Ual Bankruptcy Exit
- Thread starter Beer Guzzler
- Start date
Happens with nearly every company exiting Ch 11; common shareholders get nothing. They knew it would happen in December, 2002, and the fact that it is finally happening should come as no surprise.
Very rare for a company to not cancel its common stock when it fails to provide for all of its debts. If creditors don't get 100%, then shareholders SHOULD get NOTHING and like it.
Very rare for a company to not cancel its common stock when it fails to provide for all of its debts. If creditors don't get 100%, then shareholders SHOULD get NOTHING and like it.
casual rat
Senior
- Aug 25, 2002
- 413
- 3
The worthless stock was a fastball coming down the middle of the plate, perfectly positioned in the hitter's Home Run Zone, to be hit way outta the Park--who couldn't see that one coming? Like suddenly, they put the common stock under a pillow and the Stock Market Fairy made it worth something? 
maddogdriver
Member
- Feb 14, 2004
- 54
- 3
United Files Bankruptcy Plan; Shareholders to Get Nothing
This is three year old news............This should be posted in DAL or NWA forums.
This is three year old news............This should be posted in DAL or NWA forums.
Agreed...the fact that shareholders will be holding paper that's worth its weight in, well, PAPER, is not news. Anytime a company goes through Ch. 11, it's almost guaranteed to turn out this way.
What's interesting to me in all of this is the way that the POR is structured. The new investors - the banks - aren't investing at all. The whole thing will be new debt! Why couldn't UAL find someone with some cash who is actually willing to take some equity in the company???
It also appears the POR calls for current creditors to have the new stock placed on their shoulders with NO CASH headed their way - not even a few cents on the dollar (please correct me if I'm wrong). This is somewhat of a surprise to me as usually there is some cash for creditors. This is what I would expect to be the biggest bone of contention over the next few months.
What's interesting to me in all of this is the way that the POR is structured. The new investors - the banks - aren't investing at all. The whole thing will be new debt! Why couldn't UAL find someone with some cash who is actually willing to take some equity in the company???
It also appears the POR calls for current creditors to have the new stock placed on their shoulders with NO CASH headed their way - not even a few cents on the dollar (please correct me if I'm wrong). This is somewhat of a surprise to me as usually there is some cash for creditors. This is what I would expect to be the biggest bone of contention over the next few months.
Beer Guzzler said:
I'm shocked, shocked to discover that the equity holders in a BK company will not receive anything!
Your worthless stock certificates, sir.
-synchronicity
Cosmo
Veteran
- Aug 20, 2002
- 840
- 0
Fly:Fly said:
I believe Synchronicity was engaging in a bit of sarcasm, related to the surprise implied in the thread title.
I'm shocked, absolutely shocked I tell you, that you didn't catch the sarcastic tone in his post (you probably just finished working a flight from Europe!).
I am absolutely APPALLED that shareholders equity will be liquidated! How dare UAL do this to their most loyal investors when they hung in there for so many years through thick and thin?
Oh, wait a second...I was one of those people, wasn't I? NEVER MIND!!
Let them eat cake. I did.
They may even grow to like it.
Oh, wait a second...I was one of those people, wasn't I? NEVER MIND!!
Let them eat cake. I did.
They may even grow to like it.
WorldTraveler
Corn Field
- Dec 5, 2003
- 21,709
- 10,721
The low value given to unsecured creditors (4-7%) is far more problematic than the loss of value to stockholders. UA employees are getting something back in return for their loss of stock value but everyone else does get screwed as was fully expected. However, 7% is very low value for unsecured creditors and there is no assurance that they will accept the POR, esp. since they will be given the share in stock. It is possible that the POR will be approved solely because most of UAL's creditors committee is composed of secured creditors who will come out of this OK.
WorldTraveler said:
World, I generally agree with you but not with the bolded portion. The secured creditors don't actually get to vote, as they get 100%. They are deemed to vote in favor. The wiped out shareholders don't get to vote either, since they get nothing and are deemed to reject. Only the unsecureds who are impaired get to vote, and whether the plan is accepted is in their hands, if I understand the Ch 11 confirmation process.
WorldTraveler said:
WorldTraveler,
If you are right, Tilton & Co will have done a superb job maximizing the benefits of the bankruptcy.
Cosmo said:Fly:
I believe Synchronicity was engaging in a bit of sarcasm, related to the surprise implied in the thread title.
I'm shocked, absolutely shocked I tell you, that you didn't catch the sarcastic tone in his post (you probably just finished working a flight from Europe!).Â
[post="297573"][/post]
Oh, no, I'm really really horribly and terribly surprised
that equity holders are getting nothing in BK :wacko: , since that happens so rarely . I mean, most of the time the old equity holders get lots for their shares, in spite of the fact that they're lower on the food chain for getting funds (below all the creditors and even the preferred shareholders) than non-rev companions flying standby are for getting seats! Really, they get plenty, uh huh, it's never that the old stock is cancelled and brand new shares are issued to the new parties making contributions to the BK entity. And of course the reason a company is in BK in the first place is because they don't have enough to pay their creditors, much less those equity holders, but hey. Really, there are plenty of times equity holders get stuff out of BK. Like...for example....uh....well...er...... :huh: I'm sure I'll think of one soon.... :huh:
Uh, let me get back to you on that one....
-synchronicity
needs to add the "sarcasm" icon, and maybe a "I held UAL equity thru BK, and all I got was this stupid T-shirt"
whatkindoffreshhell
Veteran
WorldTraveler said:
Keep spouting nonsense you pompous poster!
4-7% is probably near double the value given to unsecured creditors. And unsecured creditors are ALWAYS in the minority of the folks on a debtors' committee -- because nobody cares about them. Fact.
Proof that UA's bankruptcy consultants/lawyers/snake-oil-salesman are as incompetent as the people that hired them. Because they charmed you too.
That wasn't so hard. Now gitch yer lube ready for the ATL gymnastics show.
