Unsecured creditors of SAS had been dissatisfied with a previous version of the carrier’s US Chapter 11 re-organisation plan, and agreed to the latest revision after “hard-fought” discussions, court filings show.
The 5 February filing states that treatment of general unsecured creditors in the plan had raised “significant concerns”.
These concerns centred mainly on proper allocation of distributable value from claims against various entities in the bankruptcy case – including parent SAS AB – and contribution of around $220 million of distributable value into a trust to pay for potential governmental non-tax claims.
The non-tax claims are based on interest owned arising from state aid which was received in 2020, but which has been deemed incompatible under European Union law.
Under the previous Chapter 11 plan, says the filing, the “lengthy process” required to resolve these non-tax claims meant unsecured creditors would not have received the “lion’s share” of their distributions for “nearly a decade – if at all”.
It adds that weeks of “extensive, hard-fought negotiations” between SAS and investors have been held in order to “reconcile tensions” between US bankruptcy law and EU law, examine “novel questions” of Danish and Swedish law, and analyse laws regarding securities, tax and trusts in various jurisdictions.
The filing says the latest Chapter 11 plan provides “numerous benefits” to general unsecured creditors including increasing the initial distributable value to them by around $7.2 million, and fairly allocating the value among various SAS-affiliated entities in the bankruptcy.
It also develops a legal strategy for determining the amount of governmental non-tax claims.
“With these material improvements…the [creditors’ committee] is prepared to support the plan,” it states, acknowledging that “time is not on [SAS’s] side” given the duration that SAS has been under costly Chapter 11 protection and its need to begin soliciting acceptances of the plan.
