delta group pans bid by usairways

[longing4piedmont]

I see you completely ignored the part if they are a creditor, which bondholders are they will get solicited for a vote on the POR.

You don't have to be on the Creditor's Committee to vote on the POR.

No I didn't ignore it, you just keep editing your post.

If you're done with the edits, why don't you give us all an accurate explanation on the role of the creditor's committee and the process..... I await your educational response.

 

[700UW]

The moment that a debtor files for bankruptcy protection the playing field immediately changes. Old familiar rules are out and the Bankruptcy code is in. The creditor, which initiates aggressive and protective measures from the outset of the case, is most likely to maximize its return. One of the best ways for creditors to participate in such active measures is to join an official creditors’ committee.

Creditors’ committees can play an important role in overseeing the debtor’s reorganization by acting as a watchdog over the debtor. Unsecured creditors will benefit greatly from the strength in numbers that comes with the formation of a committee.

In Chapter 11 cases the unsecured creditors’ committee are appointed by the United States Trustee. Ordinarily the members will include the seven largest claimants in the particular class. The United States Trustee has a list filed by the debtor of the twenty largest unsecured creditors from which to select members of the Official Unsecured Creditors’ Committee. Since secured creditors are normally protected by the value of their collateral, it is not as likely that they will join forces to form a committee although they may elect to do so.

A creditors’ committee is an integral part of the Chapter 11 bankruptcy process and can play a major role in shaping the Chapter 11 case, particularly in negotiating, or even proposing a plan of reorganization for the debtor. It has the right to be heard on any issue in the Chapter 11 case. Normally this means making decisions concerning what the debtor may do outside of the ordinary course of business. Decisions regarding the ordinary day-to-day operations of the debtor are left to debtor’s management, provided there is no abuse, fraud, or other impropriety. A committee may consult with the Debtor and make recommendations concerning the debtor’s business but should not attempt to control the debtor’s financial affairs.

A committee may hire an attorney and any other professionals, as it deems appropriate. All professionals must be approved by the bankruptcy court, and, once approved their fees incurred are paid by the debtor from its assets. The ability to hire counsel whose fees are paid by the debtor is a great advantage to the committee. It ensures proper representation for the creditors and it often promotes cooperation by the debtor.

A creditors’ committee, once formed, should immediately review any cash collateral agreements that the debtor had made and prepare to take a stand the next time such an agreement comes up for review. Cash collateral is a term used for the debtor’s cash, accounts receivable, and other cash equivalents in which a lender has a valid security interest. A lender secured by cash collateral can prohibit the debtor from spending its cash and, in such cases, the debtor may not use its cash without first obtaining a court order. Without cash the debtor cannot operate and so is eager to reach an agreement with the secured lender for the use of cash collateral early in the case. Due to the debtor’s often desperate situation, such secured lenders are able to extract additional collateral and even preferential treatment by the debtor in exchange for its consent to the debtor’s use of cash collateral. The committee must ensure that such a secured lender is not receiving any more than it is entitled to receive under the Bankruptcy Code.

Investigation is one of the most critical functions of a creditors’ committee in a Chapter 11 case. The committee’s counsel may orally examine any of the debtor’s management with respect to the acts, conduct and property of the debtor. Counsel may also request that documents and records be produced.

Any investigation undertaken by a committee should include, at a minimum, a review of the likely distribution that the unsecured creditors would receive in a liquidation. The committee can then determine if creditors will be better served by a reorganization or a liquidation. Potential causes of action available against insiders, including the recovery of preferential and fraudulent transfers, should be evaluated. A review of the debtor’s operating procedures should also be conducted.

A creditors’ committee should participate in the plan negotiations to formulate a plan that is acceptable to all parties. By negotiating during the plan’s formulation, a plan confirmation battle between the debtor and the committee may be avoided.

The debtor may be unwilling to negotiate the terms of its plan and may seek a "cram down" on creditors. The committee must carefully analyze the proposed plan for any unfair treatment of its constituency. It may then object to confirmation of the plan.

The committee should ensure that the disclosure statement, which is mailed to Creditors, contains adequate information to enable them to make a knowledgeable decision on the plan. If the disclosure statement is not adequate the committee may file an objection to it.

The Bankruptcy Code specifically recognizes that a creditors’ committee may propose a plan of reorganization for the debtor. This is a very aggressive move that seeks to take control away from the debtor and put the committee in the driver’s seat. Like a debtor plan, the committee’s plan must be approved by the creditors and the court before it is implemented.

Another powerful right granted a creditor’s committee is the right to request that the court appoint a trustee to replace the debtor’s management. A committee should request the appointment of a trustee if it is satisfied that the debtor’s management is incapable of functioning properly and that the debtor’s assets will be seriously diminished if management is left in place. If the committee is concerned but does not find a trustee necessary, then it may request the appointment of an examiner to keep a more watchful eye on the debtor.

Creditors’ committees may also intervene in adversary proceedings filed within the bankruptcy case to recover preferences received by other creditors. A committee may even, under certain circumstances, bring lawsuits to recover assets for the estate that the debtor has failed to bring.

In an article titled, "Creditors' Committees: How they really work," we noted the benefits of joining a creditors' committee in appropriate cases. Membership in the unsecured creditors' committee is the most effective way for individual unsecured creditors to influence the outcome of a bankruptcy case for the least expense.

Unsecured creditors' committees are appointed by the United States Trustee at the initial meeting of creditors held in the bankruptcy case. Ordinarily the members will include a few of the largest unsecured creditors.

The official unsecured creditors' committee is an important player in the Chapter 11 bankruptcy process. The Committee functions as a watchdog over the debtor, negotiator with secured creditors and a major participant in the plan confirmation process. The Committee has the right to voice an opinion on any issue in a Chapter 11 case. Normally this means making decisions concerning what the debtor may do outside of the ordinary course of business. Decisions about day-to-day operations are usually left to debtor's management, absent abuse, fraud, or other impropriety. A committee may consult with the debtor and make recommendations concerning the debtor's business but generally does not try to control the debtor's operations.

The Committee is entitled to hire counsel and any other professionals it deems appropriate. All professionals must be approved by the bankruptcy court, and, once approved, their fees are paid by the debtor from its assets. The ability to hire counsel whose fees are paid by the debtor is a great advantage to the Committee. It ensures proper representation of the creditors and often promotes cooperation by the debtor.

If the debtor is operating at a loss, or has little cash or other assets to pay Committee counsel's fees, the Committee should carefully consider the role counsel will play or if it is worth hiring counsel at all. Deciding whether to hire counsel is one of the first things creditors' committee should do. The decision will turn on many variables, including the complexity of the case and the debtor's financial situation.

The need for counsel is measured directly by the amount of the debtor's assets and the viability of its business operations. Where there appears to be assets or a viable business enterprise, counsel should be hired. Where there is not, counsel and the Committee itself may be unnecessary, except to convert the case to Chapter 7 where it properly belongs. Often it is not known whether the debtor's assets have - or are capable of producing - equity for the unsecured creditors. In such cases, counsel's initial task should be to investigate the availability of assets and report back to the Committee. Then the Committee can intelligently decide what it must do in the case and the extent to which counsel should be involved.

There are usually issues that require the immediate attention of counsel, such as a debtor's cash collateral agreement with a secured creditor. Cash collateral agreements are usually entered into within the first couple days after a bankruptcy filing because the debtor needs cash to operate. Most lenders secured by cash collateral use this golden opportunity to obtain favorable treatment in the case, such as super priorities and post-petition liens, which can be detrimental to the unsecured creditors. Here is where committee counsel is vital. Counsel should immediately enter into the negotiations to ensure that the cash collateral agreement is not too far-reaching and to carve out a source of payment for his fees. Counsel can and should take the matter to court if the debtor or secured creditor will not budge on these matters.

If the debtor has not been forthcoming regarding its assets and liabilities, investigation by committee counsel may be needed, including review of books and records and oral examination of key personnel. Of course, committee counsel can be vitally important in reviewing any disclosure statement or plan of reorganization that the debtor proposes, or in proposing a disclosure statement and plan for the Committee.

It is wise at the outset of a Chapter 11 case for the Committee to arrange a consultation with a lawyer who has significant experience in representing creditors' committees to get his or her recommendations regarding what course of action the committee should take and what assistance counsel may offer.

Happy now?

 

[a320av8r]

Wrong again, but keep trying. The bond holders mentioned get get no vote.

And you seem to forget there has been one vote already and the score was

DL - 1

Dougie - 0

So unless something has changed other than the formal filing with the SEC, the wonder boy is going to have to do some fast talking next week.

Didn't mention bondholders, said creditors...

 

[longing4piedmont]

Happy now?

Any body can cut and paste.

Let's make this simple. If the committee rejects the offer from US, the other creditors never get to vote on it.

 

[bigbusdrvr]

I see you completely ignored the part if they are a creditor, which bondholders are they will get solicited for a vote on the POR.

You don't have to be on the Creditor's Committee to vote on the POR.

--------------------------------------------------------
i believe he missed the party when the "rail road" sold "Piedmont" for the money.....regardless of the excellent employees, and their unquestionably love and devotion to that airline!! wake up man its all about the "benjimans". if the people that control the money at delta can get more future money from the combined u/delta they will take, or answer to their shareholders. end of story....

 

[longing4piedmont]

Didn't mention bondholders, said creditors...

Really. Read it slowly this time.....

Some Delta creditors, who will be the ones to vote on management's reorganization plan, are lining up on US Airways' side. An ad hoc committee of bondholders voiced support of the offer during conference calls on Tuesday, the Wall Street Journal reported. The lawyer representing the committee could not be reached yesterday.

 

[700UW]

Bondholders are creditors also. They are owed money by DL.

 

[longing4piedmont]

Bondholders are creditors also. They are owed money by DL.

I give up. You will just never admit when you are wrong. I'm going to bed.

But before I go, answer me this. Why isn't the IAM insisting on throwing out the cost neutral contracts NOW. And be careful how you respond this time as your last answer was proven to be wrong by several posters on this forum

I'll read your educational response tomorrow..... Have a good evening

 

[700UW]

I have all ready posted the IAM's response to the merger and cost neutral contracts. Shall I post it again for you?

Bondholders hold promisary notes from DL, they gave them cash for a return with interest.

They are creditors. Go ask the EETCs holders, and various airport authorites that held US' bonds and got screwed in chapter 11.

 

[hp-csr-phx]

law.com

I'm not sure if this has been posted yet--but the article talks about the DIP lenders.

 

[pilot]

DAL has been granted, by the BK judge, the EXCLUSIVE right to formulate their own plan to exit BK and make the creditors happy. I believe they hold that right until Feb. 2007. Nothing LCC can say or do will revoke that right.

If DAL can put together a plan that is better than the one LCC has proposed the game is over before it starts.

Look for that to happen. If the DAL managment was really smart they now have, as one of LCC's former management brainstorms stated at one time, a "unique opportunity" to get even more from the DAL employees. Read concessions.

Look for that to happen too. LCC isn't merging with DAL folks.

Ain't gonna happen.

pilot

 

[Charlie_Tuna]

law.com

I'm not sure if this has been posted yet--but the article talks about the DIP lenders.

Good article especially this part:


There may be another reason that Parker went public with his latest offer for Delta, Rochelle said. Parker does not know the identity of some of Delta's largest unsecured creditors. That's because professional investors have swooped in and acquired Delta's distressed debt at a discount during the airline's bankruptcy protection. These distressed-debt specialists are not required to disclose their identity, or the amounts of debt they have purchased, in bankruptcy court filings.

"You don't know who these folks are and it's difficult to communicate with them," Rochelle said. "If Parker has to go public with his plan for Delta, it invites debt-holders to come to him and talk about it."



Maybe this will stop some of bickering about who the creditors are and what side they are on....um naw wishful thinking.

If DAL can put together a plan that is better than the one LCC has proposed the game is over before it starts.

Ain't gonna happen.

The game has already started. Where have you been?

Ain't gonna happen huh. You sure are sure of yourself... we will see where that smug sureness gets you.

 

[longing4piedmont]

Good article especially this part:
There may be another reason that Parker went public with his latest offer for Delta, Rochelle said. Parker does not know the identity of some of Delta's largest unsecured creditors. That's because professional investors have swooped in and acquired Delta's distressed debt at a discount during the airline's bankruptcy protection. These distressed-debt specialists are not required to disclose their identity, or the amounts of debt they have purchased, in bankruptcy court filings.

Just got to love the way some folks pick out and post parts that support their view. Did you just not read the first part of the article which describes who is who and what the process is?

Parker on Wednesday made public a letter he sent to Delta CEO Gerald Grinstein, in which he offered to buy the Atlanta airline for $8 billion after Delta exits bankruptcy protection. It's Parker's second offer for Delta; the first time, Grinstein wasn't interested.

Now Parker is taking his case to a group of companies that stand second in line for Delta's assets in the airline's bankruptcy case. The first-place creditors, called debtor-in-possession, or DIP, lenders, are expected to get their money back during the bankruptcy process.

The second-place companies are classified as unsecured creditors. They range from companies like Boeing, to whom Delta owes money for airplanes, and the federal Pension Benefit Guaranty Corp., which is on the hook for Delta employees' retirement funds.

Other companies that are on the committee of Delta's unsecured creditors include: Coca-Cola, IBM, U.S. Bancorp, Pratt & Whitney, Fidelity Investments and the Bank of New York. These companies will help decide whether the US Airways buyout offer is the best course for Delta to chart after bankruptcy, said Fulbright & Jaworski bankruptcy partner William J. Rochelle III. "If a significant number of unsecured creditors think this is the way to go, it will become hard for Grinstein to resist," said Rochelle, who represents Boeing.

These creditors will have to engage in some "arm twisting" of Grinstein, the chief executive officer, who holds the final decision, said Arnall Golden Gregory partner Darryl S. Laddin.

"This offer, if you will, by US Airways is an attempt to influence the creditors and to have the creditors exercise their influence over the board and the officers," said Laddin, head of Arnall Golden's bankruptcy practice group.

Under the terms of Parker's latest proposal, Delta's unsecured creditors would receive $4 billion in cash and about 78.5 million shares of US Airways common stock. Delta's unsecured creditors would own about 45 percent of the new airline as a result of the transaction.

The order of priority for Delta's creditors is slightly different in the context of US Airways' buyout offer than it is for the pure bankruptcy procedure of creditors collecting on their debts.

Delta's DIP lenders are first in line when it comes to Delta settling its debts, which are expected to total about $16 billion. But the DIP lenders won't necessarily make the call as to whether to accept US Airways' offer, Rochelle said.

Delta's DIP lenders are General Electric Capital Corp., Morgan Stanley and American Express Travel Related Services Co. They provided Delta with financing needed to keep the airline afloat during bankruptcy reorganization.

"The DIP lenders will end up with their debt at the end of the day, regardless of what happens with the US Airways offer," Rochelle said. "It's the unsecured creditors who would become the stockholders at the end of the bankruptcy plan. They'll have the more important say."

All of Delta's creditors are now studying Parker's proposal and in the coming days will likely get together, in an unofficial capacity, to decide how to proceed, Rochelle said. If they decide they like US Airways' offer, they may have an uphill battle convincing Grinstein of the same. On Wednesday, Grinstein indicated he probably was not interested in US Airways' latest offer.

"We received a letter from U.S. Airways this morning and will of course review it," Grinstein said in a statement. "Delta's plan has always been to emerge from bankruptcy in the first half of 2007 as a strong, stand-alone carrier. Our plan is working."

There may be another reason that Parker went public with his latest offer for Delta, Rochelle said. Parker does not know the identity of some of Delta's largest unsecured creditors. That's because professional investors have swooped in and acquired Delta's distressed debt at a discount during the airline's bankruptcy protection. These distressed-debt specialists are not required to disclose their identity, or the amounts of debt they have purchased, in bankruptcy court filings.

"You don't know who these folks are and it's difficult to communicate with them," Rochelle said. "If Parker has to go public with his plan for Delta, it invites debt-holders to come to him and talk about it."

The role of Judge Adlai S. Hardin Jr. of the U.S. Bankruptcy Court in the Southern District of New York in the US Airways' offer for Delta will be limited, Laddin said.

"The judge is not going to react to the US Airways proposal by calling the parties into court and saying, 'Gee I think this is a good idea,'" Laddin said. "The judge would only be called in to rule on a pending motion, such as whether to approve a transaction."

The case is In re: Delta Air Lines Inc., et al., No. 05-17923, U.S. Bankruptcy Court in the Southern District of New York, filed Sept. 14, 2005.

US Airways already has its hands full completing the acquisition of another company that was in bankruptcy protection. In September 2005, America West Airlines bought US Airways, which at the time was operating under bankruptcy protection. The new company kept the US Airways name, but remained headquartered at America West's home in Tempe, Ariz.

I have all ready posted the IAM's response to the merger and cost neutral contracts. Shall I post it again for you?

Bondholders hold promisary notes from DL, they gave them cash for a return with interest.

They are creditors. Go ask the EETCs holders, and various airport authorites that held US' bonds and got screwed in chapter 11.

Yes, please post an accurate version of the interiem agreement this time....unlike the last post.

Thanks for the finance lesson as well, but it was not needed. I was a accounting and finance major in school. Regardless of what you want to call them, they are not on the committee, thus get no vote.

 

[PITbull]

DAL has been granted, by the BK judge, the EXCLUSIVE right to formulate their own plan to exit BK and make the creditors happy. I believe they hold that right until Feb. 2007. Nothing LCC can say or do will revoke that right.

If DAL can put together a plan that is better than the one LCC has proposed the game is over before it starts.

Look for that to happen. If the DAL managment was really smart they now have, as one of LCC's former management brainstorms stated at one time, a "unique opportunity" to get even more from the DAL employees. Read concessions.

Look for that to happen too. LCC isn't merging with DAL folks.

Ain't gonna happen.

pilot

If DL wants to emerge from BK as a solo carrier by Feb and continue to have their employees' support, specifically the pilot group, I don't believe they will be asking for another round of concessions between now and Feb.

 

[scot]

This topic is about the Delta group and its response to US's offer. Please discuss the seniority issues in a new thread and lets stop making EVERY US/DL thread about seniority/unions, etc. Thanks.