Panamá-domiciled Colombian carrier Avianca announced that it is moving its domicile to the United Kingdom. The announcement comes as Avianca matriculates through a Chapter 11 bankruptcy process in the United States, in which Avianca received around $2 billion in new financing under a debt-for-equity deal that wipes out existing shareholders. The airline’s UK move was motivated by the fact that the rules and decisions of the Chapter 11 process are recognized there, allowing Avianca to access tax benefits under its new jurisdiction.
On August 2021, Avianca’s board of directors approved the filing of a plan of reorganization and disclosure statement in US Bankruptcy Court. Last week, the Southern District of New York approved it, which will allow the company to complete its Chapter 11 bankruptcy process before the end of the year.
Avianca also announced that its stock will no longer be traded on the BVC, Colombia’s Stock Exchange. At the time of the suspension of trading in Avianca shares at the Colombian Stock Exchange, its stock closed at 42.5 pesos (approximately 1 cent US). Since filing for Chapter 11 bankruptcy, its stock has lost almost all value. The company was delisted last year from the New York Stock Exchange as well.
The airline will change its name to Avianca Group International Ltd. once its principal domicile is established in the UK. In a statement, Avianca said that its current shareholders will not receive any payout or be included as shareholders in Avianca Group. Under the reorganization plan, Avianca says it expects to have 130 airplanes servicing 200 routes by 2025.