In a recent move, SAS (Scandinavian Airlines System) announced its intention to file a second amended chapter 11 plan of reorganization and related disclosure statement with the U.S. Bankruptcy Court for the Southern District of New York.
This filing continues the airlines journey towards financial restructuring and recovery. Let’s delve into the details to understand the implications for stakeholders, particularly creditors.
Understanding the Chapter 11 Plan
The Chapter 11 Plan outlines the anticipated recoveries for various classes of creditors, shedding light on the distribution of assets upon emergence from the chapter 11 process.
Notably, holders of SAS AB’s listed commercial hybrid bonds are poised to receive an initial cash recovery of up to 9.4% of the nominal value of their claims.
This figure could potentially increase to 25.0% cumulatively under certain conditions, offering a glimmer of hope amidst the restructuring landscape.
Support from Unsecured Creditors Committee
The Official Committee of Unsecured Creditors, tasked with safeguarding the interests of creditors, has thrown its weight behind the Chapter 11 Plan.
Their endorsement emphasizes the viability of the proposed restructuring framework and also underscores the importance of creditor cooperation in the rehabilitation process.
Projected Recoveries for Creditors
SAS AB’s Listed Commercial Hybrid Bonds Holders
For holders of SAS AB’s listed commercial hybrid bonds, the projected recovery ranges from 6.9% to 9.4% of the nominal value initially.
This could potentially escalate to 20.0-25.0% cumulatively, contingent upon the release of Restricted Funds and other factors outlined in the Chapter 11 Plan.
General Unsecured Creditors
Other general unsecured creditors, including those associated with Scandinavian Airlines System Denmark‐Norway‐Sweden (the “SAS Consortium”), can anticipate initial recoveries ranging from 1.7% to 2.7% of the nominal value of their claims.
Similarly, creditors linked to entities like Gorm Dark Blue Limited and Scandinavian Airlines of North America Inc. are slated to receive varying degrees of recovery, with amounts dependent on several factors such as claim size and creditor hierarchy.
In addition to cash distributions, approximately USD 75 million in new equity will be allocated to specified classes of general unsecured creditors.
This equity injection, constituting around 13.6% of the reorganized SAS, aims to balance the interests of diverse creditor groups and foster long-term stability.
Conditionalities and Timeline
It’s crucial to note that the Chapter 11 Plan’s effectiveness hinges on several conditions precedent, including regulatory approvals and the completion of a Swedish company reorganization at the SAS AB level.
While a hearing on the Disclosure Statement is slated for February 6, 2024, the final approval of the Chapter 11 Plan is anticipated in the first quarter of 2024.
SAS envisages emerging from the chapter 11 process by the latter half of 2024, signifying a significant milestone in its restructuring journey.
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