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[BLOCKQUOTE][BR]----------------[BR]On 12/7/2002 4:44:13 PM Rational Thought wrote: [BR][BR][BR]
[BLOCKQUOTE][BR]DIP financing does have higher seniority than pre-banruptcy creditors. That being said, lower seniority creditors could sue if they felt that the DIP financer selected a course of action that lowered the return to subordinated debt. It is odd that the DIP financer would select CH7, usually that is suggested by lower seniority creditors who are concerned the company will blow through the DIP financing and then get liquidated, with the corresponding decrease in their claims.[BR][BR][FONT color=#ff3333]Hi Rational,[/FONT][BR][BR][FONT color=#ff3333]Thanks for the information. I appreciate the details. The part I'm still looking for is whether RSA is only in it as far as the DIP they provided (in return for effective control of the company) and which they would likely recover in a Chapter 7 situation, or whether RSA has deeper investments in U which would likely be jeopardized in a Chapter 7 filing, such as the leases they hold on aircraft, etc. Normally I wouldn't expect the aircraft leases to result in that much liability because you could repo them and lease them to someone else to recover your investment. But in this market, they'd be stuck with aircraft they can't place with another customer, and its corresponding value on the resale market has also diminished substantially. [BR][/FONT][BR]However, Mr Marky, it would appear to me that US unions have limited power in negotiate here. The employees may have suffered financially, but they could always try and find a job elsewhere. And they could lose their jobs permanently, which would clearly be a financially negative outcome. Lastly, although the employees lose out, so do the debtholders who are unlikely to be made whole. And the equity is essentially worthless.[BR][BR][FONT color=#ff3333]The debtholders accepted the risk when they extended credit to the company. The employees OTOH, are stakeholders, not debt holders. Their livlihood is on the line as is their investment in their ongoing employment and eventual retirement. They have a major stake in the health and success of the company. The debtholders have no such equivelant investment. They have either provided goods, services or funding in exchange for a profit and with risk factors clearly identified before hand. This won't put them out on the street unless they're as mismanaged as the airline. Excepting of course the stockholders, who have already been screwed. But they had plenty of warning and it's much easier to dump your poorly invested stock than it is to dump your job.[BR][BR]I don't know if Segal's agreement with unions regarding not seeking further concessions or abrogation of contracts in BK court in exchange for the concessions they have given the company is in the form of a legally binding contract, or just his assurances, but if he goes, does Bronner have to make good on any such obligation? Is this what the "S1113" letter addresses or is that something else??[BR][BR]Marky [BR][BR][/FONT][BR]----------------[/BLOCKQUOTE][/BLOCKQUOTE][BR][BR]
