airBaltic initiates Chapter 11 debt restructuring in the U.S

Latvian national carrier airBaltic has initiated debt restructuring under Chapter 11 in the United States. The airline has secured a commitment for up to 350 million euros in Debtor-in-Possession (DIP) financing to ensure liquidity and operational continuity during the process.

A preliminary ruling from the U.S. Bankruptcy Court for the Southern District of New York indicates that airBaltic will be required to pay significant commission fees totaling up to 52.5 million euros. These fees include a 5% backstop commitment fee, a 5% upfront DIP fee, and a 5% exit fee. The first two fees are expected to be added to the principal amount of the debt rather than paid immediately.

The decision to utilize Chapter 11 is likely driven by the need for global reach and the involvement of major U.S.-based creditors, such as Pratt & Whitney, which holds a claim of approximately 66.5 million euros. While the Chapter 11 moratorium provides a structured restructuring period, its legal bindingness outside the U.S. depends on international treaties and specific contractual agreements.