Avianca will move its address to the UK in order to gain greater tax benefits. This was stated, Tuesday, by the specialized media “Bloomberg”, As part of the final hearing to approve the restructuring plan and the company’s exit from Chapter Eleven.
According to the outlet, the decision surprised the judge overseeing the company’s proceedings, Martin Glenn, who said he was “unhappy” with the fact that this “before unknown”.
(And so are Avianca’s new travel chairs.)
Glenn said the new owners would have an advantage if the company went bankrupt under UK business restructuring rules. He said the reason was because they were able to keep their capital even despite the objections of creditors..
Under US bankruptcy law, all creditors must receive the full payment before the owners get anything in return.
Company lawyer Evan Flick noted that the company chose the United Kingdom to acquire Tax advantage He added that the decision to become a legal entity in the UK was taken after the reorganization had progressed.
(Avianca’s board agrees to submit the reorganization plan.)
It is important to note that prior to the pandemic and entry into operation, Avianca was incorporated in Panama and operated from Colombia.
The airline also specified that what will change is its address and not the company’s headquarters.
“The proposal to settle the new holding company in the UK is based on the fact that the rules and decisions of the Chapter 11 process are recognized in that region. Thus, the new domicile does not imply any change in the operation or presence of an airline in its jurisdictionsAvianca explained.
This Tuesday was celebrated Final verdict to decide whether to approve Avianca’s plan to cut about $3 billion in debt and allocate ownership to lenders. However, the session was postponed.
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