Deadlines....

[jimntx]

So, is it possible that U can voluntarily file to reject some contracts, some equipment and leases, but......

not default on payment of any debt but default on the stipulations of the ATSB loan. Can they use the bankruptcy courts to protect them from terms (covenants) of a loan, but still pay it?

Basically telling a judge, "We're bankrupt, because we can't continue as a going concern under our current contracts and agreements, oh, but we CAN pay our debts, if relieved from our other obligations- leases and CBA's, we just need some protection from the courts to sort it all out."

[post="175641"][/post]​

They can ask anything they want to. Whether or not the BK court will grant the request is another matter entirely. It's true that the ATSB-backed loans appear to have some "super-first-in-line" status, and the fact that it is a Federal agency talking to a Federal court doesn't help. However, most BK courts tend to have a problem with "I want to stiff these guys, but I want to pay these other guys in full."

 

[funguy2]

Jim, while you are doing mea culpas for the use of the phrase "we can't file for bankruptcy", there's another misstatement that has been circulating that needs to be clarified.

The ATSB did not loan US Airways any money. Therefore, I don't see how they can "call the loan." The only entity that can call a loan is the entity which made the loan--i.e., Chase Manhattan or Bank of America or whoever loaned US Airways the money in the first place.

jimntx:

You are indeed correct... However, my posts already get lengthy, so I try to take short-cuts to keep them something less than 10 pages long... So, I too have technically misspoken on account of keeping things short and interesting... You'll note that I no longer refer to "ATSB loans" but rather "ATSB-backed loans".

You are correct... The banks will call the loans, and the call will go to the ATSB, since they've co-signed. ATSB will then invoke its remedies to US Airways.

Edit: I see BoeingBoy already said the same thing....

 

[funguy2]

If US Files they will be in violation of the loan covenants.

If US Airways does not file BK, they will also be in violation of the loan covenants... (the unrestrictred cash and/or EBITDAR covenants)... See, now that's the kicker...

Breach is Breach... doesn't matter which one they breach. Chances are that they are better to breach the loan covenants with the BK filing than without it, simply because its brings an "outside" mediator (the BK judge) into the picture before US Airways loses the cash...

 

[bobcat]

So, what is the deadline? No one ever answered the question. Does anyone really know and is there a definitive deadline?

It is now Sept. 3 and not one work group has even agreed to put any type of a proposal to a vote. Seems highly unlikely that there will be any conclusion to this mess before Sept. 30 let alone Sept. 12 or 15.

Management has set several deadlines over the last eight months just to watch those dates go by with no urgency. What will the next deadline be?

 

[funguy2]

bobcat:

You ask a good question, and that's probably the reason why nobody has answered it directly.

The reality is this... Nobody here knows, or can say publicly without getting fired and/or arrested for SEC violations. Furthermore, Lakefield and Bronner may not even have it finalized yet, since it seems to be a day-to-day situation, and a seemingly disconnected BOD and management (i.e. Chairman of the BOD says liquidation is possible, even likely in certain scenarios and the CEO says its not on the table).

I think many of the posters have tried to lay out all of the events that may trigger the "real" deadline. Otherwise, we have to wait and see what happens... Unfortunately for the employees and unions, this turns into a game of Chicken with an 18-wheeler.

 

[BoeingBoy]

Bobcat,

Somewhere back at the start of this thread, I layed out the deadlines as I see them. There may be others that I'm not aware of.

I think what you're asking is "What is the timeline for filing BK".

My 2 cents worth...

I suspect the filing will come before the 15th of this month - whether or not the IRS grants the waiver on the pension payments. I assume that the filing will enable the company to not make whatever pension payment is required (full or reduced with waiver), thus conserving cash. I would also expect the company to attempt to terminate the remaining DB plans once in BK.

The only "fly in the ointment" that I can forsee is if the ATSB makes it known that they will call the loan if we file. And that brings us back to a question I asked somewhere else above - can the judge prevent the ATSB from calling the loan if we're in BK?

Jim

 

[RowUnderDCA]

As many of us have speculated: that question is key. I suspect that they won't need a judge's protection if the creditors themselves want to give U a chance to pay back the loans. I understand that U will have to be paying all creditors. So, will a court allow U to treat its pension obligations differently than its creditors..... I'd guess it would. Stiff future payments to the pension funds, while paying creditors.

 

[jimntx]

If US Airways does not file BK, they will also be in violation of the loan covenants... (the unrestrictred cash and/or EBITDAR covenants)... See, now that's the kicker...

Breach is Breach... doesn't matter which one they breach. Chances are that they are better to breach the loan covenants with the BK filing than without it, simply because its brings an "outside" mediator (the BK judge) into the picture before US Airways loses the cash...

[post="175698"][/post]​

It does in fact put US Airways between Scylla and Charybdis (between a rock and a hard place is rather common, don't you think?). However, IMHO, US Airways filing for bankruptcy would be better than the creditors forcing a Bankruptcy which almost certainly would be Ch. 7. And, under the previously quoted loan provision, ATSB would "aid and assist" creditors in a liquidation proceeding.

So, will a court allow U to treat its pension obligations differently than its creditors..... I'd guess it would. Stiff future payments to the pension funds, while paying creditors.

[post="175724"][/post]​

Now, there's a question for the ages. Judging from the PBGC's recent actions in the UAL bankruptcy court, I don't think dumping the pension plans in order to pay other creditors is going to be a slam dunk from now on. If the UAL BK judge agrees with the PBGC that UAL's financing plan violates Federal pension laws and is therefore illegal, then you have what is called precedent based upon case law. Once one judge sticks his neck out and rules on an "unknown waters" type issue, other judges are not so ready to rule differently without compelling reasons.

 

[BoeingBoy]

jimntx,

One thing for sure, U is standing on the shore of an uncharted sea - the first airline to declare BK while having an ATSB-backed loan. Oh well, at least we'll be first at something....

BTW, on reflection I want to clarify something. My layman's reading of the loan document leads me to believe that the ATSB is the final authority on remedies for violation of the loan's requirements. However, I would suspect that the actual lenders, especially the major lenders (Tranche A) carry some weight with the ATSB. If either, or both, told the ATSB that they were uncomfortable with a U BK, would the ATSB ignore them? I don't know, but it's interesting to think about....

Jim

 

[oldiebutgoody]

Actually, the parties which are guaranteed by the ATSB probably would not have a say, since it is the ATSB (aka taxpayer) which stands to lose, not them. Can't really file a lawsuit without being damaged somehow. However, the creditors for the unsecured part of the loan WOULD have a say, since they can potentially lose. And just whom would this party be? Why, it's none other than the RSA! My, My, how complcated this is becoming! Just my thoughts, of course.

 

[BoeingBoy]

oldie,

"Actually, the parties which are guaranteed by the ATSB probably would not have a say, since it is the ATSB (aka taxpayer) which stands to lose, not them."

I completely overlooked that - thanks.

[Edit] And that would explain why the ATSB calls the shots - they (on behalf of the taxpayers) are on the hook - at least for the Tranche A loans.

Jim

 

[Dog Wonder]

The original question was 'What is the deadline?'. Plenty of opinion but, who knows.

 

[jimntx]

BTW, on reflection I want to clarify something. My layman's reading of the loan document leads me to believe that the ATSB is the final authority on remedies for violation of the loan's requirements. However, I would suspect that the actual lenders, especially the major lenders (Tranche A) carry some weight with the ATSB. If either, or both, told the ATSB that they were uncomfortable with a U BK, would the ATSB ignore them? I don't know, but it's interesting to think about....

Jim

[post="175752"][/post]​

Actually, the parties which are guaranteed by the ATSB probably would not have a say, since it is the ATSB (aka taxpayer) which stands to lose, not them. Can't really file a lawsuit without being damaged somehow. However, the creditors for the unsecured part of the loan WOULD have a say, since they can potentially lose. And just whom would this party be? Why, it's none other than the RSA! My, My, how complcated this is becoming! Just my thoughts, of course.

[post="175837"][/post]​

I'm no expert, but I think you are misreading the loan document. Basically, what you are saying is that if you (stand-in for ATSB) co-sign a note for your dear shiftless brother-in-law (stand-in for US Airways), the bank can not call his note because you have guaranteed it and they are not hurt by his nonpayment. And because of that fact, the bank can not force him into bankruptcy, only you can. Under the law, the bank can not actually collect from the co-signer until AFTER it has declared the loan in default and called it.

I don't know why you all keep harping about the RSA in this situation. RSA will neither be hurt by losing it's US Airways investment (less than 1% of the total assets of the system) nor will it come out ahead if US Airways fails. You made reference to RSA being the creditor for the unsecured part of the loan. It is my understanding that the total RSA involvement is that the retirement system paid $240 million for 37% of the common stock. That is not a loan. It is an investment. (If only it were a loan. There are several major corporations out there who would owe me big time for their stock's performance over the last 2 years!! )

In bankruptcy, the stockholders are the only group which usually make out worse than the employees. I don't believe that they are even classified as unsecured creditors. They are owners of the company. In the most technical sense, the creditors could come after the stockholders as owners to pay part of the debts of the company. It's not done, but it is a concept discussed in law schools. (I don't let it be known in polite society, but I have several friends who are lawyers. )

 

[USA320Pilot]

US Airways has held discussions with the ATSB regarding the loan guarantee and the Board has already indicated its opinion to Bruce Lakefield.

Respectfully,

USA320Pilot

 

[NeedForSpeedNFS]

US Airways has held discussions with the ATSB regarding the loan guarantee and the Board has already indicated its opinion to Bruce Lakefield.

Respectfully,

USA320Pilot

[post="175888"][/post]​

And......... What is that opinion??