Feb 12, 2003
On 3/13/03 the IAM has filed an objection to the POR and seeks to recover the over $38 million paid to Wolf, Gangwal and Nagin.
The information is on the bankruptcy court web page and you will need an ID and password to view it. I would post the motion but it is a PDF file, so you can''t copy and paste it.
Do you know if the 1.4 million paid to Greg Gibson was the normal pilot lump sum retirement or was this payment in addition to his pilot pension? Also, what function did the person perform who received the 400K payment(I can't remember the name I read)?

P.S. Thanks for providing the link.
You can cut and paste from Adobe. Select the "T" on the right side of the tool bar. Its called Text Select Tool and you can even use the drop down menu within that tool to select a column. There is also a graphics select tool next to it.
03/13/2003 1343399.01
Alexandria division
In Re:
Case No. 02-83984 (SSM)
(Jointly Administered)
Chapter 11
Hon. Stephen S. Mitchell


The International Association of Machinists and Aerospace Workers,AFL-CIO (the IAM), by and through its undersigned counsel, submits the following limited objection to confirmation of the Joint Plan Of Reorganization Of Us Airways
Group, Inc. And Its Affiliated Debtors And Debtors-In-Possession (the Plan), and respectfully states:

1. On August 11, 2002 (the Petition Date), the Debtors filed petitions for relief pursuant to chapter 11 of title 11 of the United States Code (the Bankruptcy

2. The IAM is one of five principal bargaining units representing the Debtors’ employees. The IAM represents approximately 30% of the Debtors’ work force.

3. During the pendency of these chapter 11 cases, the Debtors and the IAM negotiated amendments to the IAM’s collective bargaining agreement. These amendments were effectuated as part of the Debtors’ need to reduce labor costs as part of its restructuring efforts.

4. The Debtor filed the Plan on January 17, 2003. The Debtor first filed the Plan Exhibits referred to in this objection on February 27, 2003, after the January 17,2003 approval of the Debtors’ Disclosure Statement.

5. Plan Exhibit F Nonexclusive List Of Retained Actions includes, among others all insiders listed on SOFA-3b of each Debtors’ Statement of Financial Affairs, except such insiders that were providing services to the Debtors as of the date of commencement of the Disclosure Statement hearing.

6. SOFA-3b for US Airways, Inc. provides in part that, within the year prior to the filing of these chapter 11 cases, Mr. Gangwal, identified as President and CEO, received $15,657,733, Mr. Wolf, identified as Chairman and CEO, received $15,085,234, Mr. Nagin, identified as Exec. VP Corporate Affairs and General Counsel, received $5,617,934, Mr. Gibons, identified as VP-Flight Operations, received $1,545,354 and Mr.Reeves, identified as VP-Government Affairs, received $499,142.

7. It is the IAM’s understanding that Mr. Wolf held a seat on US Airways, Inc.’s board of directors as of the date of commencement of the Disclosure Statement hearing. It is not clear what other insiders may be viewed by the Debtors as providing services as of the date of commencement of the Disclosure Statement hearing and thereby arguably protected from suit. Also, given the language of Plan Exhibit F, it is unclear whether Mr. Wolf’s board seat in and of itself would protect Mr. Wolf from any claims or causes of action which could be brought against him as a result of his receipt of the more than $15 million prior to the Petition Date.

8. Also, it is unclear whether the claims against one, some, or all of the named insiders arising out of payments to them in excess of $38 million prior to the Petition Date would be released under sections 11.4 and/or 11.5 of the Plan, or subject to -3- the indemnification provisions of 11.9 of the Plan or the injunction provisions of section 11.10 of the Plan.


9. Generally, the IAM supports confirmation. However, the IAM submits that in the event the Court would otherwise confirm the Plan, the following language should be included in any confirmation order entered by the Court:
Notwithstanding anything in the Disclosure Statement, Plan or Plan Exhibits to the contrary, any and all claims and causes of action arising out of or related to the payments identified in SOFA-3b for US Airways, Inc. to Mr.Gangwal of $15,657,733, Mr. Wolf of $15,085,234, Mr. Nagin of $5,617,934, Mr. Gibons of $1,545,354 and Mr. Reeves of $499,142; including, without limitation, the right of the Reorganized Debtors and/or the Post Confirmation Committee to have standing and the right to pursue these claims and causes of action (the Insider Claims) and for the IAM to have the right to pursue the Insider Claims, at the Reorganized Debtors’ expense, in the event that the Reorganized Debtors and the Post Confirmation Committee determine not to pursue one or more of the Insider Claims within 45 days following the Confirmation Date.

10. The release of the Insider Claims, if in fact sought under the Plan, violates the provisions of the Bankruptcy Code. Section 524(e) of the Bankruptcy Code specifically states: [e]xcept as provided in subsection (a)(3) of this section, discharge of a debt of the debtor does not affect the liability of any other entity on, or the property of any other entity for, such debt. 11 U.S.C. § 524(e). Congress enacted § 524(e) to prohibit the release of non-debtors. See Gillman v. Continental Airlines (In re Continental Airlines), 203 F.3d 203 (3d Cir. 2000); In re Sure-Snap Corp., 983 F.2d 1015, 1019 (11 th Cir. 1993); Underhill v. Royal, 769 F.2d 1416, 1432 (9 th Cir. 1985); In re A.J. Mackay Co., 50 B.R. 756, 861 (D. Utah 1985) (The plan confirmed by the bankruptcy court purported to give a non-bankrupt debtor protection against creditors.

However, the protection available under chapter 11 against creditors is available only to a debtor. The only way a person can take advantage of that protection is to himself file for bankruptcy under chapter 11. The jurisdiction over a debtor and his property necessary to protect them from creditors can properly be invoked only by filing for bankruptcy). Certainly, the Plan must ensure that the Insider Claims do not fall prey to compromise through the confirmation process. These claims against third parties may not be released or permanently enjoined, and the liability for them may not be limited. See In re Continental Airlines, 203 F.3d 203 (3d Cir. 2000).

11. Section 1129(a)(1) of the Bankruptcy Code requires that, in order to be confirmed, a plan of reorganization must comply with all the applicable provisions of the Bankruptcy Code. Bankruptcy courts have held that plans that violate 11 U.S.C. §524(e), and thus violate 11 U.S.C. §1129(a)(1), cannot be confirmed over an objection. See, e.g., In re Fred Lowenschuss, 67 F.3d 1394, 1401 (9 th Cir. 1995), cert. denied, 517 U.S. 1243, 116 S.Ct. 2497, 135 L.Ed2d 189 (1996) (without exception, [§]524(e) precludes bankruptcy courts from discharging the liabilities of non-debtors); In re Zale Corporation, 62 F.3d 746, 760 (5 th Cir. 1995) (bankruptcy court lacks authority to approve settlement agreement containing permanent injunction that constituted an impermissible discharge of a non-debtor); see also In re Sandy Ridge Dev. Corp., 881 F.2d 1346, 1351 (5 th Cir. 1989) (pursuant to §524(e), discharge in a bankruptcy will not affect the liability of a non-debtor guarantor).

12. Until the Plan, through an appropriate form of confirmation order is modified to preserve the Insider Claims, the Court should not confirm the Plan. To do otherwise unfairly imposes involuntary releases on creditors and stake- holders in these
cases, all of whom made substantial concessions as part of the Debtors’ reorganization, in favor of insiders and non-debtors.

13. Accordingly, the IAM respectfully requests that this Court refrain from confirming the Plan unless it is amended or modified to include the relief requested

Respectfully submitted,
Sharon Levine (SL 2109)
S. Jason Teele (SJT 7390)
65 Livingston Avenue
Roseland, New Jersey 07068
973.597.2400 (facsimile)
and Odin Feldman & Pittleman PC
Donald F. King, Esquire
9302 Lee Highway
Suite 1100
Fairfax, Virginia 22031
703.218.2160 (facsimile)
By:/s/ Donald F. King
Attorneys for International
Association of Machinists and
Aerospace Workers, AFL-CIO
Dated: March 10, 2003
Plan. American Solar King Corp., 90 B.R. 808, 823 (Bank. W.D. Tx 1988); In re Sherwood Square
Associates, 87 B.R. 388, 390 (Bankr. D. Md 1988). Further, Bankruptcy Code §105 permits the Court to
address objections at the confirmation hearing by conditioning confirmation upon the satisfaction of terms
narrowly tailored to be responsive to the objections. In re Walker, 165 B.R. 994, 1000 (Bankr. E.D. Va
  • Thread Starter
  • Thread starter
  • #6
The lawsuit will have to prove that the payments were unfairly made as the airline was preparing to file for bankruptcy. Major US Bankruptcy firms say proving such allegations is often difficult. Any decision to recoup the payments to the former executives would have to come from U.S. Bankruptcy Court Judge Stephen S. Mitchell.
If the judge has any intregity, he would have to look at how appropiate HUGE payoffs to a couple of insiders were, at a time the company was in a finiancial crisis...At the time, the company was suffering losses, was saying that banckruptcy was going to happen if it could not merge with United Airlines...

Doesn't sound like a time to deplete cash needed to operate for a few leaders who failed in leading the airline, and lined their pockets...

They were in controlling postions of information, finances and USAIRWAYS stock owned by alot of investors.... Hmmm... Reminds me of a nice, sweet lady named Martha Stewart....I will not mention ENRON.. I wouldn't think of doing that....

Latest posts