Filing Alert: Azul Chapter 11
Azul Files Chapter 11 in Southern District of New York
Azul S.A. and its debtor affiliates⁽¹⁾, a São Paulo, Brazil-based airline, filed for Chapter 11 protection on May 28 in the U.S. Bankruptcy Court for the Southern District of New York.
The prepackaged Chapter 11 filing aims to implement a comprehensive financial restructuring supported by key financial stakeholders and strategic partners through three separate Restructuring Support Agreements (RSAs). The plan will reduce funded debt by over $2.0 billion and provide approximately $670 million in new capital during the restructuring, plus up to $950 million in new equity upon emergence.
The company, Brazil's largest airline by departures and cities served, faced compounded challenges since 2020 from the COVID-19 crisis, high foreign exchange volatility impacting its largely U.S. dollar-denominated debt and lease obligations, 2024 flooding in Southern Brazil, and increased litigation. These issues led to a need for $800 million in fresh capital, only partially met by $500 million in superpriority financing from noteholders and a significantly smaller-than-expected $8 million follow-on equity raise.
Emergence will be facilitated by a $650 million backstopped equity rights offering, with proceeds to repay the DIP, and a commitment from strategic partners United Airlines and American Airlines to invest $200 million to $300 million in new equity. The DIP facility is a $1.57 billion superpriority senior secured multi-draw term loan, including a $250 million initial new money draw.
Azul S.A. reports $4.5 billion in assets and $9.6 billion in liabilities. The filing indicates that there will be funds available for distribution to unsecured creditors. The case number is 25-11176.
⁽¹⁾ For a complete list of Debtor entities, see organizational structure chart below.
Corporate Organizational Structure
Top Unsecured Claims
Initial DIP Budget
Key Parties
Counsel:
- Timothy Graulich
- Davis Polk & Wardwell LLP
- Email: timothy.graulich@davispolk.com
Financial Advisor / CRO:
- FTI Consulting Inc. (Samuel Aguirre)
Claims Agent:
Equity Security Holders:
- TRIP Participações S/A – 33% Equity Interest
- Other Minority Holders – 67% Equity Interest
Bondoro Insights is continuing to monitor this case and will provide further coverage as appropriate.
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