After a year and a half practically without movement, the Interjet case resurfaces with its declaration of commercial bankruptcy . Last week, the Second District Court for Bankruptcy Matters of Mexico City ruled that the conciliation stage of the process be considered open, which marks the beginning of a long road for both workers and creditors of the company, between whom are suppliers and consumers.
A commercial bankruptcy is a legal figure contemplated primarily to try to reinsert people or companies that have a lack of liquidity or insolvency into economic activity, explains Carlos Olvera, leading partner of the insolvency area of the firm Santamarina + Steta. Although the Interjet administration assures that this is the purpose of the process, the company’s union has another intention: to auction off its assets to have resources to pay around 5,000 airline workers.
Where do consumers stand in this process? According to data from the airline itself, at the end of 2021 there were between 9,000 and 12,000 users who were left with a ticket in hand after the company ceased operations in December 2020. In the best case they could access a partial compensation, but at worst they could be left empty-handed.
Where is Interjet at the moment?
A commercial bankruptcy consists of a preliminary phase and two stages: conciliation and bankruptcy . The first seeks to reach a bankruptcy agreement, in which the conditions are agreed for the company to pay its creditors; in the second, the company’s assets are auctioned off to liquidate creditors “as far as it goes.” Interjet just started the conciliation stage.
In this phase, the company has the possibility of restarting operations, but for this it has to reach an agreement with its creditors and the debts it has with them.
How big is Interjet’s problem? In mid-2019, the airline had losses of 516 million pesos, but by the end of 2021 it accumulated a debt of around 40,000 million pesos , according to data from the new administration of the company, acquired by the Del Valle family from the hands of the German family.
The conciliation stage can be extended for a maximum of 365 days , explains Olvera. During this period, Mexican creditors must present their applications for credit recognition at the conciliator’s domicile – which is pending appointment by the Secretariat of Infrastructure, Communications and Transportation (SICT). Foreign creditors will have 145 calendar days to submit their respective applications.
“Once the one who is going to be our conciliator is appointed, we are going to ask that the issue of contracting essential credits be authorized,” said Carlos del Valle, deputy general director of Interjet, in a video released last week. “This helps us to strengthen so that we can continue and carry out with the issue always attached to the law to be able to request the permits and concessions established by law, committed to the most valuable thing that we have, which are our partners, the employees of this great Interjet company”.
However, at this stage there are several challenges that the company will have to overcome, the main one being the level of indebtedness it has, where there are liabilities with suppliers, of a fiscal and labor nature .
“Although the conciliation stage is intended to save the company, Interjet owes millions of dollars, it is disaffiliated from international organizations that have to do with aviation,” says Pablo Casas Lías, director of the National Institute of Aeronautical Legal Research (INAJ), referring to the suspension of the International Air Transport Association (IATA) of its payment system, in April 2020. “It is more convenient, with that investment that would have to be made, to open a new airline, without problems” .
For a commercial bankruptcy to be successful, more than 50% of the creditors must agree with the proposed bankruptcy agreement , explains Olvera, which is where the form and percentage of payment is established – which implies a debt relief, which can go from 5% to 95%–, as well as the terms in which the payments will be made.
“When a contest process is successful in conciliation, the agreement is celebrated and fulfilled. At that moment the contest ends”, he adds.
However, when an agreement is not reached, bankruptcy follows.
Who gets paid first?
When this stage is passed, an auction of assets is made to liquidate the creditors of a company. However, the payment order varies and consumers do not fare well in this process.
The Santamaria + Steta specialist explains that the priority is the workers , who can collect from one to two years of lost wages. In the same position are the expenses to maintain the bankruptcy estate –which is the set of assets and rights that make up the company’s assets–, and even if there is a new investor, it remains at that level.
These figures are followed by creditors with collateral –which can be a mortgage or a pledge–, other workers, the treasury, common creditors and, later, creditors without special collateral, where consumers enter .
“According to the Commercial Bankruptcy Law, airline workers are preferential credits . It will be impossible for any other creditor to make any payment”, considers Casas Lías.
Due to the weighting that consumers have as creditors of Interjet, there are other figures that point to being able to recover part of what the airline owes them.
“ The workers have a serious possibility of collection . Essentially, what will make it possible for Interjet to move forward will be the ability to generate new loans and financing”, concludes Olvera.
