Colombia’s Avianca Airlines blocked from receiving US$370 million emergency loan

Avianca ©AirTeamImages

A three-judge Cundinamarca Administrative court has blocked a loan from the Colombian government to stricken Avianca Airlines (Avianca) in response to a citizen’s lawsuit filed by Jonathan Ruiz Tobon. Avianca, which is currently in Chapter 11 bankruptcy proceedings in the U.S.

Cundinamarca is a department and administrative suburb of Bogotá. Little is known about Tobon, who filed the lawsuit blocking the loan on the grounds it was a threat to public resources and as the current bankruptcy proceedings are taking place in a foreign court, this jeopardizes the likelihood of the loan being repaid.

The lawsuit also looked to force the government to disclose proof that there was no conflict of interest where the loan was concerned. Avianca’s Senior Vice President of Strategic Relations and Customer Experience, Maria Paula Duque, is the sister of Ivan Duque, Colombia’s President. Beyond this, the lawsuit also requested documentation to demonstrate that due diligence had been correctly carried out. This is a point of controversy as the firm hired to conduct such a study was only hired the night before President Duque announced the intended loan.

The lawsuit stated that as Avianca was already in trouble prior to the Coronavirus COVID-19 pandemic, the pandemic could not be used to justify the financing, especially as this would show favoritism towards Avianca when other airlines are also seeking financial help. The magistrates admitted the lawsuit, and granted the injunction against the loan to Avianca, while denying a motion to require the Ministry of Finance and Public Credit to report on objective analysis that led to the approval of the loan and did not include a justification of possible conflict of interest between President Duque and his sister.

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