Interjet is declared bankrupt and must auction off its assets

The Second District Court for Commercial Bankruptcy in Mexico City formally declared Interjet bankrupt, more than two years after the suspension of its operations.

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Interjet and its debts

Following the ruling by Judge Saúl Martínez Lira, the company, which was founded in 2005 and ceased operations in December 2020, will have to auction its assets in order to pay creditors. Interjet accumulates debts of around 1.25 billion dollars and its employees have been on strike since January 2021.

The same court had declared the airline in insolvency proceedings at the end of August last year, a year and a half after the unions filed for insolvency.

At that time, Interjet said the process would be carried out «with the aim of achieving the conservation and start of operations of the company through the agreement signed with its recognised creditors». However, this never materialised.

The new resolution established the suspension of the company’s ability to exercise its assets and rights, with the exception of those that are inalienable, unseizable and imprescriptible, reported El Economista. For the order for the sale of assets to take place, the conciliator Gerardo Sierra must first be ratified as the trustee of the process.

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The ruling also aims to allow Interjet to pay at least part of what is owed to the more than 5.000 striking workers. The claim, which sought a conciliation and the payment of back wages and other benefits, led to the request for insolvency proceedings.

Interjet’s decline

The first signs of trouble came in 2019, when Interjet began suspending routes and reducing the size of its fleet. In just under six months, the company disposed of most of its aircraft and its management handed over control to Alejandro del Valle, who took over as CEO.

However, del Valle failed to halt the company’s decline. Both he and Miguel Alemán Magnani, Interjet’s founder, faced charges of tax fraud.

By the end of 2020, the impact of the crisis generated by the pandemic added to the debts in fuel, payroll and taxes, and ended up drowning Interjet. Now, the competent judge will analyse whether the company’s directors contracted obligations that they knew they could not meet and incurred in fraud.