Bankrupt creditors of Avianca Brasil on Monday approved a plan to auction seven lots of the airline’s assets by the end of July. Brazil’s two largest airlines, Latam and Gol, each pledged to bid $70 million for unspecified lots and lend $8 million apiece to keep Avianca Brasil flying. The two airlines and Avianca Brasil’s major creditor, U.S. fund Elliot Management, produced the plan in the week between the first creditors’ assembly, scheduled for March 29 but canceled for lack of a quorum, and the second a week later, on April 5. The plan won approval over an earlier $105 million offer by rival Azul to assume key slots, routes, and up to 30 aircraft, moves that would have helped it break into the highly lucrative São Paulo-Rio de Janeiro shuttle market. Azul already advanced more than $13 million against that deal. The approval, negotiated during a seven-hour assembly, also calls for the division of assets among secured and unsecured creditors on a pro-rata basis, after severance benefits, the individual limit for which the creditors increased.

Avianca Brasil’s loyalty program constitutes one lot, and the other six lots consist of slots at Congonhas and Guarulhos airports in São Paulo and Santos Dumont Airport in Rio de Janeiro. In an interview with newspaper O Estado de S. Paulo, Azul president John Rodgerson complained about efforts by Latam and Gol to block its entry to Congonhas. “They have 90 percent of the airport and are trying to get 95 percent,” he told the paper. “They will break an airline [Avianca] to keep us from flying the shuttle...But [Brazilian national civil aviation agency] ANAC has made it clear that you can’t sell slots. If you want a slot, you have to buy the company that operates the slot.”

The plan faces operational, regulatory, and legal hurdles. Avianca Brasil owes aircraft lessors about $150 million, and their efforts to reclaim 40 percent of the airline’s fleet met with a court stay until the creditors’ assembly, which has now taken place. Brazil’s most highly regarded law firms attended the creditors’ assembly and will use their skills to persuade regulators that the agreement does not constitute a sale of slots. Should the plan and Avianca Brasil both collapse, the slots would revert, and under past criteria would go to the carriers that currently operate the most flights at the airports, namely Latam and Gol.