T R O U B L E D C O M P A N Y R E P O R T E R
Friday, October 11, 2002, Vol. 6, No. 202
US AIRWAYS: Wants More Time to Make Lease-Related Decisions
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US Airways Group Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Eastern District of Virginia to extend their deadline to assume, assume and assign, or reject unexpired leases of nonresidential real property until the confirmation of a plan of reorganization, but no later than March 31, 2003.
Under Section 365(d)(4) of the Bankruptcy Code, the initial 60-day period within which the Debtors must assume or reject nonresidential real property leases expires on October 10, 2002. As of the Petition Date, the Debtors were lessees or sublessors under more than 500 Unexpired Leases. The Debtors are in the process of evaluating all of their owned and leased real estate and each Unexpired Lease agreement. In considering their options, the Debtors are evaluating a variety of factors to determine whether it is appropriate to assume, assume and assign, or reject each Unexpired Lease.
John Wm. Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher &Flom, explains that if the current deadline is not extended beyond October 10, 2002, the Debtors may be compelled, without sufficient time to make a reasoned decision, to either assume substantial, long-term liabilities under the Unexpired Leases or to forfeit the benefits associated with some Unexpired Leases, which would be to the significant detriment of the Debtors' ability to operate and preserve the going-concern value of their business for the benefit of all creditors and other parties-in-interest.
Mr. Butler assures Judge Mitchell that the Debtors have made substantial progress in assessing a number of Unexpired Leases. On the Petition Date, the Debtors sought to reject 25 Unexpired Leases. Given the size of these cases, the number of Unexpired Leases and the need for the Debtors to focus on their primary objective of stabilizing their business, Mr. Butler explains that more time is needed to adequately assess whether to assume or reject each Unexpired Lease.
Mr. Butler informs that Court that the Debtors' decision about each particular Unexpired Lease and the timing of assumption or rejection depends, in large part, on whether the location will play a future role in the Debtors' business plan going forward. Whether each individual Unexpired Lease will be assumed or rejected will depend, most significantly, on whether the Debtors will continue operations at the location once the strategic business plan is fully implemented.
The Debtors have made great progress in formulating their
business plan. However, locations are still being evaluated. Accordingly, it is not possible to determine at this early stage whether certain of those locations will remain a part of the Debtors' business. The Debtors are also conducting an analysis at certain of the locations to determine whether there is value to the Debtors in an assignment rather than a rejection of those Unexpired Leases. These decisions cannot be made properly and
responsibly without an extension of the time within which the Unexpired Leases must either be assumed or rejected, Mr. Butler emphasizes.
Given the importance of the Unexpired Leases to their ongoing business operations and restructuring efforts, the Debtors ask the Court, out of an abundance of caution, for a bridge order extending the deadline under Section 365(d)(4) until the Court enters a final order with respect to this Motion.
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Accordingly, Judge Mitchell extends the lease decision period until the November 7, 2002 hearing. (US Airways Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service, Inc., 609/392-0900)
US Airways Inc.'s 10.375% bonds due 2013 (U13USR2), DebtTraders reports, are trading at 10 cents-on-the-dollar. See
http://www.debttraders.com/price.cfm?