20-11133-mg doc 694 filed 08/11/20 entered 08/11/20 21:27:30 … · 14 hours ago · objection...

44810.00007

Hearing Date & Time: August 18, 2020 at 2:00 p.m. (prevailing Eastern Time) Objection Deadline: August 14, 2020 at 12:00 p.m. (prevailing Eastern Time)

Dennis F. Dunne Evan R. Fleck 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 A. 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 HEARING ON DEBTORS’ (I) REQUEST FOR EXPEDITED

DETERMINATION; AND (II) EMERGENCY MOTION FOR AUTHORIZATION TO ENTER INTO LETTER AGREEMENTS WITH FINANCING ARRANGERS

1 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 Taca International Holdco 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); Nicaraguense de Aviación, Sociedad Anónima (Nica, S.A.) (N/A); Regional Express Américas S.A.S. (N/A); Ronair N.V. (N/A); Servicio Terrestre, Aereo 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 694 Filed 08/11/20 Entered 08/11/20 21:27:30 Main Document Pg 1 of 42

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2011133200811000000000005

Docket #0694 Date Filed: 08/11/2020

2

PLEASE TAKE NOTICE that, pursuant Local Bankruptcy Rules 9006-1 and 9077-1 and

Paragraph 26 of the Order Implementing Certain Notice and Case Management Procedures

[Docket No. 47] (the “Case Management Order”), a hearing will be held at 2:00 p.m. (prevailing

Eastern Time) on August 18, 2020 before the Honorable Martin Glenn, United States Bankruptcy

Judge, United States Bankruptcy Court for the Southern District of New York, One Bowling

Green, New York, New York 10004 to consider Debtors’ Emergency Motion for Authorization to

Enter into Letter Agreements with Financing Arrangers (the “Motion”).

PLEASE TAKE FURTHER NOTICE that, in accordance with General Order M-543

dated March 20, 2020, the Hearing will be conducted telephonically. Any parties wishing to

participate must do so telephonically through CourtSolutions (www.court-solutions.com).

Instructions to register for CourtSolutions LLC are attached to General Order M-543.

PLEASE TAKE FURTHER NOTICE that, any objections or responses to the relief

requested in the Motion shall: (a) be in writing; (b) conform to the Federal Rules of Bankruptcy

Procedure, the Local Bankruptcy Rules for the Southern District of New York, all General Orders

applicable to chapter 11 cases in the United States Bankruptcy Court for the Southern District of

New York, and the Case Management Order; (c) be filed electronically with this Court on the

docket of In re Avianca Holdings S.A., Case 20-11133 (MG) by registered users of this Court’s

electronic filing system and in accordance with the General Order M-399 (which is available on

this Court’s website at http://www.nysb.uscourts.gov) by August 14, at 12:00 p.m., prevailing

Eastern Time; and (d) be promptly served on the following parties: (i) the Chambers of the

Honorable Martin Glenn, United States Bankruptcy Court for the Southern District of New York,

One Bowling Green, New York, NY 10004; (ii) the Debtors, c/o Richard Galindo

([email protected]); (iii) Milbank LLP, 55 Hudson Yards, New York, New York


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10001 (Attn: Evan R. Fleck, Esq. and Gregory A. Bray, Esq. ([email protected] and

[email protected])), counsel for the Debtors; (iv) Morrison & Foerster LLP,

[email protected] and [email protected] (Attn: Brett H. Miller, Esq. and Todd M. Goren,

Esq.), counsel to the Official Committee of Unsecured Creditors (the “Committee”), (v) William

K. Harrington, U.S. Department of Justice, Office of the U.S. Trustee, 201 Varick Street, Room

1006, New York, NY 10014 (Attn: Brian Masumoto, Esq. and Greg Zipes, Esq.); (vi) the

Securities and Exchange Commission, 100 F Street, NE, Washington, D.C. 20549; and (vii) the

Federal Aviation Administration, 800 Independence Ave., S.W. Washington, DC 20591 (Attn:

Office of the Chief Counsel).

PLEASE TAKE FURTHER NOTICE that copies of the Motion and other pleadings for

subsequent hearings may be obtained free of charge by visiting the KCC website at

http://www.kccllc.net/avianca. You may also obtain copies of any pleadings by visiting at

http://www.nysb.uscourts.gov in accordance with the procedures and fees set forth therein.

PLEASE TAKE FURTHER NOTICE that your rights may be affected. You should

read the Motion carefully and discuss them with your attorney, if you have one. If you do

not have an attorney, you may wish to consult with one.

PLEASE TAKE FURTHER NOTICE that the Hearing may be continued or adjourned

thereafter from time to time without further notice other than an announcement of the adjourned

date or dates at the Hearing or at a later hearing.

PLEASE TAKE FURTHER NOTICE that you need not appear at the Hearing if you do

not object to the relief requested in any of the Motions.

PLEASE TAKE FURTHER NOTICE that if you do not want the Court to grant the relief

requested in the Motion, or if you want the Court to consider your view on the Motion, then you


4

or your attorney must attend the Hearing. If you or your attorney do not take these steps, the Court

may decide that you do not oppose the relief sought in the Motion and may enter orders granting

the relief requested in the Motion with no further notice or opportunity to be heard.

Dated: August 11, 2020 New York, New York

/s/ Evan R. Fleck Dennis F. Dunne Evan R. Fleck MILBANK LLP 55 Hudson Yards New York, New York 10001 Telephone: (212) 530-5000 Facsimile: (212) 530-5219

- and -


Counsel for Debtors and Debtors-in-Possession


Hearing Date & Time: August 18, 2020 at 2:00 p.m. (prevailing Eastern Time) Objection Deadline: August 14, 2020 at 12:00 p.m. (prevailing Eastern Time)

Dennis F. Dunne Evan R. Fleck 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


UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK

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


DEBTORS’ EMERGENCY MOTION FOR AUTHORIZATION TO ENTER

INTO LETTER AGREEMENTS WITH FINANCING ARRANGERS




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Avianca Holdings S.A. and its direct and indirect subsidiaries in the above-captioned

chapter 11 cases (the “Chapter 11 Cases”), as debtors and debtors in possession (collectively the

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

RELIEF REQUESTED

1. The Debtors request entry of the proposed order, substantially in the form attached

hereto as Exhibit A, authorizing them pursuant to sections 105(a) and 363(b) of the Bankruptcy

Code to enter into (i) that certain Fee Letter (the “Fee Letter”) dated August 11, 2020 attached

hereto as Exhibit B, which provides for (a) the payment of certain arranger fees and an Alternative

Transaction Fee to Goldman Sachs Lending Partners LLC and its affiliates and subsidiaries (“GS”)

and JPMorgan Chase Bank, N.A. and its affiliates and subsidiaries (“JPM”) in their capacities as

Co-Lead Arrangers of the Debtors’ anticipated $900 million Tranche A debtor-in-possession

financing facility (the “Tranche A DIP Facility”), and (b) certain administrative agent fees for JPM

in its capacity as administrative agent for the Tranche A DIP Facility, and (ii) that certain

Engagement Letter, dated August 11, 2020 attached hereto as Exhibit C (the “Engagement

Letter”, and together with the Fee Letter, the “Letter Agreements”), which provides for (a) the

engagement of GS and JPM as Co-Lead Arrangers and the engagement of JPM as administrative

agent of the Tranche A DIP Facility, (b) the indemnification of GS and JPM by the Debtors as set

forth in the Engagement Letter, and (c) the reimbursement to GS and JPM of certain reasonable,

out-of-pocket fees and expenses, including those for their respective counsel, as set forth in the

Engagement Letter.


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JURSDICTION

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.

BACKGROUND

3. On May 10, 2020 (the “Petition Date”), each of the Debtors filed a voluntary

petition for relief under chapter 11 of the Bankruptcy Code.

4. The Debtors continue to operate their businesses and manage their properties as

debtors in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. The Debtors’

cases are being jointly administered pursuant to Bankruptcy Rule 1015(b) and the Amended Order

(I) Directing Joint Administration of Chapter 11 Cases and (II) Granting Related Relief [Docket

No. 73].

5. On May 22, 2020, the United States Trustee for the Southern District of New York

appointed an official committee of unsecured creditors (the “Committee”). See Notice of

Appointment of Official Committee of Unsecured Creditors [Docket No. 154]. No trustee or

examiner has been appointed in these cases.

6. Additional information regarding the Debtors’ business, capital structure, and the

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

Neuhauser in Support of the Debtors’ Chapter 11 Petitions and First Day Orders (the “First Day

Declaration”).

PRELIMINARY STATEMENT

7. As has been shared with the Court at each hearing during these cases, the Debtors

and their advisors have analyzed the funding requirements necessary for their debtor-in-possession

financing based on management’s forecast, and concluded that the Debtors imminently will require


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new financing in the amount of at least $1.6 billion for the duration of these proceedings. While

the Debtors have made significant progress toward obtaining commitments for a portion of their

financing needs, including the entirety of the junior priority tranche in an aggregate principal

amount of $700 million (the “Tranche B DIP Facility”), a portion of the $900 million Tranche A

DIP Facility remains uncommitted. The Debtors therefore have decided to engage GS and JPM

as a Co-Lead Arrangers, along with Seabury Securities LLC (“Seabury”), the Debtors’ principal

financial advisor and sole and exclusive lead arranger of the Tranche B Facility, to assist them

with the syndication of the balance of this facility.

8. In any chapter 11 case, it is critical for a debtor to maintain liquidity sufficient to

finance its case. Here, certainty of financing is particularly critical during a global pandemic that

has devastated the airline industry and resulted in a complete shutdown of Avianca’s scheduled

passenger operations, making it extremely difficult to forecast potential lender participation. As

their cash dwindles, the Debtors must ensure they have access to sufficient liquidity to pay

operational expenses even if revenue remains suppressed in the near term. If the Debtors are not

able to secure a sufficient amount of debtor-in-possession financing, they will assuredly be forced

to sell or liquidate their businesses to the detriment of thousands of employees and customers

around the world. As fiduciaries, the Debtors must do everything in their power to avoid this

outcome.

9. While the Debtors are cognizant at all times of increasing fees and expenses,

including those contemplated by GS and JPM in the Letter Agreements, they must also ensure that

the business continues, lest there be little to no value to distribute to their creditors. It is critical

that the Debtors not make the mistake of doing too little when the stakes are so high. The Debtors


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thus require the services to be provided by GS and JPM to ensure the successful—and immediate—

syndication and consummation of the Tranche A DIP Facility.

10. Importantly, the Debtors have ensured that the work of two arrangers will not result

in a “double dip” from a fee perspective, and have caused the arranger fees for the Tranche A DIP

Facility to be split equally between JPM and GS. This economic arrangement is reflected in the

Letter Agreements. Additionally, the Debtors and Seabury have agreed to amend Seabury’s

engagement letter (filed contemporaneously herewith) to further protect against any potential

duplication in fees. Specifically, Seabury will be the sole arranger for the Tranche B DIP Facility,

and neither JPM nor GS will earn any fees in connection therewith. Seabury will also amend its

engagement letter to provide that the existing 90% reduction in success fees for any portion of a

DIP facility that is provided by existing stakeholders of the Debtors and/or any governmental entity

will be extended to all new money commitments under the Tranche A DIP Facility.

11. The Debtors therefore believe that entry into the Letter Agreements, in combination

with the modifications to Seabury’s engagement letter, is eminently reasonable under the

circumstances, is an appropriate exercise of their business judgment, and is in the best interests of

their estates and creditors. The fee arrangements contemplated in the Letter Agreements are the

product of arm’s length negotiation by the Debtors’ management. The potential benefits to be

derived from GS and JPM’s services will thus far outweigh the cost of the fees and indemnity, as

applicable, to be provided under the Letter Agreements.

THE LETTER AGREEMENTS

12. In connection with the arranging the Tranche A DIP Facility, GS and JPM have

requested that the Debtors agree to (i) pay certain arranger and administrative agent fees as

described in the Fee Letter, (ii) pay an Alternative Transaction Fee in the event an Alternative DIP

Financing is consummated, (iii) indemnify GS and JPM for their efforts related to the Tranche A


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DIP Facility, and (iv) reimburse GS and JPM for their reasonable, out-of-pocket fees and expenses,

including those for their respective counsel, subject to a $1 million cap for GS and a $1 million

cap for JPM (which may be increased from time to time by written agreement of the Debtors, the

Committee, and GS or JPM, as applicable, or pursuant to an order of the Court in the event that

the Committee does not consent to an increase that has otherwise been agreed to by the Debtors

and GS or JPM).

13. With respect to GS, the Debtors have previously sought and obtained relief from

this Court to indemnify GS for its efforts related to arranging a debtor-in-possession financing

facility, and to reimburse GS for the fees and expenses of its counsel subject to a $1 million cap

[Docket No. 635]. The Debtors and GS have agreed that the Engagement Letter will supersede

the previously approved letter agreement, and the $1 million cap on reimbursable fees and

expenses contained in the Engagement Letter shall be inclusive of all amounts incurred before the

date of the Engagement Letter.

14. Each of GS and JPM have been tasked with, and have already undertaken a

significant amount of work toward, co-arranging a $900 million Tranche A DIP Facility in

coordination with Seabury to complement the $700 million Tranche B DIP Facility currently being

negotiated with certain of the Debtors’ prepetition lenders and others. GS and JPM will be

representing the Debtors and their estates as Co-Lead Arrangers in discussions with potential

lenders beginning immediately, and in the case of JPM, it therefore requires the assurance of

indemnification from the Debtors in connection with these discussions. The Debtors’ entry into

the Letter Agreement will thus enable GS and JPM to continue their efforts to obtain the Tranche

A DIP Facility for the Debtors which, in turn, will pave the way for the consummation of the

Debtors’ eventual chapter 11 plan.


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15. The terms and conditions contained in the Letter Agreements are the product of

extensive and arm’s-length negotiations among the Debtors, GS, JPM, and each of their respective

advisors. The Debtors and each of the GS and JPM completed several rounds of negotiations

regarding the terms of the Letter Agreements. During this time, the Debtors were able to obtain

additional economic and non-economic concessions from each of GS and JPM. The Letter

Agreements reflect market terms and conditions, and are fair and reasonable in light of the type of

transaction and the size of the proposed financings. For these reasons, the Debtors submit that

entering into the Letter Agreements is an exercise of their sound business judgment and should be

approved.

BASIS FOR RELIEF

16. “Section 363 [of the Bankruptcy Code] . . . governs the use of funds by the debtor

in possession while it operates its business after the bankruptcy petition is filed.” In re Enron

Corp., 335 B.R. 22, 27 (S.D.N.Y. 2005). Section 363(b) of the Bankruptcy Code provides, in

relevant part, that “[t]he trustee, after notice and a hearing, may use, sell, or lease, other than in the

ordinary course of business, property of the estate.” 11 U.S.C. § 363(b); In re Lionel Corp., 772

F.2d 1063, 1066 (2d. Cir. 1983). Section 105(a) of the Bankruptcy Code provides that, “the court

may issue any order, process, or judgment that is necessary or appropriate to carry out the

provisions of this title,” including the provisions of section 363(b). See 11 U.S.C. § 105 (a); In re

Enron Corp., 335 B.R. at 27.

17. Courts generally will approve a request for relief under section 363 of the

Bankruptcy Code where the debtor demonstrates a sound business justification for seeking such

relief. In re Lionel Corp., 722 F.2d at 1071 (“The rule we adopt requires that a judge determining

a section 363(b) application expressly find from the evidence presented before him at the hearing

a good business reason to grant such an application.”); In re Fairfield Sentry Limited, 539 B.R.


8

658, 668 (Bankr S.D.N.Y. 2015) (SMB) (same); In re MF Global Inc., 467 B.R. 726, 730 (Bankr.

S.D.N.Y. 2012) (MG) (“Although not specified by section 363, the Second Circuit requires that

transactions under section 363 be based on the sound business judgment of the debtor or trustee.”).

To determine if a “good business reason” exists, courts apply the business judgment rule. In re

Integrated Resources, Inc., 147 B.R. 650, 656 (S.D.N.Y. 1992). The business judgment rule is “a

presumption that in making a business decision the directors of a corporation acted on an informed

basis, in good faith and in the honest belief that the action taken was in the best interest of the

company.” Id. Additionally, courts generally will not interfere with corporate decisions as to what

is in their best interest absent a showing of bad faith, self-interest, or gross negligence. Id.

Generally, “[w]here the debtor articulates a reasonable basis for its business decisions (as distinct

from a decision made arbitrarily or capriciously), courts will generally not entertain objections to

the debtor's conduct.” MF Global Inc., 467 B.R. at 730 (citing In re Johns–Manville Corp., 60 B.R.

612, 616 (Bankr. S.D.N.Y. 1986)). Furthermore, “[i]f a valid business justification exists, then a

strong presumption follows that the agreement at issue was negotiated in good faith and is in the

best interests of the estate; the burden of rebutting that presumption falls to parties opposing the

transaction.” Id.

I. Good Business Reasons Exist to Enter into the Letter Agreements

18. The Debtors and all of their economic stakeholders have an interest in reaching a

consensual resolution of these chapter 11 cases in the most cost effective and efficient manner

possible. GS and JPM’s arranger services substantially increase the likelihood of the Debtors

being able to obtain financing commitments that will facilitate both the development of an

appropriate business plan and the Debtors’ reorganization efforts, and will provide the best chance

for the Debtors to sufficiently fund their chapter 11 cases to their conclusion. The indemnity,

arranger and administrative agent fees, and fee reimbursement provisions contained in the Letter


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Agreements are a reasonable term and condition of GS and JPM’s arranger engagements and were,

along with all terms of Letter Agreements, negotiated by the Debtors, GS, JPM, and counsel to

each of GS and JPM at arm’s-length and in good faith. For these reasons, the Debtors believe that

their entry into the Letter Agreements is in their best interests and is consistent with achieving the

Debtors’ primary objective of confirmation and consummation of a consensual chapter 11 plan.

19. Courts in this district and others have approved the granting of indemnities and the

payment of fees incurred by professionals engaged by third parties when the “reimbursement

arrangement was ‘in the best interests of the Debtors and all parties in interest,’” including in other

large airline cases. See, e.g., In re AMR Corporation, Case No. 11-15643 (SHL) (Bankr. S.D.N.Y.

2011) [Docket No. 4652] (approving work fee letter for the reimbursement of hourly fees of

counsel and the monthly/success fees of a financial advisor for an ad hoc group of lenders to

potentially provide equity and other financing to support American Airline’s business plan and the

consummation of a chapter 11 plan); In re Relativity Fashion, LLC, Case No. 15-11989 (MEW)

(Bankr. S.D.N.Y. 2015) [Docket No. 1163] (approving agreement for indemnification and

payment of $60,000 per month in fees to co-lead arrangers under debtors’ debtor-in-possession

and exit facilities); In re Maxcom Telecomunicaciones, S.A.B. DE C.V., Case No. 13-11839

(PJW) (Bankr. D. Del. 2013) [Docket No. 109] (approving debtor’s entry into indemnification

agreement with Citibank as depository for proposed equity tender offer); In re Eastman Kodak

Co., Case No. 12-10202 (ALG) (Bankr. S.D.N.Y. 2012) [Docket No. 2576] (approving debtors’

motion to pay $1 million work fee to Citibank, as agent under the debtors’ DIP facility, in

connection with negotiating and structuring an amendment to the DIP facility to permit a maturity

extension and a supplemental DIP facility); In re Tronox, Inc., Case No. 09-10156 (ALG) (Bankr.

S.D.N.Y. 2009) [Docket Nos. 870, 997] (authorizing debtors to pay up to $5.5 million in due


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diligence costs to interested lenders for costs incurred in connection with providing exit financing);

In re Scotia Development, LLC, Case No. 07-20027 (Bankr. S.D. Tex. 2007) [Docket No. 2128]

(approving $150,000 work fee for Bank of America to structure and act as agent to a potential DIP

facility over objections of creditors’ committee and indenture trustee);2 In re Bethlehem Steel

Corp., 2003 WL 21738964, at *12 (S.D.N.Y. July 28, 2003) (court approved, pursuant to section

363(b) of the Bankruptcy Code, the reimbursement of professional fees of a union engaged in early

plan negotiations with a debtor). A motion to authorize such payments is further bolstered when

it is shown, as is the case with the Professional Fees, that the use not only has a “‘proper business

justification’” but “has potential to lead toward confirmation of a plan and is not [designed] to

evade the plan confirmation process.” In re Chrysler LLC, 405 B.R. 84, 96 (Bankr. S.D.N.Y. 2009)

(approving an expedited proposal to sell assets).

20. Absent evidence of “self-dealing or manipulation among the parties who negotiated

the reimbursement procedures” reimbursement motions should be approved. In re ASARCO,

L.L.C., 650 F.3d 593, 603 (5th Cir. 2011), the Fifth Circuit (i) upheld bankruptcy court decision

to prospectively approve payment of due diligence fees of bidders in an auction for debtor

properties pursuant to section 363(b) and (ii) explicitly rejected arguments that such authority

could only be granted pursuant to section 503(b)(3)(D). As discussed above, courts are especially

inclined to approve reimbursement agreements when they will facilitate processes that “maximize

the value of [a debtor’s] estate.” Id.

21. Courts in this district and others also routinely approve transaction fees, including

breakup fees. See, e.g., In re Gawker Media LLC, Case No. 16-11700 (Bank. S.D.N.Y. June 21,

2 The foregoing orders were attached as Exhibit C to the Debtors’ Motion For Authorization to Enter into Letter

Agreement with Financing Arranger [Docket No. 498].


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2018) [Docket No. 1141] (approving stalking horse purchaser’s 4.42% breakup fee); In re TK

Holdings Inc., Case No. 17-11375 (Bankr. D. Del. Dec. 8, 2017) [Docket No. 1335] (granting

motion to approve restructuring support agreement, including provisions for a breakup fee and

reimbursement of expenses); In re KIT Digital, Inc., Case No. 13-11298 (Bankr. S.D.N.Y. Jun. 17,

2013) [Docket No. 238] (same, for plan support agreement); In re General Maritime Corp., Case

No. 11-15285 (Bankr. S.D.N.Y. Dec. 15, 2011) [Docket No. 140] (same, for equity commitment

agreement); In re Sea Launch Co., L.L.C., No. 09-12153 (Bankr. D. Del. May 12, 2010) [Docket

No. 697] (approving 3.75-percent DIP break-up fee); In re NextMedia Group, Inc., Case No. 09-

14463 (Bankr. D. Del. Jan. 22, 2010) [Docket No. 126] (granting motion to approve restructuring

support agreement, including provisions for a breakup fee and reimbursement of expenses).

22. The efforts of GS and JPM are an integral part of the Debtors’ efforts to move

forward to achieve the objectives of chapter 11. The Tranche A DIP Facility, if obtained, will

facilitate the development of an appropriate business plan and confirmation of a chapter 11 plan,

and will provide the best chance for the Debtors to sufficiently fund their chapter 11 cases to their

conclusion. Accordingly, the relief requested is in the best interests of the Debtors and their

economic stakeholders.

II. Section 363(b) is the Applicable Standard For the Relief Requested

23. Section 363(b) of the Bankruptcy Code and the business judgment rule is the

standard of review for the relief requested. Although parties objecting to reimbursement motions

occasionally assert that such motions should be brought pursuant to either section 327(e)

(employment of professional persons) or 503(b)(3) of the Bankruptcy Code (allowance of

administrative expense for reimbursement), section 363(b) of the Bankruptcy Code is the proper

source of authority for authorizing reimbursement motions. In re Enron Corp., 335 B.R. at 29

(upholding bankruptcy court’s approval of an application to retain a law firm (and pay its fees) to


12

represent employees of the debtors in a pending investigation pursuant to section 363(b) as

opposed to section 327(e)). The fact that similar relief may be sought under different

circumstances pursuant to a different section of the code is irrelevant. As the ASARCO court

noted, “[t]he authorization of certain types of payments under section 363(b) is not prohibited

simply because there is another section of the Bankruptcy Code related to the same type of

payment.” Id. (quoting In re Bethlehem Steel Corp., 2003 WL 2173864, at *11).

24. Courts have held “that the business judgment standard is the better fit for assessing

[a debtor’s] reimbursement motion” because “[s]ection 363 addresses the debtor’s use of the estate

property.” In re ASARCO, L.L.C., 650 F.3d at 602. In denying an argument that section 503 is

required for reimbursement of fees as administrative expenses, the ASARCO court held that

section 503 “generally applies to third parties that have already incurred expenses in connection

to the debtor’s estate,” but that in the context of prospective reimbursement orders, “application of

the [363(b)] business judgment standard is appropriate.” Id. at 602-603. The court in Bethlehem

Steel reached a similar conclusion stating that in situations “where a creditor incurs expenses in

attempting to collect on pre-petition claims . . . that situation is covered by § 503,” but where the

“[debtor] determined that paying the [creditor’s] expenses was a good business decision and would

help develop a reorganization plan . . . it was appropriate for the debtors to reimburse the [creditor’s

professionals] for the reasonable cost of [their] advice and counsel.” In re Bethlehem Steel Corp.,

2003 WL 2173864, at *11.

25. The Debtors request for authority to enter into the Letter Agreements is in

furtherance of their ultimate goal of confirmation and consummation of a chapter 11 plan.

Therefore, section 363(b) is the proper standard under which the relief requested should be

considered.


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BANKRUPTCY RULE 6003 IS SATISFIED AND REQUEST FOR WAIVER OF STAY

26. The Debtors further submit that because the relief requested in this Motion is

necessary to avoid immediate and irreparable harm to the Debtors for the reasons set forth herein,

Bankruptcy Rule 6003 has been satisfied.

27. Specifically, Bankruptcy Rule 6003 provides:

Except to the extent that relief is necessary to avoid immediate and irreparable harm, the court shall not, within 21 days after the filing of the petition, issue an order granting the following: . . . (b) a motion to use, sell, lease, or otherwise incur an obligation regarding property of the estate, including a motion to pay all or part of a claim that arose before the filing of the petition, but not a motion under Rule 4001 . . . .

Fed. R. Bankr. P. 6003.

28. Any delay in obtaining Court approval of the Letter Agreements may cause a delay

in the work being performed by GS and JPM—especially in the case of JPM, which is not yet

indemnified by the Debtors. This in turn may result in the Debtors not timely receiving the DIP

Facility and liquidity they desperately need, which could have disastrous consequences for

creditors and the Debtors’ ability to continue as a going concern. Accordingly, the Debtors submit

that the relief requested herein is necessary to avoid immediate and irreparable harm and, therefore,

Bankruptcy Rule 6003(b) is satisfied.

29. The Debtors further seek a waiver of any stay of the effectiveness of the order

approving this Motion. Pursuant to Bankruptcy Rule 6004(h), “[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). As set forth

above, the relief requested herein is essential to prevent immediate and irreparable damage to the


14

Debtors’ operations, going-concern value, and their efforts to pursue a resolution to these

chapter 11 cases.

30. Accordingly, the relief requested herein is appropriate under the circumstances and

under Bankruptcy Rules 6003 and 6004(h).

NOTICE

31. Notice of this Motion has been or will be given to the following parties or, in lieu

thereof, to their counsel, if known: (a) the Standard Parties (as defined in the Order Implementing

Certain Case Management and Notice Procedures [Docket No. 47]); and (b) 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

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

other court.

[Remainder of Page Intentionally Left Blank]


15

WHEREFORE the Debtors respectfully request that the Motion be granted and that they

be granted such other and further relief as is just.

Dated: New York, New York August 11, 2020

/s/ Evan R. Fleck Dennis F. Dunne Evan R. Fleck MILBANK LLP 55 Hudson Yards New York, New York 10001 Telephone: (212) 530-5000 Facsimile: (212) 530-5219

- and -


Counsel for Debtors and Debtors-in-Possession


Exhibit A

Proposed Order


UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK -----------------------------------------------------------------x : In re: : : AVIANCA HOLDINGS S.A., et al.,1 : : Debtors. : : -----------------------------------------------------------------x


ORDER AUTHORIZING DEBTORS TO ENTER

INTO LETTER AGREEMENTS WITH FINANCING ARRANGERS

Upon the Motion (the “Motion”)2 of Avianca Holdings S.A. and its direct and indirect

subsidiaries in the above-captioned chapter 11 cases, as debtors and debtors in possession

(collectively, the “Debtors”), pursuant to sections 105 and 363 of title 11, United States Code (the

“Bankruptcy Code”), to enter into the Letter Agreements, all as more fully described in the Motion;

and the Court having jurisdiction to consider the Motion and the relief requested therein in

accordance with 28 U.S.C. §§ 157 and 1334 and the Amended Standing Order of Reference M-

431, dated January 31, 2012 (Preska, C.J.); and consideration of the Motion and the relief requested

therein being a core proceeding pursuant to 28 U.S.C. § 157(b); and venue being proper before



2 Capitalized terms used herein but not defined shall have the meanings ascribed to them in the Motion.


2

this Court pursuant to 28 U.S.C. §§ 1408 and 1409; and due and proper notice of the Motion having

been provided, and it appearing that no other or further notice need be provided; and a hearing

having been held to consider the relief requested in the Motion (the “Hearing”); and upon the

record of the Hearing and all of the proceedings had before the Court; and the Court having found

and determined that the relief sought in the Motion is in the best interests of the Debtors, and all

parties in interest, and that the legal and factual bases set forth in the Motion establish just cause

for the relief granted herein; and after due consideration and deliberation and sufficient cause

appearing therefor, it is it is HEREBY ORDERED THAT:

1. The Motion is granted as set forth herein.

2. Pursuant to section 363(b) of the Bankruptcy Code, the Letter Agreements are

approved in all respects and the Debtors are authorized to honor all of their obligations under the

Letter Agreements, including without limitation (i) the engagement of GS and JPM as described

in the Engagement Letter, (ii) the arranger and administrative agent fees as described in the Fee

Letter, (iii) the Alternative Transaction Fee as described in the Fee Letter, (iv) the indemnification

of GS and JPM on the terms set forth in the Engagement Letter, and (v) the reimbursement of

reasonable, out-of-pocket fees and expenses subject to an aggregate cap of $1 million for GS and

$1 million for JPM (the “Fee Cap”).

3. The Fee Cap may be increased from time to time by agreement of the Debtors, the

Committee, GS and/or JPM, as applicable, with the approval of the Court (which approval may be

in the form of an as-ordered stipulation); provided, that nothing herein shall limit the Debtors’

ability to unilaterally seek Court approval for an increase of the Fee Cap.


3

4. The professional fees payable pursuant to the Engagement Letter shall constitute

allowed administrative expenses of each of the Debtors in these cases pursuant to section 503(b)

of the Bankruptcy Code.

5. Entry of this Order is without prejudice to the Debtors’ right to seek entry of an

order modifying or supplementing the relief granted herein.

6. The Debtors are authorized to take all actions they deem necessary and appropriate

to effectuate the relief granted pursuant to this Order in accordance with the Motion.

7. The terms and conditions of this Order shall be immediately effective and

enforceable upon its entry.

8. This Court shall retain jurisdiction to hear and determine all matters arising from

the interpretation, enforcement, or implementation of this Order.

Dated: , 2020 New York, New York

___________________________________ UNITED STATES BANKRUPTCY JUDGE


Exhibit B

Fee Letter


44810.00007

GOLDMAN SACHS LENDING PARTNERS LLC

200 West Street New York, New York 10282

JPMORGAN CHASE BANK, N.A. 383 Madison Avenue

New York, New York 10179

CONFIDENTIAL

August 11, 2020

Avianca Holdings S.A.

DIP Term Loan Credit Facility Fee Letter

Avianca Holdings S.A. Avenida Eldorado No. 92-30 Centro Administrativo Avianca Bogota, 1, Colombia Attention: Adrian Neuhauser, CFO Ladies and Gentlemen: Reference is made to the Engagement Letter dated the date hereof (the “Engagement Letter”) among Goldman Sachs Lending Partners LLC (“GS”) and JPMorgan Chase Bank N.A. (“JPMorgan”, and together with GS, the “Engagement Parties”, “we” or “us”) and Avianca Holdings S.A. (the “Borrower” or “you”) regarding the Tranche A Facility and related transactions described therein. Capitalized terms used but not defined herein are used with the meanings assigned to them in the Engagement Letter. This letter agreement is the Fee Letter referred to in the Engagement Letter. Facility Fees Subject to the other terms and conditions herein, as consideration for the Engagement Parties’ agreements under the Engagement Letter, you agree to pay, or cause to be paid, to the Engagement Parties, each for its own account, an arrangement fee (the “Arrangement Fee”) in an aggregate amount equal to (i) [___]% of the aggregate face principal amount of the commitments provided under the Tranche A Facility on the date of the execution of the Credit Documentation, which fee shall be allocated 50% to GS and 50% to JPMorgan, and shall be earned on the date hereof and due and payable in its entirety on the date of initial funding under the Tranche A Facility, plus (ii) [ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .


2

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]. The Arrangement Fee shall be in addition to any fees to market paid to the Lenders in connection with the Tranche A Facility (any such fees to market to be agreed by you and the Engagement Parties). For the avoidance of doubt, the Arrangement Fee shall be payable on any and all commitments provided under the Tranche A Facility that do not constitute existing secured prepetition indebtedness that is rolled up under the Tranche A Facility.

Administrative Agent Fees

As consideration for JPMorgan’s agreement to act as Administrative Agent for the Tranche A Facility and the Tranche B Facility, you agree to pay, or cause to be paid, to the Administrative Agent, an annual administration fee in an amount equal to $[__ _] per year, which fee will be payable on the Closing Date and annually in advance on each anniversary thereof prior to the maturity or early termination of the Tranche A Facility and the payment in full of all amounts owing with respect thereto or otherwise owing under the Credit Documentation.

Alternative Financing

In the event that the Borrower or its board of directors makes a determination to enter into or otherwise accept (I) any alternative proposal for debtor-in-possession financing with a party other than the Tranche A Facility arranged by the Engagement Parties (other than the Tranche B Facility and any existing secured prepetition indebtedness that is rolled up under the Tranche A Facility), or (II) any debtor-in-possession financing that reduces the Tranche A Facility (without the consent of the Engagement Parties), eliminates entirely the Tranche A Facility or replaces the Tranche A Facility with debtor-in-possession financing with a party, arranger, bookrunner, agent, manager or similar other than the Engagement Parties (such alternative debtor-in-possession financing described in clauses (I) and (II), an “Alternative DIP Financing”), (a) the Borrower shall immediately notify the Engagement Parties in writing and provide the Engagement Parties with a copy of such Alternative DIP Financing proposal, and each Engagement Party may terminate (with respect to itself) the Engagement Letter and this Fee Letter within five (5) business days of such notification, and (b) the Borrower may terminate the Engagement Letter and this Fee Letter at any time after three (3) business days’ prior written notice to the Engagement Parties (the date of any such termination, the “Alternative Transaction Termination Date”).

In the event that the Alternative Transaction Termination Date occurs and the Alternative DIP Financing is consummated (the date of such consummation, the “Alternative DIP Financing Closing Date”), the Borrower shall pay the Engagement Parties a fee equal to [___]% of (y), if the Borrower has assisted the Engagement Parties in completing syndication as contemplated in the Engagement Letter and provided a reasonable opportunity prior to the Alternative Transaction Termination Date (as determined in good faith by the Arrangers) to syndicate and allocate the Tranche A Facility, the amount of commitments allocated by the Arrangers for the Tranche A Facility as of the Alternative Transaction Termination Date, as determined in good faith by the Arrangers, which amount shall not exceed $900 million or (z) if the Borrower has failed to assist or provide the opportunity described in clause (y), $900 million (the “Alternative Transaction Fee”) as full and complete compensation to the Engagement Parties for the Borrower’s failure to execute the Tranche A Facility (such fee to be allocated 50% to GS and 50% to JPMorgan). The Alternative Transaction Fee shall be due and payable on the date of Alternative DIP Financing Closing Date from the proceeds of such Alternative DIP Financing and shall have administrative expense priority status in the Chapter 11 Cases of the Debtors pursuant to section 503(b)(1) of the Bankruptcy Code. For the avoidance of doubt the Borrower shall have no obligation to pay the Alternative Transaction Fee in the event that the Alternative DIP Financing Closing Date does not occur, or it does not obtain approval to pay such Alternative Transaction Fee from the Bankruptcy Court.


3

General

You agree that, once paid, the fees or any part thereof payable hereunder and under the Engagement Letter shall not be refundable under any circumstances, regardless of whether the transactions or borrowings contemplated by the Engagement Letter are consummated, except as otherwise agreed in writing by you and the Engagement Parties. All fees payable hereunder and under the Engagement Letter shall be paid in immediately available funds in U.S. Dollars and shall not be subject to reduction by way of withholding, setoff or counterclaim or be otherwise affected by any claim or dispute related to any other matter. In addition, all fees payable hereunder shall be paid without deduction for any taxes, levies, imposts, duties, deductions, charges or withholdings imposed by any national, state or local taxing authority, or will be grossed up by you for such amounts so deducted. Further, you agree that the fees paid hereunder shall be in addition to reimbursement of the Engagement Parties’ out-of-pocket expenses as provided for in the Engagement Letter, and any other fees payable to the Engagement Parties or the Lenders pursuant to the Engagement Letter.

You agree that, each Engagement Party may, in its sole discretion, share with or allocate to, its affiliates and/or one or more Lenders, all or a portion of any fees payable to such Engagement Party pursuant to this Fee Letter.

You understand and agree that this Fee Letter shall not constitute or give rise to any obligation to provide any financing. This Fee Letter may not be amended or waived except by an instrument in writing signed by each Engagement Party and you. This Fee Letter may not be assigned by you except as permitted pursuant to the Engagement Letter. This Fee Letter may be executed in any number of counterparts, each of which shall be an original, and all of which, when taken together, shall constitute one agreement. The words “execution,” “signed,” “signature,” “delivery,” and words of like import in or relating to this Fee Letter and/or any document to be signed in connection with this Fee Letter and the transactions contemplated hereby shall be deemed to include Electronic Signatures (as defined below), deliveries or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature, physical delivery thereof or the use of a paper-based recordkeeping system, as the case may be. As used herein, “Electronic Signatures” means any electronic symbol or process attached to, or associated with, any contract or other record and adopted by a person with the intent to sign, authenticate or accept such contract or record.

You agree that this Fee Letter and its contents are subject to the confidentiality, limitation of liability and indemnity provisions of the Engagement Letter. The provisions of this Fee Letter shall survive the expiration or termination of the Engagement Letter (including any extensions thereof) and the funding of the Tranche A Facility, and shall remain in full force and effect regardless of whether the Credit Documentation shall be executed and delivered.

This Fee Letter shall be governed by, and construed in accordance with, the law of the State of New York. You consent to the exclusive jurisdiction and venue of the United States Bankruptcy Court for the Southern District of New York sitting in the Borough of Manhattan (or if such court lacks subject matter jurisdiction, the Supreme Court of the State of New York sitting in the Borough of Manhattan or the United States District Court for the Southern District of New York sitting in the Borough of Manhattan). Each party hereto irrevocably waives, to the fullest extent permitted by applicable law, (a) any right it may have to a trial by jury in any legal proceeding arising out of or relating to this Fee Letter or the transactions contemplated hereby (whether based on contract, tort or any other theory) and (b) any objection that it may now or hereafter have to the laying of venue of any such legal proceeding in the federal or state courts located in the City of New York, Borough of Manhattan.


[Signature Page to Fee Letter]

Please confirm that the foregoing is our mutual understanding by signing and returning to us an executed counterpart of this Fee Letter.

Very truly yours,

GOLDMAN SACHS LENDING PARTNERS LLC

By: Name:Title:

JPMORGAN CHASE BANK, N.A.

By: Name:Title:


Ehudin, Robert [IBD]

Robert EhudinAuthorized Signatory


[Signature Page to Fee Letter]

Very truly yours,


By: Name: Lisandro Miguens Title: Authorized Signatory


Accepted and agreed to as of

the date first above written:

AVIANCA HOLDINGS S.A.

By:

Name:

Title:

Richard GalindoSecretary


Exhibit C

Engagement Letter


44810.00007

GOLDMAN SACHS LENDING PARTNERS LLC 200 West Street


JPMORGAN CHASE BANK, N.A. 383 Madison Avenue


August 11, 2020

Avianca Holdings S.A. DIP Term Loan Credit Facility

Engagement Letter

Avianca Holdings S.A. Avenida Eldorado No. 92-30 Centro Administrativo Avianca Bogota, 1, Colombia Attention: Adrian Neuhauser, CFO Ladies and Gentlemen: You (including your subsidiaries, “you” or the “Borrower”) have informed Goldman Sachs Lending Partners LLC (“GS”) and JPMorgan Chase Bank, N.A. (“JPMorgan”, and together with GS, the “Engagement Parties”, “we” or “us”) that the Borrower and certain of Borrower’s subsidiaries (collectively, the “Subsidiary Debtors” and together with the Borrower, the “Debtors”) have filed voluntary petitions for relief (the “Chapter 11 Cases”) under Chapter 11 of the United States Bankruptcy Code (as amended, the “Bankruptcy Code”). You have further informed us that, in connection with the Chapter 11 Cases, you intend to incur a debtor-in-possession term loan credit facility consisting of (i) a priority tranche in an aggregate principal amount of up to US$900 million (the “Tranche A Facility”) and (ii) a junior priority tranche (the “Tranche B Facility”), and have requested that each Engagement Party agree to act as Co-Lead Arranger to arrange and syndicate the Tranche A Facility in coordination with Seabury Securities LLC, the Debtors’ principal financial advisor and sole and exclusive lead arranger of the Tranche B Facility (“Seabury”). Each Engagement Party is pleased to advise you that it is willing to act as a Co-Lead Arranger for the Tranche A Facility. Furthermore, each Engagement Party is pleased to advise you of its agreement to use commercially reasonable efforts to assemble a syndicate of financial institutions identified by the Engagement Parties in consultation with you and reasonably acceptable to you to provide the commitments for the Tranche A Facility, upon the terms and subject to the conditions set forth in this engagement letter (this “Engagement Letter”). This Engagement Letter shall supersede in all respects the Letter Agreement dated July 15, 2020 by and among GS, the Debtors, and Clifford Chance US LLP.

1. Titles and Roles It is agreed that JPMorgan will act as the sole and exclusive Administrative Agent (in such capacity, the “Administrative Agent”), and that GS and JPMorgan will each act as a co-lead arranger and joint bookrunner (in such capacity, the “Arrangers”) for the Tranche A Facility; provided that the Borrower agrees that JPMorgan may perform its responsibilities hereunder through its affiliate, J.P. Morgan Securities LLC. You agree that no other agents, co-agents, lead arrangers, syndication agents, documentation agents, bookrunners, managers or arrangers will be appointed, no other titles will be awarded and no compensation (other than as expressly contemplated by the Fee Letter referred to below) will be paid in connection with


2

the Tranche A Facility unless you and we shall so agree in writing (it being understood and agreed that the foregoing shall not prohibit payments to Seabury as compensation for their role as financial advisor). It is understood and agreed that this Engagement Letter shall not constitute (i) either an express or implied commitment or offer by any Engagement Party or any of its affiliates to provide any portion of the Tranche A Facility or the Tranche B Facility or to otherwise provide any financing (any such commitment or offer, if it ever exists, will be evidenced by an additional agreement between any Engagement Party or any of its affiliates and the Borrower) or (ii) any guarantee that the Tranche A Facility will be successfully arranged and consummated.

2. Syndication

We intend to syndicate the Tranche A Facility to a group of financial institutions (the “Lenders”) identified by us in consultation with you and reasonably acceptable to you. The Engagement Parties intend to commence syndication efforts promptly upon the execution of this Engagement Letter, and you agree actively to assist each Engagement Party in completing a syndication satisfactory to it. Such assistance shall be comprised of: (a) your using commercially reasonable efforts to ensure that the syndication efforts benefit materially from your existing lending relationships, (b) direct contact between senior management and advisors of the Borrower and the proposed Lenders, (c) the hosting, with the Engagement Parties, of one or more meetings of prospective Lenders and (d) as set forth in the next paragraph, assistance in the preparation of materials to be used in connection with the syndication. You hereby authorize each Arranger to download copies of the Borrower’s trademark logos from its website and post copies thereof and any relevant information materials to a deal site on IntraLinks™, DebtDomain, SyndTrak, ClearPar or any other electronic platform chosen by the Arrangers to be their electronic transmission system (an “Electronic Platform”) established by the Arrangers to syndicate the Tranche A Facility, and to use the Borrower’s trademark logos on any confidential information memoranda, presentations and other marketing materials prepared in connection with the syndication of the Tranche A Facility or, with your consent (which consent not to be unreasonably withheld, conditioned or delayed), in any advertisements that we may place after the closing of the Tranche A Facility in financial and other newspapers, journals, the World Wide Web, home page or otherwise, at such Arranger’s own expense describing its services to the Borrower hereunder. You also understand and acknowledge that we may provide to market data collectors, such as league table, or other service providers to the lending industry, information regarding the closing date, size, type, purpose of, and parties to, the Tranche A Facility.

As Arrangers, the Engagement Parties will manage all aspects of the syndication in coordination with Seabury, including decisions as to the selection of institutions to be approached and when they will be approached, when their commitments will be accepted, which institutions will participate, the allocations of the commitments among the Lenders and the amount and distribution of fees among the Lenders. In acting as Arrangers, no Engagement Party will have responsibility other than to use commercially reasonable efforts to arrange the syndication as set forth herein and is acting solely in the capacity of an arm’s length contractual counterparty to the Borrower with respect to the arrangement of the Tranche A Facility (including in connection with determining the terms of the Tranche A Facility) and not as a financial advisor or a fiduciary to, or an agent of, the Borrower or any other person.

3. Information To assist the Engagement Parties in their syndication efforts, you agree promptly to prepare and

provide to the Arrangers all information with respect to the Borrower and the transactions contemplated hereby, including all financial information and projections (the “Projections”), as we may reasonably request in connection with the arrangement and syndication of the Tranche A Facility. You hereby represent and covenant that (a) all information other than the Projections (the “Information”) that has been or will be made


3

available to the Arrangers by you or any of your representatives is or will be, when furnished, complete and correct in all material respects and does not or will not, when furnished, contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein not materially misleading in light of the circumstances under which such statements are made, and (b) the Projections that have been or will be made available to the Arrangers by you or any of your representatives have been or will be prepared in good faith based upon reasonable assumptions. If, at any time prior to the termination of this Engagement Letter, any of the representations and warranties in the preceding sentence would not be accurate and complete in any material respect if the Information or Projections were being furnished, and such representations and warranties were being made, at such time, then you agree to promptly supplement the Information and/or Projections so that the representations and warranties contained in this paragraph remain accurate and complete in all material respects under those circumstances. You understand that in arranging and syndicating the Tranche A Facility we may use and rely on the Information and Projections without independent verification thereof.

4. Fees

As consideration for the Engagement Parties' agreement to perform the services described herein, you agree to pay to the Engagement Parties the nonrefundable fees set forth in the Fee Letter dated the date hereof and delivered herewith (the “Fee Letter”). You agree that, once paid, the fees or any part thereof payable hereunder and under the Fee Letter shall not be refundable under any circumstances, regardless of whether the transactions or borrowings contemplated by this Engagement Letter are consummated, except as otherwise agreed in writing by you and the Engagement Parties. All fees payable hereunder and under the Fee Letter shall be paid in immediately available funds in U.S. Dollars and shall not be subject to reduction by way of withholding, setoff or counterclaim or be otherwise affected by any claim or dispute related to any other matter. In addition, all fees payable hereunder and under the Fee Letter shall be paid without deduction for any taxes, levies, imposts, duties, deductions, charges or withholdings imposed by any national, state or local taxing authority, or will be grossed up by you for such amounts so deducted.

5. Conditions Each Engagement Party's agreements herein are subject to (a) our completion of and satisfaction in all respects with a business, financial and legal due diligence investigation of the Borrower and the transactions contemplated hereby, (b) our not becoming aware after the date hereof of any information or other matter affecting the Borrower or the transactions contemplated hereby which is inconsistent in a material and adverse manner with any such information or other matter disclosed to us prior to the date hereof, (c) our satisfaction that prior to and during the syndication of the Tranche A Facility there shall be no competing offering, placement or arrangement of any debt securities or bank financing by or on behalf of the Borrower or any affiliate thereof (other than the Tranche B Facility or any existing indebtedness constituting prepetition indebtedness that is rolled up under the Tranche A Facility), (d) there occurring a syndication period reasonably agreed by the Engagement Parties from the date a final confidential information memorandum is available, (e) there not occurring or becoming known to us any material adverse condition or material adverse change in or affecting the business, operations, property, condition (financial or otherwise) or prospects of the Borrower and its subsidiaries, taken as a whole, as of the Closing Date (as defined below), (f) payment of fees under the Fee Letter in accordance with the terms thereof, (g) on or before August 12, 2020, the Borrower shall have filed a motion to approve this Engagement Letter and the Fee Letter in the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”) in form and substance reasonably satisfactory to the Arrangers, (h) on or before, August 18, 2020, entry of an order of the Bankruptcy Court, in form and substance satisfactory to the Arrangers approving this Engagement Letter and the Fee Letter (including payment of the fees hereunder and thereunder), and (i)


4

the other conditions set forth or referred to in this Engagement Letter and in the definitive documentation for the Tranche A Facility (the “Credit Documentation”). For purposes of this Engagement Letter and the Fee Letter, “Closing Date” shall mean the date on which the funding under the Tranche A Facility occurs.

6. Limitation of Liability, Indemnity, Settlement

(a) Limitation of Liability. You agree that (i) in no event shall any Engagement Party, and its affiliates and its and their officers,

directors, employees, advisors, and agents (each, and including, without limitation, the Engagement Parties, an “Arranger-Related Person”) have any Liabilities (as defined below), on any theory of liability, for any special, indirect, consequential or punitive damages incurred by you, your affiliates or your respective equity holders arising out of, in connection with, or as a result of, this Engagement Letter, the Fee Letter, the Chapter 11 Cases or any other agreement or instrument contemplated hereby, and (ii) no Arranger-Related Person shall have any Liabilities arising from, or be responsible for, the use by others of Information or other materials (including, without limitation, any personal data) obtained through electronic, telecommunications or other information transmission systems, including an Electronic Platform or otherwise via the internet; provided that, nothing in this clause (a) shall relieve you of any obligation you may have to indemnify an Indemnified Person (as defined below), as provided in clause (b) below, against any special, indirect, consequential or punitive damages asserted against such Indemnified Person by a third party. You agree, to the extent permitted by applicable law, to not assert any claims against any Arranger-Related Person with respect to any of the foregoing. As used herein, the term “Liabilities” shall mean any losses, claims (including intraparty claims), demands, damages or liabilities of any kind.

(b) Indemnity. You agree (A) to (i) indemnify and hold harmless each Engagement Party and its affiliates and its

and their officers, directors, employees, advisors, and agents (each, and including, without limitation, the Engagement Parties, an “Indemnified Person”) from and against any and all Liabilities and related expenses to which any such Indemnified Person may become subject arising out of or in connection with this Engagement Letter, the Chapter 11 Cases, the Credit Documentation, the Fee Letter, the Tranche A Facility, the use of the proceeds thereof, any related transaction or the activities performed or services furnished pursuant to this Engagement Letter or the role of the Engagement Parties in connection therewith or in connection with any actual or prospective claim, litigation, investigation, arbitration or administrative, judicial or regulatory action or proceeding in any jurisdiction relating to any of the foregoing (including in relation to enforcing the terms of clause (a) above and the terms of this clause (b)) (each, a “Proceeding”), regardless of whether or not any Indemnified Person is a party thereto and whether or not such Proceeding is brought by you, your equity holders, affiliates, creditors or any other person and (ii) reimburse each Indemnified Person upon demand for any legal or other expenses incurred in connection with investigating or defending any of the foregoing, regardless of whether or not in connection with any pending or threatened Proceeding to which any Indemnified Person is a party, in each case as such expenses are incurred or paid; provided that the foregoing indemnity will not, as to any Indemnified Person, apply to any Liabilities or related expenses to the extent they are found by a final, non-appealable judgment of a court of competent jurisdiction to (I) primarily result from the willful misconduct or gross negligence of such Indemnified Person in performing its activities or services under this Engagement Letter, or (II) have not resulted from an act or omission by you or any of your affiliates and have been brought by an Indemnified Person against any other Indemnified Person (other than any claims against any Engagement Party in its capacity or in fulfilling its role as an arranger or agent or any similar role hereunder and (B) to reimburse each Engagement Party and its affiliates on demand for all reasonable out-of-pocket expenses (including due diligence expenses, syndication expenses, consultant's fees and expenses, travel expenses, and reasonable fees, charges and disbursements of counsels) incurred in connection with the Tranche A Facility and any related


5

documentation (including this Engagement Letter, the Chapter 11 Cases, the Credit Documentation and the Fee Letter), or the administration, amendment, modification or waiver thereof, subject, in the case of this Clause (B) and with respect to legal expenses incurred on or prior to the Closing Date, to an aggregate cap of $1 million for GS and $1 million for JPM (inclusive of all amounts incurred before the date of this Engagement Letter); provided that that such caps shall not apply to fees and expenses in connection with or relating to any actual or threatened claim or objection to the approval of the Tranche A Facility, this Engagement Letter or the transactions contemplated hereby. In connection with reimbursement, the Engagement Parties’ counsel shall only be required to deliver to the Debtors summary invoices without time detail and redacted for privilege and confidentiality.

The expense reimbursements and indemnification provisions of this Engagement Letter shall

constitute superpriority administrative expenses under Sections 503(b)(1) and 507(a)(2) of the Bankruptcy Code in the Chapter 11 Cases without the need to file any motion (other than any motion as may be necessary to obtain the approvals of this Engagement Letter and the Fee Letter), application or proof of claim and notwithstanding any administrative claims bar date, and shall be immediately payable in accordance with the terms hereof without further notice or order of the Bankruptcy Court.

(c) Settlement.

You shall not, without the prior written consent of the Engagement Parties (which consent shall not

be unreasonably withheld, conditioned or delayed), effect any settlement of any pending or threatened Proceedings in respect of which indemnity could have been sought hereunder by the Engagement Parties unless (x) such settlement includes an unconditional release of such Indemnified Person in form and substance reasonably satisfactory to the Engagement Parties from all liability on claims that are the subject matter of such Proceedings and (y) does not include any statement as to or any admission of fault, culpability or a failure to act by or on behalf of the Engagement Parties or any injunctive relief or other non-monetary remedy. You acknowledge that any failure to comply with your obligations under the preceding sentence may cause irreparable harm to the Engagement Parties and the other Indemnified Persons.

7. Affiliate Activities, Sharing of Information, Absence of Fiduciary Relationships The Engagement Parties may employ the services of its affiliates in providing certain services

hereunder and, in connection with the provision of such services, may exchange with such affiliates information concerning you and the other companies that may be the subject of the transactions contemplated by this Engagement Letter, and, to the extent so employed, such affiliates shall be entitled to the benefits, and be subject to the obligations, of the Engagement Parties hereunder. Each Engagement Party shall be responsible for its affiliates’ failure to comply with such obligations under this Engagement Letter.

You acknowledge that each Engagement Party, the Lenders and their respective affiliates may be

providing debt financing, equity capital or other services (including financial advisory services) to other companies in respect of which you may have conflicting interests regarding the transactions described herein and otherwise. No Engagement Party will use confidential information obtained from you by virtue of the transactions contemplated by this Engagement Letter or its other relationships with you in connection with the performance by such Engagement Party of services for other companies, and no Engagement Party will furnish any such information to other companies. You also acknowledge that no Engagement Party has any obligation to use in connection with the transactions contemplated by this Engagement Letter, or to furnish to you, confidential information obtained from other companies.

You agree that each Engagement Party will act under this Engagement Letter as an independent contractor and that nothing in this Engagement Letter will be deemed to create an advisory, fiduciary or agency relationship or fiduciary or other implied duty between such Engagement Party, on the one hand, and


6

you and your respective equity holders or your and their respective affiliates on the other hand. You acknowledge and agree that (i) the transactions contemplated by this Engagement Letter are arm’s-length commercial transactions between each Engagement Party and, if applicable, its affiliates, on the one hand, and you, on the other, (ii) in connection therewith and with the process leading to such transaction each Engagement Party and, if applicable, its affiliates, is acting solely as a principal and has not been, is not and will not be acting as an advisor, agent or fiduciary of you, your management, equity holders, creditors, affiliates or any other person and (iii) with respect to the transactions contemplated hereby or the process leading thereto, each Engagement Party and, if applicable, its affiliates, has not assumed (x) an advisory or fiduciary responsibility in favor of you or your affiliates (irrespective of whether such Engagement Party or any of its affiliates has advised or is currently advising you or your affiliates on other matters (which, for the avoidance of doubt, includes acting as a financial advisor to the Borrower or any of its affiliates in respect of any transaction related hereto)) or (y) any other obligation except the obligations expressly set forth in this Engagement Letter. You further acknowledge and agree that (i) you are responsible for making your own independent judgment with respect to such transactions and the process leading thereto, (ii) you are capable of evaluating and understand and accept the terms, risks and conditions of the transactions contemplated hereby, and the Engagement Parties shall have no responsibility or liability to you with respect thereto, and (iii) no Engagement Party is advising the Borrower as to any legal, tax, investment, accounting, regulatory or any other matters in any jurisdiction, and you shall consult with your own advisors concerning such matters and you shall be responsible for making your own independent investigation and appraisal of the transactions contemplated hereby. Any review by any Engagement Party or any of its affiliates of the Borrower, the transactions contemplated hereby or other matters relating to such transactions will be performed solely for the benefit of such Engagement Party and shall not be on behalf of the Borrower. The Borrower agrees that it will not claim that any Engagement Party has rendered any advisory services or assert any claim against any Engagement Party based on an alleged breach of fiduciary duty by any Engagement Party in connection with this Engagement Letter and the transactions contemplated hereby or assert any claim based on any actual or potential conflict of interest that might be asserted to arise or result from the engagement of any Engagement Party or any of its affiliates acting as a financial advisor to the Borrower or any of its affiliates, on the one hand, and the engagement of such Engagement Party hereunder and the transactions contemplated hereby, on the other hand.

You further acknowledge that each Engagement Party, together with its affiliates, is a full service

securities or banking firm engaged in securities trading and brokerage activities as well as providing investment banking and other financial services. In the ordinary course of business, each Engagement Party may provide investment banking and other financial services to, and/or acquire, hold or sell, for its own accounts and the accounts of customers, equity, debt and other securities and financial instruments (including bank loans and other obligations) of, you and other companies with which you may have commercial or other relationships. With respect to any securities and/or financial instruments so held by any Engagement Party or any of its customers, all rights in respect of such securities and financial instruments, including any voting rights, will be exercised by the holder of the rights, in its sole discretion.

8. Confidentiality This Engagement Letter is delivered to you on the understanding that neither this Engagement Letter

or the Fee Letter nor any of their terms or substance shall be disclosed by you, directly or indirectly, to any other person except (a) to your officers, agents and advisors who are directly involved in the consideration of this matter and for whom you shall be responsible for any breach by any one of them of this confidentiality undertaking, (b) as may be compelled in a judicial or administrative proceeding or as otherwise required by law (in which case you agree to inform us promptly thereof), in each case excluding disclosure in the context of the Chapter 11 Cases, which shall be governed by the last sentence of this paragraph, (c) as may be required to obtain court approval (including by the Bankruptcy Court) in connection with any acts or obligations to be taken pursuant to this Engagement Letter or the Fee Letter or the transactions contemplated


7

hereby or thereby (but any such disclosure shall be subject to the limitations set forth in in the last sentence of this paragraph), (d) upon notice to us, the existence of this Engagement Letter and Fee Letter (but not the contents thereof) to any rating agency, (e) the existence and contents of this Engagement Letter (but not the Fee Letter), to a potential Lender in connection with the Tranche A Facility or Tranche B Facility, (f) the aggregate fee amounts contained in the Fee Letter as part of projections, pro forma information or a generic disclosure of aggregate sources and uses related to fee amounts related to the Tranche A Facility or the Tranche B Facility to the extent customary or required in any public filing relating to the Tranche A Facility or the Tranche B Facility or the Chapter 11 Cases, and (g) this Engagement Letter, the Fee Letter and the contents hereof and thereof to the extent reasonably necessary in connection with any remedy or enforcement of any right under this Engagement Letter or the Fee Letter. Notwithstanding anything to the contrary in the foregoing, in connection with seeking court approval of this Engagement Letter and the Fee Letter you shall only be permitted to (i) provide unredacted copies of this Engagement Letter and the Fee Letter to the Bankruptcy Court and the Office of the United States Trustee in connection with any motion seeking approval of this Engagement Letter and the Fee Letter, (ii) publicly disclose this Engagement Letter and the Fee Letter to the extent necessary to obtain approval of the Bankruptcy Court of this Engagement Letter and the Fee Letter or the Tranche A Facility, provided, that any disclosure of the Fee Letter pursuant to the preceding clause (i) and (ii) shall be made in a redacted manner in form and substance reasonably satisfactory to the Engagement Parties and, to the extent required, providing an unredacted copy thereof directly to the Bankruptcy Court and the Office of the United States Trustee, (iii) provide unredacted copies of this Engagement Letter and the Fee Letter to advisors to any statutory committee appointed in the Chapter 11 Cases of you or any of the other Debtors, and in each case so long as such disclosure is on a confidential “professionals’ eyes only” basis, and (iv) publicly file this Engagement Letter (but not the Fee Letter) in order to comply with any public disclosure requirements under the applicable rules of the Securities and Exchange Commission.

9. Miscellaneous This Engagement Letter shall not be assignable by you without the prior written consent of each

Engagement Party (and any purported assignment without such consent shall be null and void), is intended to be solely for the benefit of the parties hereto and is not intended to confer any benefits upon, or create any rights in favor of, any person other than the parties hereto. GS may assign its rights and agreements hereunder to Goldman Sachs Bank USA. This Engagement Letter may not be amended or waived except by an instrument in writing signed by you and each Engagement Party. This Engagement Letter and the Fee Letter are the only agreements that have been entered into among us with respect to the Tranche A Facility and set forth the entire understanding of the parties with respect thereto.

This Engagement Letter may be executed in any number of counterparts, each of which shall be an

original, and all of which, when taken together, shall constitute one agreement. The words “execution,” “signed,” “signature,” “delivery,” and words of like import in or relating to this Engagement Letter, the Fee Letter and/or any document to be signed in connection with this Engagement Letter and the transactions contemplated hereby shall be deemed to include Electronic Signatures (as defined below), and deliveries or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature, physical delivery thereof or the use of a paper-based recordkeeping system, as the case may be. “Electronic Signatures” means any electronic symbol or process attached to, or associated with, any contract or other record and adopted by a person with the intent to sign, authenticate or accept such contract or record.

This Engagement Letter shall be governed by, and construed in accordance with, the law of the State

of New York. The Borrower consents to the exclusive jurisdiction and venue of the United States Bankruptcy Court for the Southern District of New York sitting in the Borough of Manhattan (or if such court lacks subject matter jurisdiction, the Supreme Court of the State of New York sitting in the Borough of Manhattan


8

or the United States District Court for the Southern District of New York sitting in the Borough of Manhattan). Each party hereto irrevocably waives, to the fullest extent permitted by applicable law, (a) any right it may have to a trial by jury in any legal proceeding arising out of or relating to this Engagement Letter, the Credit Documentation, the Fee Letter or the transactions contemplated hereby or thereby (whether based on contract, tort or any other theory) and (b) any objection that it may now or hereafter have to the laying of venue of any such legal proceeding in the federal or state courts located in the City of New York, Borough of Manhattan.

The Engagement Parties, on behalf of themselves and the Lenders, hereby notify the Borrower that pursuant to the requirements of the USA Patriot Act, Title III of Pub. L. 107-56 (signed into law October 26, 2001) (the “Patriot Act”) and 31 C.F.R. § 1010.230 (the “Beneficial Ownership Regulation”), they, the Lenders and each of their respective affiliates are required to obtain, verify and record information that identifies the Debtors, which information includes the name, address, tax identification number and other information regarding the Debtors that will allow the Engagement Parties to identify the Debtors in accordance with the Patriot Act and the Beneficial Ownership Regulation, as applicable. This notice is given in accordance with the requirements of the Patriot Act and Beneficial Ownership Regulation and is effective for each of the Engagement Parties the Lenders and each of their respective affiliates.

The compensation, reimbursement, indemnification, confidentiality, affiliate activities and agreement not to assert fiduciary duty claims, jurisdiction, venue, waiver of jury trial and governing law provisions contained herein and in the Fee Letter shall remain in full force and effect regardless of whether definitive documentation relating to the Tranche A Facility shall be executed and delivered and notwithstanding the termination of this Engagement Letter.

Section headings used herein are for convenience of reference only and are not to affect the

construction of, or to be taken into consideration in interpreting, this Engagement Letter. If the foregoing correctly sets forth our agreement, please indicate your acceptance of the terms of

this Engagement Letter and the Fee Letter by returning to us executed counterparts of this Engagement Letter and of the Fee Letter not later than 11:59 p.m., New York City time, on the business day after entry of the Approval Order (as defined below) (the “Expiration Time”); provided that this Engagement Letter and the Fee Letter shall be of no force and effect unless the Bankruptcy Court shall have approved the payment of all fees, payments, expenses, indemnities and other obligations set forth in this Engagement Letter and in the Fee Letter. Each Engagement Party’s agreements herein will expire at the Expiration Time in the event the Engagement Parties have not received in readable form, a complete copy of each of this Engagement Letter and the Fee Letter countersigned by you. The parties hereto agree that your acceptance of the Engagement Parties’ offer shall only be effective if each such document has been received in such form by the Engagement Parties prior to the Expiration Time. Each Engagement Party’s engagements hereunder will terminate on (a) August 18, 2020 if and to the extent the Bankruptcy Court has not entered an order, in form and substance satisfactory to the Arrangers (which order (“Approval Order”) is in full force and effect, is unstayed and has not been amended, supplemented or otherwise modified without the consent of the Arrangers) approving this Engagement Letter and the Fee Letter (including the fees, payments, expenses and indemnities and other obligations set forth in this Engagement Letter and the Fee Letter), (b) on any date after which an order described in the immediately preceding clause (a) has been entered but ceases to be in full force and effect, is stayed, is vacated, or is amended or modified without the consent of the Arrangers, and (c) December 31, 2020 (the “Termination Date”), in each case unless the closing of the Tranche A Facility, on the terms and subject to the conditions contained herein and in the applicable Credit Documentation, has been consummated on or before such date.

[Signature Pages Follow]


[Signature Page to Engagement Letter]

The Engagement Parties are pleased to have been given the opportunity to assist you in

connection with this important financing. Very truly yours, GOLDMAN SACHS LENDING PARTNERS LLC By:________________________________ Name: Title: JPMORGAN CHASE BANK, N.A. By:________________________________ Name: Title:



Robert EhudinAuthorized Signatory



[Signature Page to Engagement Letter]

Very truly yours,


By:________________________________ Name: Lisandro Miguens Title: Authorized Signatory


Accepted and agreed to as of

the date first above written:

AVIANCA HOLDINGS S.A.

By:

Name:

Title:

Richard GalindoSecretary


20-11133-mg doc 694 filed 08/11/20 entered 08/11/20 21:27:30 … · 14 hours ago · objection...

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