Garuda in Approximately $9.58 Billion Restructuring

Cleary Gottlieb has been advising PT Garuda Indonesia (Persero) Tbk (Garuda), Indonesia’s flag carrier, in its restructuring of approximately $9.58 billion of bank, bond, lease, and other indebtedness to address the ongoing challenges presented by the COVID-19 pandemic.

Cleary has assisted Garuda, in conjunction with its local law legal advisors and financial advisors, in implementing an in-court restructuring of its financial and contractual debt and in advising on its U.S. and English law governed aircraft lease and other obligations, including $500 million Sukuk certificates, and assisting in negotiations with the airline’s other creditors for workable solutions to its outstanding debt.

The restructuring plan was ratified by the Indonesian court overseeing Garuda’s proceeding on June 27, 2022. The ratification followed a successful vote by creditors with more than 95% approving the plan on June 17, 2022. The reorganization plan went effective on December 29, 2022. As a result of the plan, Garuda has significantly reduced its liabilities by restructuring outstanding debts, exchanged its remaining liabilities with $825 million in nine-year bonds and $330 million in new equity, and raised new financing. Pursuant to the plan, Garuda was also able to substantially reconstitute its fleet and enter into new lease terms for its post-restructuring fleet of planes. Cleary is also advising with respect to the recognition of Garuda’s Indonesian proceeding in various jurisdictions, including through an ongoing Chapter 15 filing in the U.S. Bankruptcy Court.

In addition to representing Garuda, Cleary has represented a number of airlines and stakeholders in the aviation sector, including as counsel to LATAM Airlines in its Chapter 11 proceeding, as counsel to Apollo as DIP lender to Aeromexico, as antitrust counsel to Korean Air, and work involving Ryan Air, Copa, and others.