Reuters
UPDATE - Judge appoints examiner on UAL benefits issue
Friday February 20, 5:15 pm ET
By Kathy Fieweger
(Updates with examiner appointed on benefits issue)
CHICAGO, Feb 20 (Reuters) - A U.S. Bankruptcy Court judge on Friday appointed an examiner to determine if United Airlines decided to seek changes to retiree health benefits before a number of workers retired based on a belief such benefits would be maintained.
Judge Eugene Wedoff said the independent examiner would be required to report back to him within a month the results of its inquiry into whether United management had decided prior to July 1, 2003, to use a provision of the U.S. Bankruptcy Code called section 1114.
That code allows for corporations to seek changes to retiree benefits if necessary for emergence from Chapter 11 bankruptcy protection.
Flight attendant and machinist union lawyers argued in court that the examiner was necessary because UAL Corp.'s (OTC BB:UALAQ.OB - News) United had decided before thousands of people retired in July that their benefits would in fact be altered.
United argued against the appointment of an examiner and denied it had made any such a decision by then, even though it had left open the possibility of such changes to benefits for more than a year.
Lawyers for the Association of Flight Attendants and International Association of Machinists said their members felt betrayed, while United's attorneys said the company was equally offended at assertions of fraud leveled against management.
ONE MONTH REORGANIZATION PLAN EXTENSION
Wedoff also granted UAL attorneys 30 more days from March 8 to file an exclusive reorganization plan with the court.
While the extension was much shorter than the nearly four months United sought, Wedoff said he would consider month-to-month extensions as needed beyond that. United had asked for an extension through June 30.
United and UAL, based in Elk Grove Village, Illinois, filed the largest Chapter 11 bankruptcy case in aviation history in December 2002. In court documents seeking the extension, United said it remained on track to emerge from court protection in the first half of 2004, but must resolve several issues first.
Among those key issues are obtaining financing for the emergence from court protection, completing a restructuring of airplane lease payments and resolving pension underfunding.
United attorney James Sprayregen told the court on Friday that the air carrier had reached an agreement in principle to restructure leases on 174 airplanes involving more than 100 financial institutions. The creditors committee has maintained some objections to the mass lease restructuring agreement.
Sprayregen also said United has received no clear indication from the Air Transportation Stabilization Board on an amended application for loan guarantees. United has asked the ATSB to back $1.6 billion of a $2.0 billion loan package.
The ATSB rejected United's application for loan guarantees before the carrier filed for bankruptcy protection in 2002, citing a flawed business plan. United has cut labor costs and restructured other expenses since then.
United has asked the Internal Revenue Service to waive pension contributions from 2003 through 2006. It also has looked for relief in legislative proposals to change pension funding formulas, something Congress has not approved, but is expected to take up again. (With David Bailey in Chicago)
You know Amfa issued a letter out saying they would get involved on the 19th but they apparently was a no-show! All smoke and Mirrors! They were to busy in Tulsa to care about United employees!!!!!
UPDATE - Judge appoints examiner on UAL benefits issue
Friday February 20, 5:15 pm ET
By Kathy Fieweger
(Updates with examiner appointed on benefits issue)
CHICAGO, Feb 20 (Reuters) - A U.S. Bankruptcy Court judge on Friday appointed an examiner to determine if United Airlines decided to seek changes to retiree health benefits before a number of workers retired based on a belief such benefits would be maintained.
Judge Eugene Wedoff said the independent examiner would be required to report back to him within a month the results of its inquiry into whether United management had decided prior to July 1, 2003, to use a provision of the U.S. Bankruptcy Code called section 1114.
That code allows for corporations to seek changes to retiree benefits if necessary for emergence from Chapter 11 bankruptcy protection.
Flight attendant and machinist union lawyers argued in court that the examiner was necessary because UAL Corp.'s (OTC BB:UALAQ.OB - News) United had decided before thousands of people retired in July that their benefits would in fact be altered.
United argued against the appointment of an examiner and denied it had made any such a decision by then, even though it had left open the possibility of such changes to benefits for more than a year.
Lawyers for the Association of Flight Attendants and International Association of Machinists said their members felt betrayed, while United's attorneys said the company was equally offended at assertions of fraud leveled against management.
ONE MONTH REORGANIZATION PLAN EXTENSION
Wedoff also granted UAL attorneys 30 more days from March 8 to file an exclusive reorganization plan with the court.
While the extension was much shorter than the nearly four months United sought, Wedoff said he would consider month-to-month extensions as needed beyond that. United had asked for an extension through June 30.
United and UAL, based in Elk Grove Village, Illinois, filed the largest Chapter 11 bankruptcy case in aviation history in December 2002. In court documents seeking the extension, United said it remained on track to emerge from court protection in the first half of 2004, but must resolve several issues first.
Among those key issues are obtaining financing for the emergence from court protection, completing a restructuring of airplane lease payments and resolving pension underfunding.
United attorney James Sprayregen told the court on Friday that the air carrier had reached an agreement in principle to restructure leases on 174 airplanes involving more than 100 financial institutions. The creditors committee has maintained some objections to the mass lease restructuring agreement.
Sprayregen also said United has received no clear indication from the Air Transportation Stabilization Board on an amended application for loan guarantees. United has asked the ATSB to back $1.6 billion of a $2.0 billion loan package.
The ATSB rejected United's application for loan guarantees before the carrier filed for bankruptcy protection in 2002, citing a flawed business plan. United has cut labor costs and restructured other expenses since then.
United has asked the Internal Revenue Service to waive pension contributions from 2003 through 2006. It also has looked for relief in legislative proposals to change pension funding formulas, something Congress has not approved, but is expected to take up again. (With David Bailey in Chicago)
You know Amfa issued a letter out saying they would get involved on the 19th but they apparently was a no-show! All smoke and Mirrors! They were to busy in Tulsa to care about United employees!!!!!
