RETO.....

The Ronin

Senior
Sep 17, 2002
497
0
If the issue is that United needs cash RIGHT NOW....why didn''t the IAM and the company fore go the retro or at least postpone it. Didn''t say I would like this, but morale already is rock bottom, so what the heck. Why pay out $70 million when you have a bill due???
 

geeman10

Newbie
Dec 1, 2002
8
0
UA WILL ALWAYS OWE MONEY TO SOME ONE
BUT HOW ABOUT THE MEN & WOMEN WHO HAVE BEEN
WAITING FOR OVER (2)YEARS ON THE RETRO ???
 

Flydrive1

Member
Oct 18, 2002
38
0
Since the IAM holds WHQ as collateral for the retro pay, maybe they can convert it to a homeless shelter for displaced UAL employees?
 

synchronicity

Advanced
Nov 27, 2002
144
0
[blockquote]
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On 12/1/2002 3:20:08 PM UnitedChicago wrote:

Hmmm...wonder if the mechanics will ever see one cent of the retro if UA goes CH11.
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[/blockquote]

First, my understanding is that the 500M "retro pay" isn't just for the mechanics, but rather is for all of IAM. I know my wife (a "public contact employee") is due to get a retro check in Mid-December if UAL hasn't filed.

That said, IAM will wear the hat of "secured creditor" in a BK filing with regards to the retro. It's a loan they made to UAL, secured by assets (HQ building? My understanding is it's secured by land and buildings, NOT by any planes). IAM will line up with all the other creditors with security interests in UAL, and they will negotiate among themselves as to who gets what, with each group claiming that their interest takes priority over everyone else's. I don't know if any other lenders can claim any security interests in the UAL assets backing the retro pay. Even if there aren't, the only way you can be guaranteed of getting the entire amount if by forcing UAL to sell the assets and use the proceeds to pay back IAM. And no matter what happens, it'll be awhile before the retro gets paid.

Like I said, I know a few corporate BK attorneys.

What makes this worse is the mistrust between the mechanics and IAM, so imagine IAM negotiating the terms of any agreements re: the retro pay. And given IAM's, er, stellar track record at communicating with their members you can guess the furor that will come when the retro is paid both late and in something less than the full amount.

-synchronicity
 

UnitedChicago

Veteran
Aug 27, 2002
756
0
www.usaviation.com
Good point on the IAM becoming a secured creditor. I would assume that either way, the IAM employees would not receive face value of the retro...but some compromise.

This again under scores the benefits to the IAM of staying out of CH11.

If the mechanics want AMFA to represent them, then voting no on the concessions package is not the way to accomplish that. They can still vote for their representation while voting yes to concessions. Their retro is not in danger and they maintain a BOD seat.
 

synchronicity

Advanced
Nov 27, 2002
144
0
[blockquote]
----------------
On 12/1/2002 3:53:17 PM geeman10 wrote:

UA WILL ALWAYS OWE MONEY TO SOME ONE
BUT HOW ABOUT THE MEN & WOMEN WHO HAVE BEEN
WAITING FOR OVER (2)YEARS ON THE RETRO ???
----------------
[/blockquote]

The simple answer is that you're secured creditors, exactly as if you were a bank that had lent UAL 500 Mil at 6% interest with quarterly payments for the next two years, secured by land and buildings (WHQ, I guess).

Yes, I know that everyone worked very hard and endured grueling, drawn out negotiations with parsimonious UAL management, that the 500M amount represents wages that should have already been paid, and so on. But IF UAL goes into bankruptcy, none of that matters one whit. The only thing that matters is the amount of the loan, the collateral backing your security interest, and the time when that security interest was established. Essentially all the creditors get lined up, and the funds go to certain groups first, then to other groups, and so on down the line until you reach common shareholders, who usually wind up with squat.
.
The good news is that as a secured creditor you'll likely take precedence over most other creditors, and hopefully A) no one else has a security interest in the collateral backing the loan (again, retro pay is essentially a loan) and B) the collateral has a value greater than the loan amount. There are a LOT of creditors who lent money for aircraft who aren't very happy now.

But in BK, it doesn't matter why UAL owes you the money. It doesn't matter if you are a bunch of hard working people who sweated for every penny of the money that you "should" have received years ago, or if you are a multi-billionaire who just lent UAL a half-billion for the heck of it. You're a secured creditor, period, and you'll get paid when all the debts are worked out and assets are split up among the creditors. This is another good reason to avoid Bankrupcy if at all possible!!

Yes, it blows. Ya think I'm happy about it? My wife is owed a nice chunk of retro, we're saving for a house and want to start our family soon, we could use that retro. But nobody cares, certainly not the other creditors who are looking out for THEIR best interest.

Speaking of which: IIRC, the 141-M deal was signed a few months before the 141 deal. I wonder if this means there are two separate security interests in WHQ, one for the 141-M retro and one for the 141 retro. I don't think so, but who knows?

-synchronicity
 

Buck

Veteran
Contributor
Aug 20, 2002
7,320
1,576
www.fairtax.org
The purpose of changing union representation is to make gains in pay and benifits. Not to reverse the gains made by fellow mechanics in the industry. Industrial unionists will never understand that if they do not use their rights as union members, they will never make gains.

And why is it that they should take concessions?
 

UnitedChicago

Veteran
Aug 27, 2002
756
0
www.usaviation.com
Buck:

Um...to keep United out of BK. I agree that the reasons they are being asked to take cuts are not their fault. They have every right to be pissed.

But...unfortunately...there are two options: voluntarily take a paycut or involuntarily take a pay cut. The involuntary option is much worse...bigger cuts, more benefits lost, more employees lost, etc.
 

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