lead to the full or partial discharge of obligations.

Financial complexities surround the restructuring, including the use of debtor-in-possession (DIP) financing. A €350 million financing package from new lenders was temporarily approved by the court, which takes priority over most existing debts. This new financing carries high costs, including approximately 12 percent annual interest and significant commissions, which could impact the company's financial outlook. Previous plans suggested converting some bondholder claims into equity, potentially writing off significant portions of debt held by 2024 bondholders.