Spirit Airlines Bankruptcy Plan Approved, Converts Debt to Equity
U.S. Bankruptcy Judge Sean Lane approved Spirit Airlines' restructuring plan, allowing the budget carrier to convert $795 million in debt into equity and exit bankruptcy as a private company.
The restructuring cancels existing equity shares and transfers ownership to Spirit's lenders, including Pacific Investment Management Company, UBS Asset Management, and Citadel Advisors.
Spirit plans to raise an additional $350 million through the sale of new equity shares and expects to emerge from bankruptcy in Q1 2025.
The airline previously rejected an acquisition offer from Frontier Group, citing less value for creditors compared to the bankruptcy restructuring. Frontier's offer would have granted Spirit 19% equity, but Spirit cited additional financial and regulatory risks.
Judge Lane overruled objections from the U.S. Securities and Exchange Commission and the Office of the U.S. Trustee regarding the release of legal claims against non-debtors. The government agencies argued Spirit improperly assumed creditor consent unless they opted out.