The aviation industry has been one of the heaviest hit sectors by COVID-19. Although recovery has begun to be detected in the Asia Pacific region, especially in China and Europe, some commentators project that a full recovery will be at least three years away. It is reported that governments have provided more than 100 billion US dollars of support to airlines.
Avianca Holdings and certain of its subsidiaries and affiliates filed for Chapter 11 protection in the United States on 10 May 2020. As one of the oldest airline brands in the world, which consists of multiple airline units operating primarily in the Central and Northern part of Latin America, Avianca had been in fragile financial condition for years. Following a management and shareholder change in mid-2019, the airline had made tangible and meaningful progress to improve its financial position in the second half of 2019. It was on the path to recovery and had taken many positive steps in that direction. Unfortunately, the coronavirus crisis struck in early 2020, and suspended Avianca’s recovery.
This article provides a brief introduction of Chapter 11 of the U.S. Bankruptcy Code, examining how it affects aircraft lease agreements, and provides a comparison between Chapter 11 and the English and PRC insolvency laws.
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