In a blow to Avianca Group International Ltd., the U.S. Supreme Court on Monday refused to hear the airline’s challenge to a ruling that treated millions in leasing fees as high-priority costs rather than ordinary debts.
A High-Stakes Clash Over Bankruptcy Priorities
The case stemmed from the Second Circuit’s decision that lease-related fees coming due during Avianca’s Chapter 11 restructuring were priority administrative expenses, not general unsecured claims. The distinction—arcane to outsiders but monumental in bankruptcy law—can mean the difference between a creditor being paid in full or left scrambling for scraps.
Avianca, the successor to reorganized Avianca Holdings SA and Latin America’s second-largest carrier, urged the nation’s highest court to step in and resolve a widening split among federal circuits. The dispute centers on a deceptively simple but legally explosive question: Do lease payments “accrue” when a contract is signed, or when the bill actually lands on the debtor’s doorstep?
