Chip, I think the simple answer is UAL could not be making the DIP requirements if they were paying all their bills. They have really have no choice though. If they don't make the DIP requirements, they loose their money. They are gambling that things will get better and a deal can be worked out with those they still owe money. Frankly, it's bullsh*t. The rest of us have to pay our bills. Bankruptcy should be a short term good deal......get your house in order and get out of BK, or liquidate. Its not fair to all the well run airlines to allow UAL to skip on its bills. [/quote]
Mike,
You seem to have a missconception about DIP requirements and BK law. whether or not we pay our current obligations has ABSOLUTELY NOTHING to do with meeting DIP requirements
DIP Requirements:
EBIDTAR earnings before interest, depreciation, taxes, amortization, and rent. Pretty much operating profit PLUS the leases and depreciation (in other words add those balance sheet costs back in to get an even higher "profit") No where does it say "and oh by the way stuff you don't feel like paying". With the judges approval, ORD and DEN could evict UAL for nonpayment. But thats how it works. We use our leverage, the other companies use theirs, and we NEGOTIATE a solution under the supervision of the court. Can we stay in BK forever? NO. There are competing interest. As long as we are making progress toward a more viable vibrant UAL, the judge and the CC will allow us to stay in. If it appears there is no more progress to be made, and we aren't viable, then we'll have a fire sale. As far as "bullsh*t", if BK was such a smoking deal, why doesn't your company do it? Why were our competitors lobbying for our ATSB rejection if BK would be "good" for UAL? they had some alltruistic love for taxpayers? BK sucks. You lose customers, you downsize, you lose prestige. On balance, staying out is much better than going in. But it's the LAW. There is NOTHING underhand going on.
What would you call it?
