Deadlines....

[BoeingBoy]

As far as the "can we or can't we file for BK", I think we're in the area of semantics, and I've been as guilty as anyone of using sloppy language.

When we accepted the terms of the ATSB loan, we agreed to certain things. One of those was to not file for BK. Just like we agreed to maintain $X unrestricted cash, and to meet certain EBITDAR requirements, etc. If we file for bankruptcy, we have just violated that agreement.

Now, any of several things could happen.

Before filing Ch 11, we could pay off the ATSB loan and eliminate all of the requirements of the loan. funguy2 went into the numbers of this possibility somewhere above and I believe concluded that this course of action is unlikely. I agree.

Before filing Ch 11, we could go to the ATSB and seek relief from that provision. The open question is would the ATSB grant that relief. Certainly there would be some (probably stiff) price to pay if they acquiesed, but the price would probably be less than paying off the full loan.

We could just file Ch 11 and hope that the ATSB didn't call in the loan. If they didn't (and presumably demanded partial repayment in exchange), the CH 11 would proceed. Of course, if they called the loan the CH 11 could become a Ch 7 quickly.

We could just file Ch 7 right off the bat (unlikely in my opinion).

The company has already indicated that we will "probably" not meet the EBITDAR or unrestricted cash requirement (I haven't seen it mentioned which) at the end of September. Filing BK is just another requirement we will not meet.

To sum up - yes, we can file for BK. I have been guilty of saying "we can't" before, but that is technically inaccurate. More accurately, if we file we are in noncompliance with the loan terms. The real question is "What will be the consequences of that noncompliance?" At worst, we liquidate. At best, as I see it with one caveat below, we have to pay off a good chunk of the remaining loan balance.

Now, I will ask anyone with legal knowledge of BK - if we file, can the judge prevent the ATSB from calling the loan? That is the wildcard to me, because I don't know the answer. However, I suspect we will learn the answer shortly.

Jim

 

[funguy2]

To sum up - yes, we can file for BK. I have been guilty of saying "we can't" before, but that is technically inaccurate. More accurately, if we file we are in noncompliance with the loan terms. The real question is "What will be the consequences of that noncompliance?" At worst, we liquidate. At best, as I see it with one caveat below, we have to pay off a good chunk of the remaining loan balance.

Now, I will ask anyone with legal knowledge of BK - if we file, can the judge prevent the ATSB from calling the loan? That is the wildcard to me, because I don't know the answer. However, I suspect we will learn the answer shortly.

Jim

[post="175466"][/post]​

BoeingBoy:

Well said as usual...

As I noted above... there are not degrees of compliance. Either you comply or you don't. Either you breach the covenants or you don't. If the company is going to breach the cash or EBITDAR covenants anyway, it may be in their best interests to voluntarily file BK and breach that covenant. If nothing else, it may slow down the process of the loan being called and repayed, and certainly changes the nature of the pension payments, the AmEx agreement, and the union negotiations (potentially all in favor of the company).

You are absolutely right about the BK judge being able to rule against the ATSB being the wild-card. I do not know which way this goes either. My feeling is that there is a conflict of interest here... BK judges are federal judges, and the ATSB is a federal agency. Essentially, the BK judge works for a creditor (i.e. the federal gov't, assuming they have to cover the loan payment due on September 30) of the bankrupt company! Even if the BK judge could rule in favor of US Airways in such a motion to delay payment or some such thing, it seems it would not be in their best interest to do so. The best you could probably hope for is that the BK judge forces US Airways and ATSB to work something out, as opposed to just call the loan. Of course, the BK judge is only able to do this if there is a BK proceding.

700UW:

The loan covenants only "prevent" a BK filing the same way that a speed limit sign "prevents" speeding. They merely point out what you must do to remain in good standing. If you don't, there may be consequences. I don't believe a BK judge can deny US Airways request for BK on the basis of the ATSB loan covenant. All it does is initiate the ATSB's right to do certain things, like immediately call the loan.

 

[BoeingBoy]

700,

As I mentioned in the rather lengthy post above, I am absolutely guilty of being lax in my use of wording on this issue. It is quite possible that I'm the one that got you started on the "can't file BK" since I think I'm probably the first one to use those words here.

I apologize to you personally for getting this misunderstanding started, and to everyone else by extension....

Jim

 

[jimntx]

Now, I will ask anyone with legal knowledge of BK - if we file, can the judge prevent the ATSB from calling the loan? That is the wildcard to me, because I don't know the answer. However, I suspect we will learn the answer shortly.

Jim

[post="175466"][/post]​

Jim, while you are doing mea culpas for the use of the phrase "we can't file for bankruptcy", there's another misstatement that has been circulating that needs to be clarified.

The ATSB did not loan US Airways any money. Therefore, I don't see how they can "call the loan." The only entity that can call a loan is the entity which made the loan--i.e., Chase Manhattan or Bank of America or whoever loaned US Airways the money in the first place. What ATSB can do is declare that US Airways is not in compliance and implement whatever penalties were written into the agreement. If those penalties are monetary in form, the BK judge could declare ATSB a creditor who has to stand in line just like everyone else. Rather like if you file bankruptcy while owing income taxes. (Though I believe that the IRS gets special first in line status.)

If US Airways defaults in full or in part on these loans which are guaranteed by the ATSB, then the ATSB is on the hook to make up the difference. Just like when you co-sign a car note for your shiftless brother-in-law and he quits making payments with only 2 payments to go. You have to pay the last two payments, not the whole loan amount.

 

[jetmechline]

Bruce Lakefield told the ALPA MEC the company can file for bankruptcy. Furthermore, ALPA's financial and legal advisors told the MEC the same thing this week.

If the filing occurs, it will likely be on September 12.

Every major union except the IAM is negotiating contract changes with the company that include a S.1113E letter except the IAM.

In my opinion, there are a couple of scenarios that could occur, but basically with the IAM's decision to not participate in the new business plan the IAM will become irrelevant and basically toast.

Respectfully,

USA320Pilot

[post="175428"][/post]​

I would like to express my opinion on what I believe is going to play out at US Airways over the next few weeks.

1. The pilots MEC will soon come up with something they will consider acceptable and send it out for their membership to vote on.

2. The F/A’s will follow the pilots shortly afterwards.

3. The CWA membership appears to be on the verge of losing everything, but in the end it will be another yes vote.

If the airbus arbitration case is lost, that will be the icing on the cake for Bronner and his crack management team. He will be able to layoff half of the mechanics because this decision will affect all overhaul work. This will get the “Fighting Machinist†off the hook.

FAILING THAT

4. The Fighting Machinist will simply change their mind about negotiating concessions. Roach will probably hold another survey and then announce that they are willing to meet with the company. The excuse they will use for their change of heart will probably be laid at the doorstep of the membership. My guess is, although they don’t know it yet, the membership will be asking Roach and Ford to at least look at what the company is offering. Or how about, “hey fellows that profit sharing idea is better than nothing,†or “we will get them the next time,†or blah, blah, blah.

In the 30 plus years I have been with the IAM they have never said no to concession at any airline. With the possible exception of EAL they have never walked the walk. The IAM has already left the door wide open for their retreat from their current position, “the concession stand is closedâ€. They are now saying,“ we are not feeling pressure form the membership to open the contract." In the end the mighty IAM will fold up like an old chair. JUST MY OPINION.

 

[BoeingBoy]

jimntx,

You are, of course, correct. The ATSB did not loan U dollar one, but guaranteed 90% of the money borrowed. In this case, I plead guilty of using shorthand, assuming that all realize the ATSB did not actually loan the money.

As for the second part - the ATSB board not calling the shots. I'll refer you to Article 7, section 7.2 of the loan document. Here is probably the pertinent part:

"... for so long as the Board Guaranty shall remain in effect, remedies exercisable by the Agent or the Collateral Agent hereunder or under any Collateral Document, shall be exercised solely upon instructions received by the Agent or the Collateral Agent from the Board in writing ..... it being understood that exercise of such remedies or forbearance nonetheless shall remain within the sole discretion of the Board."

I'll let the lawyers argue about what that really means, but my layman's take is that the ATSB calls the shots.

Jim

 

[BoeingBoy]

jimntx,

There is this, which gives the lenders some authority over liquidation of collateral...

Article 8 The Loan Administrator

[For purposes of the appropriate section, the definition of "Requesting Party" is necessary]

Section 8.1(B) ..... at the request of the Board or any Lender (any such Person so requesting, a "Requesting Party")

Now to the meat of the matter:

Section 8.1(B)(xiv) during the continuance of an Event of Default, at the written request and expense of the Requesting Party, assist and advise such Requesting Party in connection with the liquidation of the Collateral, including selecting specialists to assist in appraisal and liquidation of collateral, recommending liquidation strategies, identifying potential buyers of the assets and analyzing bids.

Jim

 

[jimntx]

Now to the meat of the matter:

Section 8.1(B)(xiv) during the continuance of an Event of Default, at the written request and expense of the Requesting Party, assist and advise such Requesting Party in connection with the liquidation of the Collateral, including selecting specialists to assist in appraisal and liquidation of collateral, recommending liquidation strategies, identifying potential buyers of the assets and analyzing bids.

Jim

[post="175581"][/post]​

That's the scary part that I was hoping was NOT in the agreement. It seems to say, "We won't liquidate you, but we will help someone else do it if it prevents us from having to make good on the loan."

You are definitely between the rock and the hard place. My thoughts are with you all. My SWAG (scientific wild-assed guess) is the people who think the company is going into BK with or without a concessionary agreeement from the unions are closer to the truth than most. Even with a concessionary agreement, the company can still blame it on the unions. "Yes, we got a concession, but it wasn't enough."

 

[NeedForSpeedNFS]

That's the scary part that I was hoping was NOT in the agreement. It seems to say, "We won't liquidate you, but we will help someone else do it if it prevents us from having to make good on the loan."

You are definitely between the rock and the hard place. My thoughts are with you all. My SWAG (scientific wild-assed guess) is the people who think the company is going into BK with or without a concessionary agreeement from the unions are closer to the truth than most. Even with a concessionary agreement, the company can still blame it on the unions. "Yes, we got a concession, but it wasn't enough."

[post="175587"][/post]​

THANK YOU!!!!! 700, I think this is what I have been trying to say!!!! Well said jimntx!!

 

[bobcat]

Don't bet on the "yes" vote from the CWA!

 

[700UW]

jetmechline,

Educate yourself Scotty Ford is gone, and the IAM Mechanic and Related at US are in DL 142 headed by William O'Driscoll have been since May 31, 2004.

 

[usfliboi]

Head of alpa today, said he believed there was a strong possiblity that US would vol file Chapter 11 by mid sept. What does the head of alpa, Us execs, and almost every financial group know that 700 doesnt?

 

[RowUnderDCA]

So, is it possible that U can voluntarily file to reject some contracts, some equipment and leases, but......

not default on payment of any debt but default on the stipulations of the ATSB loan. Can they use the bankruptcy courts to protect them from terms (covenants) of a loan, but still pay it?

Basically telling a judge, "We're bankrupt, because we can't continue as a going concern under our current contracts and agreements, oh, but we CAN pay our debts, if relieved from our other obligations- leases and CBA's, we just need some protection from the courts to sort it all out."

 

[700UW]

Head of alpa today, said he believed there was a strong possiblity that US would vol file Chapter 11 by mid sept. What does the head of alpa, Us execs, and almost every financial group know that 700 doesnt?

[post="175632"][/post]​

If US Files they will be in violation of the loan covenants.

And if you believe Pollack and any US executive, I have a bridge for sale in Brooklyn, want to buy it?

And I know you were caught in a web of untruths of who you are.

 

[usfliboi]

Web of truths huh! I have a feeling the brass has this figured out. Im sure their not too concerned that you wont allow them too file. Sounds to me the guys who are "in the know" are the ones saying they can. Time will tell, then facts speaks for themselves...