Delta blinked at the poker table

[BoeingBoy]

If the impaired classes do not each get the 2/3 + majority votes, then the plan will not pass muster. Unless of course, they try 1129B)(1).

Are you sure about that?

In the US case there were (and are in DL's case) classes of unsecured creditors that will get nothing, nada, zero. They are presumed to vote against the plan - i.e. 100% of the creditors in each of those classes is automatically considered a "No" vote. Yet the US plan passed and I presume that the same could be true of the DL plan.

Jim

 

[Gilding the Lily]

Are you sure about that?

In the US case there were (and are in DL's case) classes of unsecured creditors that will get nothing, nada, zero. They are presumed to vote against the plan - i.e. 100% of the creditors in each of those classes is automatically considered a "No" vote. Yet the US plan passed and I presume that the same could be true of the DL plan.

Jim

Jim,

Yes I am sure! If the class is to receive nothing, they are deemed to reject the plan. Delta Class 8 and Comair Class 7 are to receive nothing and, thus, are deemed to reject the plan. If this is the case, as I stated earlier, you attempt cram down under 1129.

To explain this to you, I will quote the Collier Bankruptcy Practice Guide:

"The Code provides in section 1126(g) that a class not receiving and retaining any consideration under the plan is deemed to have rejected the plan... The 'deemed rejection' provision may have a major effect on chapter 11 practice. If the debtor is insolvent, a creditor proponent of the plan may want to provide that the debtor's stockholders receive nothing under the plan, thus eliminating their equity interests in the debtor. In such cases the class of interests of equity security holders will be deemed to have rejected the plan, and thus, pursuant to section 1129(a)(8), the only way the plan will be able to be confirmed is if the class of interests can be crammed down under section 1129"

This is very common in large Chapter 11's and it appears that is what is happening here.

 

[BoeingBoy]

Which raises two questions.....

1 - Basically, for a POR in a large BK case to be approved requires a "cram down" as far as some classes of creditors are concerned (assuming that some class is getting nothing) - right?

2 - Assuming #1 to be correct, that would undoubtedly be true with either the DL or US/DL plan - right?

OK, three questions....

3 - So the question is not whether the "creditors" approve the plan if #1 and #2 are correct, but which classes disapprove the plan since most times the shareholders are presumed to vote against it - right?

Jim

 

[delta777]

Guys, guys, way too technical for us lesser beings.

I'll break it down and give ya' the odds of it happening per the experts...

"Despite his praise for the financial aspects of US Airways proposal, Cordle said the steadfst opposition among Delta labor groups, managers and political backers is likely to stop the deal from happening."

"The creditors are going to want to take the bird in hand," he said. "I think US Airways has about a one-in-five chance of completing the deal over that much opposition." Vaughn Cordle,chief analyst at Airline Forecasts

"They'll take what's behind Grinstein's Door No. 1," agreed veteran industry consultant Mike Boyd. "They know it doesn't involve the Justice Department, congressional hearings, labor unions or disparate aircraft fleets and IT systems."

1-in-5 chance, thats it, 20%. Thanks for playing.

 

[BoeingBoy]

Guys, guys, way too technical for us lesser beings.

Ain't that the truth....

Call it a quirk - I just like to get the facts rather than what the media and interested parties claim are the facts.....

Maybe instead of spending all this time going over the underlying info I'd be better off scouring the internet for something that fits a particular agenda. Only trouble is I don't have a dog in this fight so don't have a particular agenda.

Jim

 

[Gilding the Lily]

Which raises two questions.....

1 - Basically, for a POR in a large BK case to be approved requires a "cram down" as far as some classes of creditors are concerned (assuming that some class is getting nothing) - right?

2 - Assuming #1 to be correct, that would undoubtedly be true with either the DL or US/DL plan - right?

OK, three questions....

3 - So the question is not whether the "creditors" approve the plan if #1 and #2 are correct, but which classes disapprove the plan since most times the shareholders are presumed to vote against it - right?

Jim

Jim,

Often, the debtor's stockholder's litigation claims and interests claims are to receive nothing under the plan. This is done because usually, these claims are subordinated to all claims or interests that are senior to or equal to the claim or interest. 11 U.S.C. 510b

This turns out to be very helpful during the confirmation process. If you are trying to cram the plan down a class of rejecting creditors, but a class that is junior to the rejecting class is to receive property under the plan, the rejecting class may be crammed down only if it receives property having a present value equal to the allowed amount of the claims of the class.

As it turns out, in DL's plan there are no classes junior to classes 7 and 8 that are to receive a distribution. Very convenient right? That is a typical scenario.

Thus, if the plan is accepted by the other classes, cram down should be relatively easy after a valuation is ordered.

Since, it appears that both classes are on the bottom of the barrel; I presume that US/DL plan would also distribute nothing to those classes. There is a possibility, however, that US would want to forgo the necessity of a valuation and, thus, would want to give "sufficient consideration" to avoid the deemed rejection. That is unlikely though.

In regard to Q # 3. Not really. Even with the cram down provisions, the plan needs to have been accepted by the requisite majorities of holders of claims and interests (other than those classes which the proponent of the plan intends to cramdown).

 

[AstroLounge]

Gosh, if they're so good at running an airline, how did they wind up in bankruptcy in the first place?

Schucks You beat me to it! "Keep Delta My Delta?" I am still wondering WHY in the hell we would even WANT Delta! If things were so grrrrrrrrrrrrrrreat down in Atlanta WHY did they go Bust???? Parker and his pals must see something most of US do NOT See because this proposal is ridiculous, if it were UA or NWA I'd be for it, BUT NOT Their Delta.....they can Keep Their Delta.

 

[usair_begins_with_u]

Is anyone sure why LCC is not buying up delta's unsecured debt?

 

[pit_needs_help]

Is anyone sure why LCC is not buying up delta's unsecured debt?

Gambling as in Las Vegas style odds.

 

[Vikedog64]

Schucks You beat me to it! "Keep Delta My Delta?" I am still wondering WHY in the hell we would even WANT Delta! If things were so grrrrrrrrrrrrrrreat down in Atlanta WHY did they go Bust???? Parker and his pals must see something most of US do NOT See because this proposal is ridiculous, if it were UA or NWA I'd be for it, BUT NOT Their Delta.....they can Keep Their Delta.

DP wants International and fast. We have it , not to mention a union free workforce(x pilots.)

 

[PA18]

"Despite his praise for the financial aspects of US Airways proposal, Cordle said the steadfst opposition among Delta labor groups, managers and political backers is likely to stop the deal from happening."

"The creditors are going to want to take the bird in hand," he said. "I think US Airways has about a one-in-five chance of completing the deal over that much opposition." Vaughn Cordle,chief analyst at Airline Forecasts

What Cordle really wants to say:

"If this deal goes through, then the new Delta will be bigger than my United, which might lessen my captain status that I stole by crossing a picket line of legitimate United pilots.

Besides, this deal will lead to more consolidation, and I might lose a seniority number in the merger with Continental."

(Wouldn't it be deliciously ironic if he ended up junior to all the Continental scabs?)

 

[usair_begins_with_u]

Gambling as in Las Vegas style odds.

No doubt.. But if LCC is really serious about a DL merger, it would be one sure way to firm up their pimp hand with the DL BOD.

 

[ussnark]

What Cordle really wants to say:

"If this deal goes through, then the new Delta will be bigger than my United, which might lessen my captain status that I stole by crossing a picket line of legitimate United pilots.

Besides, this deal will lead to more consolidation, and I might lose a seniority number in the merger with Continental."

(Wouldn't it be deliciously ironic if he ended up junior to all the Continental scabs?)

Thank you for bringing up a vital point.

Another is, can anyone bring up a prediction or analysis by Mr. Cordle that was ever close to being correct? Sometimes I think he just publishes and speaks about whatever he is paid to do. He simply lends an air of "independence" and credibility to any press release, without knowing anything about the subject.

 

[bofie]

Is anyone sure why LCC is not buying up delta's unsecured debt?

One answer would be that LCC is not fully committed to getting Delta. They'll take it if they can get it at low risk...

I still think that this bid is just a preamble to the realdeal, whatever that is. NW perhaps?