Do creditor's prefer US's offer?

[Gilding the Lily]

The Unofficial Committee believes that it is in the best interests of Delta and its stakeholders for Delta to immediately take the following steps:


1. Provide reasonable and customary access for US Airways to perform its due diligence in a manner consistent with similar transactions.

2. Fully cooperate with US Airways to make the required filings under HSR.

3. Postpone Delta's Disclosure Statement hearing currently scheduled for February 7, 2007 to allow Delta to fully evaluate US Airways' proposal.

4. Include the active participation and input of the Unofficial Committee's advisors with respect to the US Airways' proposal and other strategic alternatives.

5. Desist from taking actions intended to deter other companies from proposing transactions with Delta that may result in greater creditor recoveries than under a stand-alone Chapter 11 plan.

See article: http://biz.yahoo.com/prnews/070110/nyw162.html?.v=69

 

[phasersonstun2]

Maybe Parker should throw in the new iPhone.

It is so cool.

 

[delta777]

Damn, its just a shame that "The Unofficial Committee" only has about $2.3 billion in claims, or about as much as DALPA by itself. This "Unofficial Committee" wanted to take the first offer, mainly banks and investment firms looking for a quick buck. I remain unimpressed.

 

[Gilding the Lily]

Damn, its just a shame that "The Unofficial Committee" only has about $2.3 billion in claims, or about as much as DALPA by itself. This "Unofficial Committee" wanted to take the first offer, mainly banks and investment firms looking for a quick buck. I remain unimpressed.

May be small in comparison to the largest 9 creditors (official committee), but it would be pretty difficult to 'cram down' a plan against the wishes of 17 claimants that hold 2.3b in unsecured claims. Not impossible... but very difficult.

 

[luv2fly]

The Unofficial Committee believes that it is in the best interests of Delta and its stakeholders for Delta to immediately take the following steps:
1. Provide reasonable and customary access for US Airways to perform its due diligence in a manner consistent with similar transactions.

2. Fully cooperate with US Airways to make the required filings under HSR.

3. Postpone Delta's Disclosure Statement hearing currently scheduled forFebruary 7, 2007 to allow Delta to fully evaluate US Airways' proposal.

4. Include the active participation and input of the Unofficial Committee's advisors with respect to the US Airways' proposal and other strategic alternatives.

5. Desist from taking actions intended to deter other companies from proposing transactions with Delta that may result in greater creditor recoveries than under a stand-alone Chapter 11 plan.

See article: http://biz.yahoo.com/prnews/070110/nyw162.html?.v=69

These seem like awful big demands from an "unofficial" committee.
#4 seems highly unlikely. They simply don't yield any true authority in this process. How many claimants are not on the unofficial committee? Your cram down discussions with Jim were quite informative btw. I just don't see them yielding the kind of power neccessary to influence the outcome.
#5 is apparently already taking place. Thus the discussion with NW and UA.

 

[BoeingBoy]

The unofficial committee members are claimed to hold $2.3 billion in claims. The nine so far named members have not filed claims for any specific amounts that I can find. A couple have filed non-specific claims on the basis of being market makers for and holders of DL securities and notes in various (unspecified) amounts from time to time.

I'll note, however, that there has been fairly brisk trading in DL claims and I haven't bothered to go thru all those to determine if or how much value these folks may have purchased.

Jim

 

[Gilding the Lily]

The claims of the unofficial committee total about 15 percent of the total claims (before objection).

 

[BoeingBoy]

That'd mean they hold claims for $12 - $13 billion (before objection).

Jim

[Edit to add]
It occurs to me that you may have meant that these folk's claims, at face value, represent about 16% of the estimated total of valid unsecured claims at the end of the process (approx $2.5 billion face value of the estimated $15 - $16 billion in surviving unsecured claims). If this is what you meant, disregard my initial statement.

On the other hand, it's a meaningless statistic in that case. Like saying the IRS holds almost 400% of the unsecured claims.

 

[FW190]

The Unofficial Committee believes that it is in the best interests of Delta and its stakeholders for Delta to immediately take the following steps:
1. Provide reasonable and customary access for US Airways to perform its due diligence in a manner consistent with similar transactions.

2. Fully cooperate with US Airways to make the required filings under HSR.

3. Postpone Delta's Disclosure Statement hearing currently scheduled for February 7, 2007 to allow Delta to fully evaluate US Airways' proposal.

4. Include the active participation and input of the Unofficial Committee's advisors with respect to the US Airways' proposal and other strategic alternatives.

5. Desist from taking actions intended to deter other companies from proposing transactions with Delta that may result in greater creditor recoveries than under a stand-alone Chapter 11 plan.

See article: http://biz.yahoo.com/prnews/070110/nyw162.html?.v=69

Based on what I read today in the WSJ, the ability of Delta to emerge stand alone is now "almost certainly doomed." Delta's best hope is to hook up with a partner they find more desirable than US Airways that will also offer the creditors a comparable payoff on their claims.

As our CEO said prior to filing for bankruptcy, the problem with bankruptcy is that while you get to reorganize you also lose control over determining the company's future. Boy, isn't that the truth!

 

[Gilding the Lily]

That'd mean they hold claims for $12 - $13 billion (before objection).

Jim

[Edit to add]
It occurs to me that you may have meant that these folk's claims, at face value, represent about 16% of the estimated total of valid unsecured claims at the end of the process (approx $2.5 billion face value of the estimated $15 - $16 billion in surviving unsecured claims). If this is what you meant, disregard my initial statement.

On the other hand, it's a meaningless statistic in that case. Like saying the IRS holds almost 400% of the unsecured claims.

Jim,

Total claims in the class (unsecured). In regards to the immediate future of DL, it doesn't matter what the secured creditors think, they are unimpaired. The total estimated value of the unsecured claims is about $15b, thus they hold about 15 percent (give or take)... which you accurately stated in your additional/edited post.

And by the way, far from a meaningless statistic. By now you are aware of what it takes to accept a plan... you know, the whole 'at least two-thirds in amount and more than one-half in number of the allowed claims' discussion. (no need to rehash that out). It doesn't appear that this committee alone could hinder the acceptance of the plan; but it is a group, that with little support, can prevent acceptance or cramdown during confirmation.

 

[BoeingBoy]

Without knowing what specific class their claims fall into or whether those claims are the subject of objections, it's impossible to say how much if any influence they can or will have. It's certainly impossible to say that they wield 16% of the voting power without knowing if their claim will be reduced or rejected prior to voting. Apparently, even the 16% is based only on their attorney's public comments and not court filings.

Maybe you've found that info and would care to share it, because I haven't been able to. As I've said, a search of the claims filed doesn't yield any pertinent info. So based on what I've (not) found, they could have claims as shareholders or "other intrested parties" and be facing a cramdown under any plan (unlikely given the fuss they making, but possible).

Jim

 

[Gilding the Lily]

Without knowing what specific class their claims fall into or whether those claims are the subject of objections, it's impossible to say how much if any influence they can or will have. It's certainly impossible to say that they wield 16% of the voting power without knowing if their claim will be reduced or rejected prior to voting. Apparently, even the 16% is based only on their attorney's public comments and not court filings.

Maybe you've found that info and would care to share it, because I haven't been able to. As I've said, a search of the claims filed doesn't yield any pertinent info. So based on what I've (not) found, they could have claims as shareholders or "other intrested parties" and be facing a cramdown under any plan (unlikely given the fuss they making, but possible).

Jim

Jim,

Yesterday, DL filed with the court its motion to approve the Disclosure statement, etc... Although most of the filing is nothing new, the motion has explained how DL plans to treat, during the voting process, those claims that are contingent, unliquidated, or disputed. For those above-mentioned claims, if the proof of claim was timely filed, it will be temporarily allowed for voting purposes at $1, regardless of the potential amount of the claim. If the proof of claim was not timely filed, those above-mentioned claims are disallowed from voting.

Of course, the majority of those above-mentioned claimants likely timely filed its proof of claim, unless their legal counsel was worthless.

It is unlikely that the Unofficial Committee's dollar amount of claims, without other creditors' assistance, will be able to seriously alter the voting/acceptance process. This is because the unofficial committee's dollar amount of claims is, at very best, only half of the amount to defeat the dollar amount requirement to acceptance in a given class. This scenario would be furthered if several of the Unofficial Committee's claims are contingent, unliquidated, or disputed... as those claims would be reduced, for voting purposes, to $1. (Obviously this analysis is moot if a significant portion of the official creditors' committee is against the POR).

If many of the unofficial creditors' claims are contingent, unliquidated, or disputed, these 17 creditors (give or take) may have an easier chance to alter the acceptance of the POR in regards to the "one-half in number of claims" requirement. Of course, it is highly unlikely that the unofficial committee's claims, alone, will equal one-half of the number of claims in a given voting class. Thus, if the unofficial committee tried this strategy, it likely still would need to woo the favor of other creditors. But, this committee would probably be more successful, if at all, in this regard because the newly filed motion only lessens the dollar amount of contingent, unliquidated, or disputed claims... not the tabulation number. (Again this analysis is moot if a significant portion of an entire creditor class is against the POR).

 

[BoeingBoy]

Thanks for the info - I haven't had a chance to look over the new filing.

Seems like it still boils down to what claims the members of the "unofficial" committee have, which I still haven't found. The last I saw, there were still only a handful of members, so they have little weight in numbers unless they're all in a class with very few members, and their claims could be worth only $1 each giving them no weight in claim value unless they're in a very small class.

In short, it still appears that they're making a lot of smoke but it's impossible to tell how much fire there is. Unless, of course, you've uncovered more info on their specific claims than I have.

Jim

 

[Gilding the Lily]

Thanks for the info - I haven't had a chance to look over the new filing.

Seems like it still boils down to what claims the members of the "unofficial" committee have, which I still haven't found. The last I saw, there were still only a handful of members, so they have little weight in numbers unless they're all in a class with very few members, and their claims could be worth only $1 each giving them no weight in claim value unless they're in a very small class.

In short, it still appears that they're making a lot of smoke but it's impossible to tell how much fire there is. Unless, of course, you've uncovered more info on their specific claims than I have.

Jim

Jim,

This was a while back, but a new filing by the Unofficial Unsecured Creditor's Committee releases more names of the members of the committee. Although I have not researched it as of yet, it should make it easier to determine the respective claims held by members of that committee. We knew some of the members, this should include the rest.

The following are members of the Unofficial Creditor's Committee:

* Avenue Capital Management II, L.P.
* Bear Stearns Investment Products Inc.
* CarVal Investors, LLC
* Columbus Hill Capital Management, L.P.
* Davidson Kempner Capital Management
* Deutsche Bank Securities, Inc.
* Duquesne Capital Management LLC
* Farallon Capital Management, LLC
* GoldenTree Asset Management L.P.
* GSO Capital Partners LP
* Lehman Brothers Inc./Commercial Paper
* Longacre Fund Management, LLC
* Silver Point Capital, LP
* Stonehill Capital Management LLC
* Trafelet & Company, LLC
* TPG Credit Management, LP
* Tudor Investment Corporation
* York Capital Management

 

[michael707767]

The following are members of the Unofficial Creditor's Committee:

* Avenue Capital Management II, L.P.
* Bear Stearns Investment Products Inc.
* CarVal Investors, LLC
* Columbus Hill Capital Management, L.P.
* Davidson Kempner Capital Management
* Deutsche Bank Securities, Inc.
* Duquesne Capital Management LLC
* Farallon Capital Management, LLC
* GoldenTree Asset Management L.P.
* GSO Capital Partners LP
* Lehman Brothers Inc./Commercial Paper
* Longacre Fund Management, LLC
* Silver Point Capital, LP
* Stonehill Capital Management LLC
* Trafelet & Company, LLC
* TPG Credit Management, LP
* Tudor Investment Corporation
* York Capital Management

The unofficial committee is made of up financial institutions who were attempting to make money off Delta by trading the ups and downs, or by going short. These are the ones who got stuck with Delta bonds.

Long story short, these creditors don't give a damm about whether or not a combined US/DL makes sense, or will even survive in the long term. They want the most short term money, thats all. So if Parkers plan would pay them even one penny more, that's the route they want to go.

The vast majority of the creditors are companies that actually did business with Delta, and likely stand to make more money in the long term by continuing to deal with a strong stand alone Delta. So they are willing to take a bit less short term if the long term prospects for Delta are better.

It's interesting that no one besides the financial firms that got stuck with Delta bonds have made any noise at all about pursuing due dilligence or considering all offers.

I think Jim hit onto something earlier. I believe the creditors of the unofficial committee are facing a cramdown.