A Colombian court has upheld its injunction barring the national government from participating in Avianca’s debtor-in-possession (DIP) financing, but the airline is confident its latest proposal will still be approved by the US bankruptcy court.

The Bogota-based carrier last month secured new funding commitments as part of a revised $2 billion financing package, after previously warning that a decision by the administrative court of Cundinamarca to suspend a $370 million loan from the Colombian government had put its earlier DIP funding proposal at risk.

Avianca close-up-b787-high. Avianca

Source: Avianca

An Avianca Boeing 787

In a 30 September filing to the US Securities and Exchange Commission, the airline states that the Colombian court has decided “not to lift its injunction”. While it “has already filed an appeal in respect of this ruling”, Avianca is confident that its restructured DIP proposal will still be given the go-ahead without the government loan.

“As previously disclosed, Avianca’s DIP structure contemplates a backstop financing for the $240 million portion reserved for the eventual participation by governments, and is not contingent on the injunction being lifted before DIP financing approval,” says the filing.

The airline will seek approval for its revised financing proposal at a US bankruptcy court hearing on 5 October, and says it “expects a favourable outcome”.

Avianca filed for Chapter 11 bankruptcy protection in the USA in May.