By Maria Chutchian

(Reuters] Grupo Aeromexico SAB de CV has reached the final stage of restructuring. It proposes a plan to decrease debt by more that $1 billion. But, they must face opposition from other junior creditors. They claim Delta Air Lines (NYSE) is benefiting from this deal.

Following nearly two years of being bankrupt, the Mexican airline will be making its case in New York for bankruptcy on Jan. 27, after almost two.

Aeromexico with $2B in outstanding debt filed Chapter 11 protection with the United States in June 2020. The company claims that it has received the necessary votes from all its creditors to continue with the transaction, even though there are still objections.

The plan, which Aeromexico says will result in a total enterprise value of $5.4 billion and preserve 13,000 jobs, would give its largest creditor, Apollo Global Management (NYSE:), the largest stake https://www.reuters.com/business/aerospace-defense/aeromexico-shareholders-back-capital-increase-restructuring-plan-2022-01-17 in the company. However, the general unsecured creditors committee, which could be able to see pennies on each dollar, claims the plan unfairly benefits the insiders.

Because insiders were involved, the committee includes Falko Regional Aviation Limited, Nordic Aviation Capital, and a pilots’ union.

It said the voting results only show one class of general unsecured creditors in support of the plan because the company used a “loophole” to value certain claims lower than what the creditors say they are worth. Aeromexico claimed that creditors had the right to challenge this arrangement prior to approval of voting. However, Aeromexico did not do so.

The plan improperly gives insiders a chunk of the reorganized entity’s equity, the committee said. That value, the committee asserts, is coming “primarily out of the recoveries” of junior creditors.

The insiders that the committee takes issue with are Delta, which was Aeromexico’s majority shareholder and is slated to emerge from the deal with a 20% stake https://www.reuters.com/article/aeromexico-bankruptcy/delta-to-receive-20-of-new-shares-of-aeromexico-under-restructuring-plan-idUSKBN2I720W, and four Mexican individual shareholders who are also board members.

The court documents were filed by the committee and stated that neither Delta, nor any of its members have made sufficient contributions to restructuring the equity.

“We have supported Aeromexico throughout the chapter 11 process and our proposed participation in the plan of reorganization would help Delta optimize our long-term relationship with Aeromexico, provide substantial benefits to our customers and secure many jobs for our people,” a Delta spokesperson said.

According to the committee, it supports a distribution plan to insiders provided that it provides fair recovery to unsecured creditors.

Aeromexico representatives and the committee didn’t immediately reply to inquiries for comment.

Invictus Global Management and another group of unsecured creditors filed papers, urging the judge who oversees the bankruptcy proceeding to deny the plan. They also argue that the Aeromexico plan was “dominated by conflicted insiders.”

Although Invictus strongly opposes this plan, the judge recently ruled it couldn’t use $47.3million in claims that it bought last summer to vote against it because previous holders of these claims had already pledged to support it. Invictus will appeal this decision.

Aeromexico was among three large Latin American airlines which filed bankruptcy in the United States for protection against creditors in 2020. This included Avianca SA in Colombia and LATAM Airlines in Chile (OTC: Group SA).