If there is a Chapter 11 filing without agreements in place, will the judge listen to arguments from both sides ( unions vs company ) about new work rules, then rule, or is it a "yea or nea " ruling with a few pen strokes?
Chapter 11 Question
- Thread starter LGA / 037
- Start date
LGA / 037 said:
As I understand it the judge will listen to both sides, creditors and management/shareholders to determine whether to allow a plan to be filed to continue operations and reorganize. Unless management/shareholders agree to sell the parts to pay creditors and shareholders. That the latter will happen seems to be the consensus of everything I have read. I hope not, but who knows.
oldiebutgoody
Veteran
Sounds to me like selling the UNSECURED assets to pay creditors will only get them a few cents on the dollar. May not be the best thing. In this respect the unions have management over a barrel. Liquidation will likely mean that the RSA loses everything, lease holders lose almost everything, and the ATSB guaranteed loans get paid off. 737s get made into beer cans, and some third world airline (like Virgin America) leases the airbusses at extremely cheap rates, with the glut of airplanes in the desert and all. UAIR liquidating is a losing proposition for everybody except the holders of the ATSB guaranteed loans.
oldiebutgoody said:
Depends on your perspective. RSA loses whether it liquidates or not. They only keep control by adding more money which isnt likely. So whatever they recover from a liquidation is likely all they will get. Same with the leaseholders. Given the situation the decision they will all be making, especially the ATSB loan holders is, how are we most likely to get the most money out of this. I cant imagine they would decide that is by continuing to operate the airline. Last time management was basically calling the shots, they wanted continued operations to try to save themselves. Now if it is any one party it is RSA and they have very little to gain and a lot to lose by not liquidating. Plus it gets this off their books so they can get back to doing something that doesnt make them look like fools. I think Lakefield is an optimist when he says there is a 95% chance of liquidation if there is a bankruptcy. The other thing to consider is that both Bronner and Lakefield, as well as virtually every independent analyst I have seen have said on the record that liquidation is extremely likely if they go to Ch 11 again. Given that, whether they are bluffing or not, who in their right mind would buy a ticket on U if they enter Ch11 again. I cant imagine ticket sales not disappearing, which will finish it one way or another I fear.
I really dont want to see this happen, but at this point Im seriously concerned that U will even be operating to fly me home this Sunday. I have a non-refundable ticket, but Im considering eating it so that I dont get stranded. If loads on UA and AA look good I will probably chance it since in worst case I can buy a one way ticket on one of them if they are available.
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