Latam Owes Bondholders No Bond Interest Payment in Reorg Plan

Latam Airlines Group SA won an appellate court’s affirmation that the bankrupt Chilean airline’s reorganization plan doesn’t have to include $150 million interest payments tied to its subsidiary’s bonds.

The airlines’ decision to avoid paying the interest didn’t impair the claims of investors who held bonds issued by Latam’s Brazilian subsidiary Tam Linhas Aéreas SA, the US Court of Appeals for the Second Circuit ruled Wednesday.

US bankruptcy law protects Latam from paying the TLA bondholders additional accrued interest, the court ruled, affirming a lower court ruling that approved Latam’s reorganization plan.

The bondholders may have had a contractual right ...