US Airways Group Inc. Joint Plan of Reorganization Accepted by Creditors

GrahamAF

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Aug 20, 2002
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grapkoski.com
Press Release Source: US Airways
US Airways Group Inc. Joint Plan of Reorganization Accepted by Creditors
Monday March 17, 5:19 pm ET
Confirmation Hearing to Begin Tomorrow
ARLINGTON, Va., March 17 /PRNewswire/ -- The independent agent tabulating the vote on US Airways'' proposed plan of reorganization today filed its report with the U.S. Bankruptcy Court in Alexandria, which disclosed that sufficient votes in favor of the Plan have been received to confirm the Plan. The confirmation hearing is scheduled to commence on Tuesday, March 18, 2003.


The filing by Logan & Company, Inc., said that all necessary creditor classes of all eight debtors in the Chapter 11 cases had voted to accept the reorganization plan. The minimum acceptance rate by claim holders voting was 80.77 percent and by claim amount voting was 81.18 percent, well above the required two-thirds vote needed for approval.
The report includes all provisional ballots that were cast by claimants that had sought provisional approval of their claims for voting purposes, as well as acceptance of the reorganization plan filed by the Pension Benefit Guaranty Corporation (PBGC). The provisional and PBGC ballots remain subject to review and approval of the Bankruptcy Court, as does the voting report itself.
The company said that holders of the company''s common stock and subordinated securities claims will not receive anything under the reorganization plan and are deemed to have rejected the plan. The company will ask the Bankruptcy Court at Tuesday''s hearing to confirm the reorganization plan notwithstanding the cancellation of current equity interests and over the objections filed by individual creditors and shareholders.
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Source: US Airways
 

usfliboi

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Aug 20, 2002
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trustee opposes plan on eve of hearing
Mon March 17, 2003 04:46 PM ET
(Adds details, paragraphs 5, 7-9, 14, 16)
By Jonathan Stempel

NEW YORK, March 17 (Reuters) - A U.S. bankruptcy trustee objected on Monday to U.S. Airways Group Inc.'s UAWGQ.OB plan to emerge from Chapter 11, one day before a hearing on the No. 7 U.S. airline's reorganization plan is slated to begin.

The trustee said in a court filing that U.S. Airways' plan to release current and former executives, board members and lawyers from potential liability arising from the bankruptcy would violate federal and state law.

"Such releases are not part of any global settlement or deal that benefits this bankruptcy estate," trustee W. Clarkson McDow Jr. said in the filing with the U.S. Bankruptcy Court in Alexandria, Virginia.

"The releases stand starkly alone in the Plan unsupported by any legal justification and there is no indication that the releases are necessary to the Plan or fair," he said.

The bankruptcy court appoints the the trustee to represent the interests of the bankruptcy estate and creditors. Other parties have also objected to parts of US Airways' plan.

A spokesman for the Arlington, Virginia-based airline, David Castelveter, said: "We are working to resolve as many of these objections as possible prior to Tuesday's hearing, but if not, we believe we will prevail before the court."

Anthony Sabino, an associate professor of business at St. John's University in New York, said the objection might complicate US Airways' plan to exit Chapter 11 this month.

"Given the circumstances in the world right now, that does not bode well for US Airways' reorganization efforts," he said. "Any delay at this critical point could prove very damaging."

U.S. Airways, which sought bankruptcy protection in August, wants to emerge by March 31, enabling it to obtain a $900 million federal loan guarantee.

HEARING TO START TUESDAY

It is seeking approval from the federal Pension Benefit Guarantee Corp. to replace its pilots' pension plan with a less costly one. It also wants a new credit card processor.

The airline industry's gloomy outlook is being further clouded by a looming war with Iraq, which is depressing travel and has helped send fuel prices soaring.

Bill Rochelle, a partner at Fulbright & Jaworski LLP, a law firm in New York, said the liability issue is the kind a U.S. trustee might raise, but that the trustee's objection should not derail U.S. Airways' exit from bankruptcy.

"The trustee's job is to protect the public, to see the law enforced," said Rochelle. "It should not be a stumbling block. Bankruptcy judges will generally assist large companies in emerging from Chapter 11 if they have complied with the law."

Among other parts of U.S. Airways' Chapter 11 plan that have drawn opposition include whether former chief executives Rakesh Gangwal and Stephen Wolf should receive payments of about $15 million each.

A hearing on the airline's reorganization is due to begin Tuesday morning before Judge Stephen Mitchell in Alexandria.

U.S. Airways shares closed Monday in over-the-counter trading at 10.9 cents, down 1 cent.
 

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