Interjet to begin financial restructuring in Mexico and the U.S.

23/03/2021

Interjet will enter into insolvency proceedings before the end of April and days later "it is certain" that it will also request a financial restructuring process in the United States, under Chapter 11 of that country's Bankruptcy Law, explained Carlos del Valle del Río, the company's new spokesperson.

Mexican authorities approve Interjet's capital injection, but Interjet still faces fines and debts in Mexico. Image: Wikimedia Commons
Mexican authorities approve Interjet's capital injection, but Interjet still faces fines and debts in Mexico. Image: Wikimedia Commons

The company accumulates debts of 1.25 billion dollars with suppliers, the tax authorities, and its workers. The purpose of the insolvency proceeding is to set payment priorities, secure investments, and return to operations between June and July. So far, at least 14 international investment funds have been contacted, the objective is to obtain financing for one billion dollars. To date, there are three firm proposals for capitalization: Lufthansa Consulting, Sigma, and WTI.

"It is good news that we are going into insolvency proceedings because this facilitates the entry of funds (...) it assures us the arrival of capital and also an orderly restructuring of things".

Given the embargoes on Interjet's bank accounts, bankruptcy is one of the requirements requested by the investment funds to participate in the airline's restructuring. Among the company's liabilities are US$250 million in debts owed to the Tax Administration Service, US$380 million for a fleet of Sukhoi airplanes, and US$140 million with aircraft lessors.

Fraudulent operations denounced

The company's spokesman explained that it had not resorted to a bankruptcy proceeding, in spite of the company's situation prior to the Covid-19 crisis, because when the change of management took place in December, "we found a mess (...) it was not possible to provide a complete and sensible X-ray to a possible investor".

The airline "comes from a complex and complicated administrative situation, the previous directors carried out a fraudulent operation", he pointed out. There are criminal charges against 11 former directors, among them William Shaw, who served as CEO, and there are also complaints against the former CFO and other high-ranking members of the operation.

Among the irregularities is a list of one thousand suppliers, "all demanding millionaire payments from two to three years ago". Once each one was summoned, it was found that many of them did not exist, he added.

Interjet has not been flying since last December, has had alerts from the Federal Consumer Protection Agency for non-compliance of flights with clients, with Alejandro del Valle as president, and its personnel has been on strike since January due to months of overdue salaries.