$4.3 Million in Fees at the Heart of the Fight
The Burnham Sterling Dispute
At issue were $4.3 million in aircraft lease broker fees tied to Burnham Sterling & Co. LLC and Babcock & Brown Securities LLC. Those fees came due while Avianca navigated the turbulence of its 2020 bankruptcy, a period when airlines worldwide were battered by the pandemic.
The Second Circuit concluded that because the charges became payable post-petition, they earned the elevated status of administrative expense claims—effectively putting them toward the front of the line for repayment.
Supreme Court Lets Second Circuit Ruling Stand
On Monday, the Supreme Court, in a brief list of orders, declined to take up Avianca’s petition. The refusal leaves the Second Circuit’s decision intact and cements a precedent that could ripple across future corporate reorganizations.
For Avianca, the outcome marks the end of its bid to shift the fees into the lower-priority pool of unsecured claims. For bankruptcy practitioners, the ruling’s survival adds yet another layer of complexity to an already fragmented landscape—one where timing can prove as decisive as any contract clause.
