20-11133-mg doc 2043 filed 08/24/21 entered 08/24/21 17:02

Dennis F. Dunne Evan R. Fleck Benjamin M. Schak MILBANK LLP 55 Hudson Yards New York, New York 10001 Telephone: (212) 530-5000 Facsimile: (212) 530-5219 Counsel for Debtors and Debtors-In-Possession

Gregory Bray MILBANK LLP 2029 Century Park East, 33rd Floor Los Angeles, CA 90067 Telephone: (424) 386-4000 Facsimile: (213) 629-5063

UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK

-----------------------------------------------------------------x : In re: : : AVIANCA HOLDINGS S.A., et al.,1 : : Debtors. : : -----------------------------------------------------------------x

Chapter 11 Case No. 20-11133 (MG) (Jointly Administered)

NOTICE OF FILING OF DEBTORS’ REVISED

MOTION FOR ENTRY OF A FINAL ORDER (I) AUTHORIZING THE DEBTORS TO ENTER INTO AMENDMENTS TO THEIR POSTPETITION DIP CREDIT DOCUMENTS AND ENTER INTO ADDITIONAL DOCUMENTS IN FURTHERANCE THEREOF, (II) GRANTING AND REAFFIRMING LIENS, (III) GRANTING SUPERPRIORITY ADMINISTRATIVE EXPENSE CLAIMS, (IV) MODIFYING THE AUTOMATIC STAY, AND (V) GRANTING RELATED

1 The Debtors in these chapter 11 cases (the “Chapter 11 Cases”), and each Debtor’s federal tax identification

number (to the extent applicable), are as follows: Avianca Holdings S.A. (N/A); Aero Transporte de Carga Unión, S.A. de C.V. (N/A); Aeroinversiones de Honduras, S.A. (N/A); Aerovías del Continente Americano S.A. Avianca (N/A); Airlease Holdings One Ltd. (N/A); America Central (Canada) Corp. (00-1071563); America Central Corp. (65-0444665); AV International Holdco S.A. (N/A); AV International Holdings S.A. (N/A); AV International Investments S.A. (N/A); AV International Ventures S.A. (N/A); AV Investments One Colombia S.A.S. (N/A); AV Investments Two Colombia S.A.S. (N/A); AV Loyalty Bermuda Ltd. (N/A); AV Taca International Holdco S.A. (N/A); Aviacorp Enterprises S.A. (N/A); Avianca Costa Rica S.A. (N/A); Avianca Leasing, LLC (47-2628716); Avianca, Inc. (13-1868573); Avianca-Ecuador S.A. (N/A); Aviaservicios, S.A. (N/A); Aviateca, S.A. (N/A); Avifreight Holding Mexico, S.A.P.I. de C.V. (N/A); C.R. Int’l Enterprises, Inc. (59-2240957); Grupo Taca Holdings Limited (N/A); International Trade Marks Agency Inc. (N/A); Inversiones del Caribe, S.A. (N/A); Isleña de Inversiones, S.A. de C.V. (N/A); Latin Airways Corp. (N/A); Latin Logistics, LLC (41-2187926); Nicaragüense de Aviación, Sociedad Anónima (N/A); Regional Express Américas S.A.S. (N/A); Ronair N.V. (N/A); Servicio Terrestre, Aéreo y Rampa S.A. (N/A); Servicios Aeroportuarios Integrados SAI S.A.S. (92-4006439); Taca de Honduras, S.A. de C.V. (N/A); Taca de México, S.A. (N/A); Taca International Airlines S.A. (N/A); Taca S.A. (N/A); Tampa Cargo S.A.S. (N/A); Technical and Training Services, S.A. de C.V. (N/A). The Debtors’ principal offices are located at Avenida Calle 26 # 59 – 15 Bogotá, Colombia.

20-11133-mg Doc 2043 Filed 08/24/21 Entered 08/24/21 17:02:36 Main Document Pg 1 of 31

¨2¤!+A5(8 !„«

2011133210824000000000001

Docket #2043 Date Filed: 08/24/2021

RELIEF

PLEASE TAKE NOTICE that on August 5, 2021, the Debtors filed their Motion for a

Final Order (I) Authorizing the Debtors to Enter into Amendments to Their Postpetition DIP

Credit Documents and Enter Into Additional Documents in Furtherance Thereof, (II) Granting

and Reaffirming Liens, (III) Granting Superpriority Administrative Expense Claims,

(IV) Modifying the Automatic Stay, and (V) Granting Related Relief [Dkt. No. 1972] (the

“Motion”), which Motion was granted by the Court on August 18, 2021 [Dkt. No. 2032].

PLEASE TAKE FURTHER NOTICE that the Debtors now file a revised version of the

Motion. This revised filing does not seek any further relief beyond that already granted by the

Court.

/s/ Evan R. Fleck New York, New York Dated: August 24, 2021 Dennis F. Dunne

Evan R. Fleck Benjamin M. Schak MILBANK LLP 55 Hudson Yards New York, New York 10001 Telephone: (212) 530-5000 Facsimile: (212) 530-5219

- and –

Gregory A. Bray MILBANK LLP 2029 Century Park East, 33rd Floor Los Angeles, CA 90067 Telephone: (424) 386-4000 Facsimile: (213) 629-5063

Counsel for Debtors and Debtors in Possession


UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK

x

In re: : Chapter 11 : AVIANCA HOLDINGS S.A., et al., : Case No. 20-11133 (MG) :

Debtors.2 : Jointly Administered :

x

DEBTORS’ MOTION FOR ENTRY OF A FINAL ORDER (I) AUTHORIZING THE DEBTORS TO ENTER INTO AMENDMENTS TO THEIR POSTPETITION DIP

CREDIT DOCUMENTS AND ENTER INTO ADDITIONAL DOCUMENTS IN FURTHERANCE THEREOF, (II) GRANTING AND REAFFIRMING LIENS,

(III) GRANTING SUPERPRIORITY ADMINISTRATIVE EXPENSE CLAIMS, (IV) MODIFYING THE AUTOMATIC STAY,

AND (V) GRANTING RELATED RELIEF

Avianca Holdings S.A. and its affiliated debtors in the above-captioned chapter 11 cases

(the “Chapter 11 Cases”), as debtors-in-possession (collectively, the “Debtors”), respectfully

represent as follows in support of this motion (the “Motion”):

2 The Debtors in these chapter 11 cases, and each Debtor’s federal tax identification number (to the extent

applicable), are as follows: Avianca Holdings S.A. (N/A); Aero Transporte de Carga Unión, S.A. de C.V. (N/A); Aeroinversiones de Honduras, S.A. (N/A); Aerovías del Continente Americano S.A. Avianca (N/A); Airlease Holdings One Ltd. (N/A); America Central (Canada) Corp. (00-1071563); America Central Corp. (65-0444665); AV International Holdco S.A. (N/A); AV International Holdings S.A. (N/A); AV International Investments S.A. (N/A); AV International Ventures S.A. (N/A); AV Investments One Colombia S.A.S. (N/A); AV Investments Two Colombia S.A.S. (N/A); AV Loyalty Bermuda Ltd. (N/A); AV Taca International Holdco S.A. (N/A); Aviacorp Enterprises S.A. (N/A); Avianca Costa Rica S.A. (N/A); Avianca Leasing, LLC (47-2628716); Avianca, Inc. (13-1868573); Avianca-Ecuador S.A. (N/A); Aviaservicios, S.A. (N/A); Aviateca, S.A. (N/A); Avifreight Holding Mexico, S.A.P.I. de C.V. (N/A); C.R. Int’l Enterprises, Inc. (59-2240957); Grupo Taca Holdings Limited (N/A); International Trade Marks Agency Inc. (N/A); Inversiones del Caribe, S.A. (N/A); Isleña de Inversiones, S.A. de C.V. (N/A); Latin Airways Corp. (N/A); Latin Logistics, LLC (41-2187926); Nicaragüense de Aviación, Sociedad Anónima (N/A); Regional Express Américas S.A.S. (N/A); Ronair N.V. (N/A); Servicio Terrestre, Aéreo y Rampa S.A. (N/A); Servicios Aeroportuarios Integrados SAI S.A.S. (92-4006439); Taca de Honduras, S.A. de C.V. (N/A); Taca de México, S.A. (N/A); Taca International Airlines S.A. (N/A); Taca S.A. (N/A); Tampa Cargo S.A.S. (N/A); Technical and Training Services, S.A. de C.V. (N/A). The Debtors’ principal offices are located at Avenida Calle 26 # 59 – 15 Bogotá, Colombia.


RELIEF REQUESTED

1. By this Motion, the Debtors request entry of an order, substantially in the form

annexed hereto as Exhibit A (the “Final DIP Amendment Order”), amending the First Final DIP

Order3 and authorizing the Debtors to amend their DIP Agreement4 and related credit documents

so as to refinance the existing “Tranche A” loans and notes with $1.6 billion in “New Tranche A-

1” and “New Tranche A-2” credits that will convert into long-term exit financing at the Debtors’

option (upon satisfaction of all conditions precedent), on terms consistent with those certain DIP-

to-Exit Facility Term Sheets annexed hereto as Exhibits B-1 (New Tranche A-1) and B-2 (New

Tranche A-2), and to pay certain related fees as disclosed herein. In support of this Motion, the

Debtors rely on the Declaration of John E. Luth in Support of Debtors’ Motion for a Final Order

(I) Authorizing the Debtors to Enter into Amendments to Their Postpetition DIP Credit Documents

and Enter Into Additional Documents in Furtherance Thereof, (II) Granting and Reaffirming

Liens, (III) Granting Superpriority Administrative Expense Claims, (IV) Modifying the Automatic

Stay, and (V) Granting Related Relief (the “Luth Declaration”) submitted contemporaneously

herewith, and respectfully state as follows:

JURISDICTION

2. This Court has jurisdiction to consider this matter pursuant to 28 U.S.C. § 157 and

1334. This is a core proceeding pursuant to 28 U.S.C. § 157(b). Venue is proper before this Court

pursuant to 28 U.S.C. §§ 1408 and 1409.

3 The Final Order (I) Authorizing the Debtors to (A) Obtain Postpetition Financing, and (B) Grant Liens and

Superpriority Administrative Expense Claims, (II) Modifying the Automatic Stay, and (III) Granting Related Relief [Docket No. 1031] (the “First Final DIP Order”). Capitalized terms not defined herein have the meanings ascribed to them in the Final DIP Order.

4 The Super-Priority Debtor-in-Possession Term Loan Agreement dated October 13, 2020, by and among Avianca Holdings, as borrower, the guarantors party thereto, the Tranche A-1 and Tranche A-2 lenders from time to time party thereto, the Tranche B lenders from time to time party thereto, and JPMorgan Chase Bank, N.A., as administrative agent and collateral agent.


3. The bases for the relief requested herein are sections 105, 361, 362, 363(b),

363(c)(2), 363(m), 364(c)(1), 364(c)(2), 364(c)(3), 364(d)(1), 364(e), 503, 506 and 507 of Title 11

of the United States Code (the “Bankruptcy Code”), Rules 2002, 4001, 6004(a), 6004(h), 9014 and

9019 of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”), and Rule 4001-2 of

the Local Rules of Bankruptcy Practice and Procedure for the United States Bankruptcy Court for

the Southern District of New York (the “Local Rules”).

PRELIMINARY STATEMENT

4. By this Motion, the Debtors are seeking authorization to amend their DIP

Agreement and related credit documents and enter into new note purchase agreements and new

indentures in accordance with such amendments in order to replace the existing approximately

$1.43 billion Tranche A DIP Facility with a $1.6 billion New Tranche A DIP/Exit Facility to be

provided by a diverse group of lenders, including several existing Tranche A lenders. Luth Decl.

¶ 23. The primary advantage of this new facility is that it may, at the Debtors’ option and subject

to satisfaction of customary terms and conditions, convert into a 7-year exit financing facility upon

the Debtors’ emergence from bankruptcy protection. Luth Decl. ¶ 22. This committed exit

financing will be a key component of any chapter 11 plan that the Debtors may propose in these

cases. Luth Decl. ¶ 26. In addition to this undoubted benefit, as described below, the new facility

also provides the Debtors with incremental liquidity at lower interest rates and can be paid in kind

during the pendency of the Chapter 11 Cases. Luth Decl. ¶ 27.

5. The Debtors are also seeking authorization to pay certain fees in connection with

the proposed amendments. These fees (principally, a commitment premium5 of % for New

5 The Debtors have already received the Court’s authorization to pay the commitment premiums and fee and

expense reimbursements. See Revised Order (I) Approving Terms of, and Debtors’ Entry Into and Performance Under, the DIP-to-Exit Facility Commitment Letters and (II) Authorizing Incurrence, Payment, and Allowance


9. Additional information regarding the Debtors’ businesses, their capital structure,

and the circumstances leading to the filing of these cases is set forth in the Declaration of Adrian

Neuhauser in Support of Chapter 11 Petitions and First Day Pleadings [Docket No. 20].

B. The Existing DIP Financing

10. Last fall, this Court entered the First Final DIP Order, approving a senior tranche

of loans and notes (“Tranche A”) and a junior tranche of loans and notes (“Tranche B”). The

Debtors’ obtaining postpetition financing was a major step forward in the Chapter 11 Cases,

coming after months of negotiations with existing lenders and bondholders, existing equity

holders, other sources of new-money financing, the Committee, and other stakeholders, led by the

Debtors’ management team, Seabury Securities LLC (“Seabury”), and other arrangers. Luth Decl.

¶ 17. Since then, the DIP Facility has given the Debtors the liquidity needed to make meaningful

progress in the Chapter 11 Cases.

11. Tranche A, which is now fully drawn, consists of loans and notes, the consideration

for which consisted of new money from prepetition noteholders and new lenders, Advent

International’s sale of LifeMiles equity to the Debtors, and a roll-up of prepetition secured notes.

The Debtors have consistently paid interest and fees on Tranche A in kind. As a result, the total

amount owing under Tranche A as of July 31, 2021 was approximately $1.395 billion, inclusive

of accrued interest but without Back-end Fees. Luth Decl. ¶ 18.

12. Tranche A may be repaid in cash at any time without penalty, but must be paid in

full in cash no later than its maturity date or the date on which the Debtors consummate their

chapter 11 plan. Whenever Tranche A is repaid, the Debtors will be charged Tranche A Back-end

Fees of 1.75% for certain Tranche A loans that were originally made by lenders that provided a

backstop and 0.75% for other Tranche A loans. Therefore, if as planned a payoff of the Tranche


A Loans occurs by the end of August 2021, the total amount owed is approximately $1.43 billion,

with Back-end Fees and accrued interest. Luth Decl. ¶ 19.

13. Tranche B, which is also fully drawn, consists of loans and notes, the consideration

for which consisted of new-money investments (mostly from lenders under the prepetition credit

facility known as the “Stakeholder Facility”) and a roll-up of all outstanding loans under that same

facility. As with Tranche A, the Debtors have consistently paid interest and fees on Tranche B in

kind. As a result, the total amount owing under Tranche B is now approximately $790,000,000

and, together with exit fees of 10%, will equal or exceed $935,000,000 upon the Debtors’

emergence from chapter 11 (based upon an exit timing of approximately October 31, 2021). Luth

Decl. ¶ 20.

14. Tranche B may, at the Debtors’ option and subject to certain conditions, be

converted into equity in the reorganized Debtors upon consummation of a chapter 11 plan.

Consistent with prior representations to the Court, the Debtors have subjected that option to a

rigorous market test and, working together with the Committee, are close to securing the final

terms and conditions of conversion of the Tranche B Loans along with an additional $200 million

of exit equity financing from the Tranche B Lenders. Luth Decl. ¶ 21.

DEBTORS’ EFFORTS TO OBTAIN EXIT FINANCING COMMITMENTS

15. As previously reported to the Court, the Debtors commenced a competitive

marketing process for exit financing, led by Seabury, on April 14, 2021. The purpose of this

process was to solicit at least $300 million of additional equity capital, and possibly $1.2 billion

or more, in order to provide the Debtors with an alternative source of exit equity financing. Luth

Decl. ¶ 12. The intent was to secure sufficient interest from alternative parties to position the

Debtors to negotiate reasonable, arms-length terms and conditions for the equity conversion option


being negotiated with the Tranche B Lenders. Seabury and the Debtors solicited proposals from

any party or group of parties willing to provide exit equity capital on more attractive terms than

the Tranche B conversion option and of sufficient size to pay off the Tranche B obligations.

Indications of interest in exit equity financing were due to Seabury by June 2, 2021. Id.; see also

Notice Regarding Exit Equity Financing Process [Docket No. 1739].

16. The Debtors and Seabury initially contacted over 125 potential investors. Many of

these parties, such as current DIP lenders, were already highly familiar with the Debtors’ business.

Ultimately, over 35 parties signed up for access to a data room containing comprehensive

information on the Debtors’ business plan, cash flow projections, DIP loan collateral, and other

materials. Many of these potential investors also participated in focused diligence sessions with

Avianca’s management and professionals. Luth Decl. ¶ 13.

17. Although the main purpose of this marketing process was to obtain additional

equity capital (to either supplement or replace the Tranche B conversion option), the Debtors and

Seabury also actively discussed debt financing structures with dozens of potential investors. At

the same time, the Debtors sought the advice of (and are in the process of formally retaining) Credit

Suisse Securities (USA) LLC (“Credit Suisse”) as a debt capital markets advisor for exit debt

financing, along with other banks. The Debtors did so in order to benefit from Credit Suisse’s and

other banks’ expertise and to obtain their advisory and structuring services in connection with the

exit debt financing. Luth Decl. ¶ 14.

18. As a result of those discussions, the Debtors have now obtained two important

financial commitments for replacement DIP financing. The first commitment, from a group of

lenders that includes many of the existing Tranche A DIP Lenders, is for $1,050,000,000 in New

Tranche A-1 DIP/Exit Loans. The second commitment, from a group of four new-money lenders,


deference to a debtor’s business judgment in connection with obtaining postpetition credit, so long as

the agreement to obtain such credit does not run afoul of the provisions of, and policies underlying,

the Bankruptcy Code. See, e.g., In re Republic Airways Holdings Inc., No. 16-10429 (SHL), 2016

WL 2616717, at *11 (Bankr. S.D.N.Y. May 4, 2016) (“In determining whether to authorize post-

petition financing, bankruptcy courts will generally defer to the debtor’s business judgment.”); In re

Farmland Indus., Inc., 294 B.R. 855, 881 (Bankr. W.D. Mo. 2003) (noting that approval of

postpetition financing requires, inter alia, an exercise of “sound and reasonable business judgment.”);

In re Trans World Airlines, Inc., 163 B.R. 964, 974 (Bankr. D. Del. 1994) (approving a postpetition

loan and receivables facility because such facility “reflect[ed] sound and prudent business

judgment”); In re Ames Dep’t Stores, Inc., 115 B.R. at 40 (Bankr. S.D.N.Y. 1990) (“[C]ases

consistently reflect that the court’s discretion under section 364 [of the Bankruptcy Code] is to be

utilized on grounds that permit [a debtor’s] reasonable business judgment to be exercised so long as

the financing agreement does not contain terms that leverage the bankruptcy process and powers or

its purpose is not so much to benefit the estate as it is to benefit a party-in-interest.”).

25. More fundamentally, the business judgment rule is highly deferential to the

decisions of management, and a court will not interfere so long as the decision is rational. See

Quadrant Structured Prods. Co., Ltd v. Vertin, 102 A.3d 155, 183 (Del. Ch. 2014); In re AMR

Corp., 485 B.R. 279, 288 (Bankr. S.D.N.Y. 2013) (SHL) (stating that the court will not interfere

with the debtors’ business judgment absent a showing of bad faith, self-interest or gross

negligence); see also In re Helm, 335 B.R. 528, 538-39 (Bankr. S.D.N.Y. 2006) (CGM) (the

business judgment rule requires the Court to determine whether a reasonable businessperson would

make a similar decision under similar circumstances). Bankruptcy courts generally will not

“second-guess” a debtor’s business decisions when those decisions involve “a business judgment


made in good faith, upon a reasonable basis, and within the scope of [its] authority under the

[Bankruptcy] Code.” In re Curlew Valley Assoc.’s, 14 B.R. 506, 513-514 (Bankr. D. Utah. Oct. 8,

1981) (noting that courts should not second guess a debtor’s business decision when that decision

involves “a business judgment made in good faith, upon a reasonable basis, and within the scope

of [the debtor’s] authority under the [Bankruptcy] Code”). To determine whether the business

judgment test is met, “the court ‘is required to examine whether a reasonable business person

would make a similar decision under similar circumstances.’” In re Dura Auto. Sys. Inc., No. 06-

11202 (KJC), 2007 WL 7728109, at *97 (Bankr. D. Del. Aug. 15, 2007) (citation omitted).

26. In determining whether the Debtors have exercised sound business judgment in

amending the DIP Agreement, the Court should consider the economic terms of the proposed

amendments under the totality of circumstances. See Hr’g Tr. at 734-35:24, In re Lyondell Chem.

Co., No. 09-10023 (REG) (Bankr. S.D.N.Y. Feb. 27, 2009) (recognizing that “the terms that are

now available for DIP financing in the current economic environment aren’t as desirable” as

otherwise); In re Elingsen McLean Oil Co., 65 B.R. 358, 365 n.7 (W.D. Mich. 1986) (recognizing

debtor may have to enter into “hard” bargains to acquire funds for its reorganization under difficult

circumstances). Moreover, the Court may appropriately take into consideration non-economic

benefits to the Debtors.

27. In In re ION Media Networks, Inc., for example, the Bankruptcy Court for the

Southern District of New York held that:

Although all parties, including the Debtors and the Committee, are naturally motivated to obtain financing on the best possible terms, a business decision to obtain credit from a particular lender is almost never based purely on economic terms. Relevant features of the financing must be evaluated, including non-economic elements such as the timing and certainty of closing, the impact on creditor constituencies, and the likelihood of a successful reorganization. This is particularly true in a bankruptcy setting where cooperation


and established allegiances with creditor groups can be a vital part of building support for a restructuring that ultimately may lead to a confirmable reorganization plan. That which helps foster consensus may be preferable to a notionally better transaction that carries the risk of promoting unwanted conflict.

No. 09-13125 (JMP), 2009 WL 2902568, at *4 (Bankr. S.D.N.Y. July 6, 2009).

28. The Debtors’ decision to amend the DIP Agreement is, under the foregoing

standard, an exercise of their sound business judgment. As further discussed in the Luth

Declaration, the Debtors and their advisors determined that it was in the estates’ best interests to

replace the existing Tranche A DIP Facility with the New Tranche A DIP/Exit Facility at this point

as the latter offers the Debtors an exit conversion option that paves the way to financing a plan of

reorganization, as well as allows for interest expense savings. Luth Decl. ¶ 35.

29. The New Tranche A DIP/Exit Facility (and related fees and expenses) were

negotiated in good faith, and both the process and its commercial terms are fair and reasonable.

Luth Decl. ¶ 35. The Debtors’ advisors actively sought out alternative proposals, engaged in an

extensive, competitive marketing process, and no other party provided a superior proposal that

would both improve on the economics of the existing Tranche A DIP Facility and provide the

Debtors with an attractive exit financing option. Id.

30. Accordingly, the Court should authorize the proposed amendment of the DIP

Agreement as a reasonable exercise of the Debtors’ business judgment.

B. The Terms of the Final DIP Amendment Order Should Largely Mirror the First Final DIP Order Except as Expressly Set Forth in the Final DIP Amendment Order

31. The New Tranche A DIP/Exit Facility will simply replace the existing Tranche A

DIP Facility, and the New Tranche A DIP/Exit Facility Secured Parties will simply step into the

shoes of the existing Tranche A DIP Facility Secured Parties. Luth Decl. ¶ 22. Accordingly, the

New Tranche A DIP/Exit Facility Loans and the New Tranche A DIP/Exit Facility Secured Parties


should enjoy the same rights and protections that the Tranche A DIP Facility Loans and the

Tranche A DIP Facility Secured Parties currently enjoy under the First Final DIP Order. Similarly,

the Debtors’ obligations under the New Tranche A DIP/Exit Facility should continue to have a

superpriority administrative expense status of the same priority as the DIP Superpriority Claims.

32. Under the First Final DIP Order, the liens of the existing DIP Facility primed, on a

consensual basis, the prepetition liens of prepetition creditors that asserted a lien in the “Shared

Collateral.” Luth Decl. ¶ 29.9 The basis for the consent was a direction letter made pursuant to a

“Collateral Sharing Agreement”—essentially a prepetition intercreditor agreement—that remains

in full force and effect. Id.

33. Furthermore, as set forth in the Luth Declaration, the New Tranche A DIP/Exit

Facility is the result of (a) the Debtors’ reasonable and informed determination that the New

Tranche A DIP Lenders offered the most favorable terms on which to obtain postpetition financing

with an exit financing conversion option and (b) extensive arms-length, good faith negotiations

between the Debtors and the New Tranche A DIP Lenders. Luth Decl. ¶ 35. The terms and

conditions of the New Tranche A DIP/Exit Facility are reasonable and appropriate under the

circumstances, and the proceeds will be used only for purposes that are permissible under the

Bankruptcy Code. Id. Further, no consideration is being provided to the New Tranche A DIP

Secured Parties other than as described herein. Luth Decl. ¶ 27. Accordingly, all of the “good

faith” provisions within the meaning of section 364(e) of the Bankruptcy Code contained in the

First Final DIP Order should be applicable to the New Tranche A DIP Secured Parties, and the

New Tranche A DIP Secured Parties should be entitled to all of the protections afforded thereby.

9 See also Debtor’s Motion for Entry of an Order (I) Authorizing the Debtors to (A) Obtain Postpetition

Financing, and (B) Grant Liens and Superpriority Administrative Expense Claims, (II) Modifying the Automatic Stay, and (III) Granting Related Relief [Docket No. 964] at ¶¶ 19, 38.


successful resolution of these Chapter 11 Cases that provides the Debtors the flexibility to

implement their business plan and continue to access the capital markets once these Chapter 11

Cases are over. The fee provisions contained in these banks’ letter agreements (attached at

Exhibits C-1 through C-3) are reasonable terms and conditions of their engagements. Luth Decl.

¶ 32.

37. In the case of JPMorgan, it will continue to act as administrative agent and collateral

agent for the DIP facility and is assisting the Debtors in implementing the proposed amendments

in those capacities. In addition, JPMorgan is being appointed as a joint lead arranger and

bookrunner for the New Tranche A DIP/Exit Loans. Under its fee letter, it will continue to earn

an annual agency fee of and will receive a transaction fee of . JPMorgan’s

agreement to continue to provide administrative and collateral agency services is particularly

beneficial to the Debtors because the time and cost of hiring a replacement agent would be

extremely burdensome given the extensive foreign collateral securing the DIP Facility. As an

example, JPMorgan had to retain at least 14 foreign law firms to assist with perfecting the collateral

in over 18 jurisdictions as part of the original DIP Facility, and the Debtors will avoid significant

costs by not replicating this process at this time. JPMorgan will also provide “fronting” at the

inception of the New Tranche A DIP/Exit Facility in exchange for a fee of of the New

Tranche A-1 DIP/Exit Loans being fronted, to be capped at ; if certain of the new lenders

are unable to fund the new facility immediately at closing, JPMorgan’s fronting services ensure

that the facility will nevertheless close and the Debtors will receive the funds necessary to repay

the existing Tranche A DIP Facility. Luth Decl. ¶ 33.

38. JPMorgan, Goldman Sachs, and BofA Securities, as joint lead arrangers and

bookrunners, each helped advise the Debtors’ management team on the structuring and


arrangement of the New Tranche A DIP/Exit Facility. In particular, JPMorgan and Goldman Sachs

acted as co-lead arrangers for the existing Tranche A DIP Facility, and their engagement in the

new transaction helped provide continuity in bringing existing lenders into the new facility. BofA

Securities previously acted as a restructuring advisor for the Debtors’ 2023 bond offering and the

Debtors’ related exchange offer, and it leveraged its familiarity with the Debtors’ business to

provide advice to the Debtors on this new long-term financing. Each of these fees was negotiated

at arm’s length, and the Debtors believe that the aggregate fixed fees10 (Credit Suisse’s success-

based fee of $6,500,000, JPMorgan’s fee (together with fronting fees and annual agency fees) of

up to $ , BofA Securities’ fee of $ , and Goldman Sachs’s fee of $ ,

totaling approximate $11.1 million or approximately 0.69% of the new principal amount) is highly

reasonable under the circumstances. Luth Decl. ¶ 34.

39. The Debtors believe that the redaction of the fee letters in the public filing and the

redaction of individual banks’ fee amounts in this Motion are appropriate under the circumstances,

for the same reasons that the Debtors did not publicly file similar fee letters of the arrangers and

agents for the original DIP Facility. See Debtors’ Mot. for Authorization to File DIP Facility Fee

Letter Under Seal [Docket No. 695] (citing other sealing orders); cf. Amended Order Authorizing

the Filing of DIP Facility Fee Letter Under Seal [Docket No. 736] (granting motion). From the

banks’ perspective, the fees set forth in these letters are closely guarded, proprietary data points.

Disclosure of the fee letters or their economic terms would cause substantial harm to the banks by

creating an unfair advantage to their competitors. These fees are customarily considered by the

10 This aggregate amount does not include Seabury Securities’ fees of approximately $4.25 million in relation to the

New Tranche A DIP/Exit Facility. Seabury’s aggregate success fees for the Chapter 11 Cases are likely to be constrained by a cap set forth in its engagement letter. Accordingly, the success fee for the New Tranche A DIP/Exit Facility should not affect the overall amount paid to Seabury for its work in the Chapter 11 Cases. In addition, payment of Seabury’s success fee for the New Tranche A DIP/Exit Facility will be deferred until final fees are determined.


applicable banks, and the commercial lending industry, in general, to be highly sensitive and

confidential, and are not typically disclosed to the public or other competing financing institutions.

40. In addition, the Debtors could be disadvantaged by disclosing these fees, as it would

set a floor price for future arrangers and agents to cite when negotiating with the Debtors. In

addition, the engagement letter with JPMorgan includes a termination event to the extent the fees

are publicly disclosed, and losing JPMorgan’s services, including the ongoing agency and fronting

bank roles, would, at the very least, impose additional costs and delay to the refinancing process.

41. Finally, maintaining the confidentiality of these fees is wholly consistent with the

precedent in this jurisdiction and others. See In re Avianca Holdings S.A., Case No. 20-11133

(MG) (Bankr. S.D.N.Y. October 5, 2020) [Docket No. 1028] (authorizing Debtors to file DIP fee

letters under seal); In re Fairway Group Holdings Corp., Case No. 20-10161 (JLG) (Bankr.

S.D.N.Y. Feb. 24, 2020) [Docket No. 211] (authorizing redaction of DIP fee letter); In re

Residential Capital, LLC, Case No. 12-12020 (MG) (Bankr. S.D.N.Y. May 18, 2012) [Docket No.

114] (authorizing debtors to file un-redacted DIP fee letters under seal); In re Nw. Airlines Corp.,

Case No. 05-17930 (ALG) (Bankr. S.D.N.Y. May 2, 2007) [Docket No. 6511] (authorizing debtor

to file a fee letter under seal in connection with the debtor’s motion for approval of an exit

financing facility); In re Calpine Corp., Case No. 05-60200 (BRL) (Bankr. S.D.N.Y. Jan. 29, June

21, and Dec. 14, 2007) [Docket Nos. 3494, 5028, and 7118] (authorizing debtors to file under seal

fee letter with respect to debtors’ refinancing effort and exit financing); In re Adelphia Commc’ns

Corp., Case No. 0241729 (REG) (Bankr. S.D.N.Y. Jan. 25, 2007) [Docket No. 13092] (authorizing

debtor to file under seal documentation of fee structure for underwriting agreement).


REQUEST FOR WAIVER OF STAY

42. The Debtors request a waiver of the stay of the effectiveness of the Final DIP

Amendment Order under Bankruptcy Rules 4001(a)(3) and 6004(h). Bankruptcy Rule 4001(a)(3)

provides that “[an] order granting a motion for relief from an automatic stay made in accordance

with Rule 4001(a)(1) is stayed until the expiration of fourteen days after entry of the order, unless

the court orders otherwise.” Fed. R. Bankr. P. 4001(a)(3). Bankruptcy Rule 6004(h), in turn,

provides that “[a]n order authorizing the use, sale, or lease of property other than cash collateral is

stayed until the expiration of 14 days after entry of the order, unless the court orders otherwise.”

Fed. R. Bankr. P. 6004(h).

43. As set forth above, the relief requested herein is essential to allow the Debtors to

move forward with their exit financing process and other efforts to pursue a resolution of these

Chapter 11 Cases. Accordingly, the relief requested herein is appropriate under the circumstances.

NOTICE

44. Notice of this Motion will be given to the Standard Parties (as defined in the Case

Management Order) and any party that has requested service pursuant to Bankruptcy Rule 2002.

In light of the nature of the relief requested, the Debtors submit that no further notice need be

given.


NO PRIOR REQUEST

45. No prior request for the relief sought in this Motion has been made to this or any

other court.

Dated: New York, New York August 4, 2021

/s/ Evan R. Fleck Dennis F. Dunne Evan R. Fleck Benjamin M. Schak MILBANK LLP 55 Hudson Yards New York, NY 10001 Telephone: (212) 530-5000 Facsimile: (212) 530-5219 - and – Gregory A. Bray MILBANK LLP 2029 Century Park East, 33rd Floor Los Angeles, CA 90067 Telephone: (424) 386-4000 Facsimile: (213) 629-5063 Counsel for Debtors and Debtors-in-Possession
