Pre-packaged Bankruptcy

[USA320Pilot]

When I first announced the company was going to pursue a pre-packaged bankruptcy filing without labor participation in the new business plan, I did not know the timing for emergence. However, I did say the financial advisor would be the Seabury Group and the legal advisors would be Arnold & Porter.

For more information on Arnold & Porter's transformation plan work click here.

Furthermore, the pre-packaged plan will not require DIP financing, had the support of the ATSB for a voluntary filing, and could occur in as little as 120 days.

The Company’s current cash position is approximately $1.45 billion in cash, cash equivalents and short-term investments. The outstanding portion of the ATSB loan is $717.6 million. The agreement between US Airways, the ATSB and the other lenders will be presented to the Court at Monday’s hearing.

As part of the Company’s timetable to emerge from Chapter 11 reorganization, US Airways intends to file its disclosure statement and plan of reorganization by the end of this year.

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Respectfully,

USA320Pilot

 

[USFlyer]

I'd say it's doubtful this will happen that fast. But, whatever happens, let's hope US finally does what it should have done the first time thru this.

 

[700UW]

Funny, you are calling pre-packaged and the company is not.

It is not a pre-packaged bankrupty, in a pre-packaged the POR is done and filed.

 

[usfliboi]

How do you know? Once again the litte words get in your way of the obvious.

 

[700UW]

Please show me anywhere in the company's press release where it says it is a pre-packaged bankruptcy.

http://biz.yahoo.com/prnews/040912/nysu016_1.html

ARLINGTON, Va., Sept. 12 /PRNewswire-FirstCall/ -- US Airways Group, Inc. (Nasdaq: UAIR - News) today announced that the Company and certain of its subsidiaries filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code. The Company said that today's action will provide the nation's seventh-largest airline the opportunity to implement its Transformation Plan built on lower costs, a simplified fare structure, and expanded service in the eastern U.S., the Caribbean, Latin America and Europe.

 

[genejockey]

The company reported a cash balance of $1.45 B in their BK filing. Can anyone break down the cash total? At the end of 2Q unrestricted cash was $975 M. How was cash flow for the months of July & August? Any mention of operational loss/profit for these months? Good luck to all at US Airways!

 

[jimntx]

The company reported a cash balance of $1.45 B in their BK filing. Can anyone break down the cash total? At the end of 2Q unrestricted cash was $975 M. How was cash flow for the months of July & August? Any mention of operational loss/profit for these months? Good luck to all at US Airways!

[post="179394"][/post]​

I've been wondering the same thing. If they can collect and hoard cash at the rate of $35 million/month, what's the financial problem that requires bankruptcy? As they say in East Texas, that ain't right!

 

[SCEflyer]

I've been wondering the same thing. If they can collect and hoard cash at the rate of $35 million/month, what's the financial problem that requires bankruptcy? As they say in East Texas, that ain't right!

[post="179438"][/post]​

The fact that the debtor company indicates that it is going to take its statutory 90 days of exclusivity, as afforded to it under Chapter 11 to prepare and present its plan of reorganization, confirms that this is not a pre-packaged bankruptcy. If it were, they would be able to pull the plan and disclosure statement off of the shelf, tinker with it a bit and then file it with the court.

The absence is DIP financing is most likely the result of no credible lender stepping up to the plate to provide working capital. This is probably the result of there not being any unencumbered assets, of any size to be taken as collateral.

There is nothing extraordinary in the judge approving a cash collateral order, on Day 1 which is favorable to the debtor. If he refused to do so, the chances of reorganizing would be virtually nil, and the case would be be quickly converted to a Chapter 7 proceeding.

In a nutshell, a prepackaged bankruptcy would require the existance of a consensus amongst most if not all the creditor and employee bodies. I see nothing consensual about this situation.

Tom

 

[FWAAA]

I've been wondering the same thing. If they can collect and hoard cash at the rate of $35 million/month, what's the financial problem that requires bankruptcy? As they say in East Texas, that ain't right!

[post="179438"][/post]​

The problem? Are you serious?

High fuel prices and pension contributions that are due on Wednesday. If the contributions were paid, then USAir would violate its unrestricted cash balance covenants, and would be in default of most all of its debt. Without a Ch 11 filing, creditors would be free to collect. Liquidation would soon follow.

 

[jimntx]

The problem? Are you serious?

High fuel prices and pension contributions that are due on Wednesday. If the contributions were paid, then USAir would violate its unrestricted cash balance covenants, and would be in default of most all of its debt. Without a Ch 11 filing, creditors would be free to collect. Liquidation would soon follow.

[post="179469"][/post]​

Go back and re-do your math. UAIR is required to maintain $725 million cash on hand. According to a certain pilot who knows better than anyone else, UAIR is going into bk with $1.45 BILLION in cash. Making a $110 million pension payment would NOT put UAIR into default with that amount of cash on hand. That was my whole point.

According to the financials which UAIR filed with the government at the end of 2nd quarter, they had $975 million cash on hand and were burning cash at the rate of approx. $2 million/day. A little over 2 months later, instead of having $60 million less cash, all of a sudden they have $70 million MORE than they had on 30JUN. :huh: That's what doesn't seem right.

 

[nycbusdriver]

... A little over 2 months later, instead of having $60 million less cash, all of a sudden they have $70 million MORE than they had on 30JUN. :huh: That's what doesn't seem right.

[post="179478"][/post]​

I'd love to hear from the vaunted ALPA advisors and the pilots' negotiating committee resident expert how this little financial slight-of-hand was pulled off.

Seems Glanzer and Hollerbach got a look at only one set of books before they they started yelling that the sky is falling.

 

[jimntx]

I'm telling you, people. UAIR has taken a page from the D. Carty/AMR playbook. The set of books the AA unions got to look at contained no mention of the SERP (Special Executive Retirement Plan, aka the Secret Executive Retirement Plan). That's why Carty was so anxious for the concessions to be finalized before 15APR last year because that was the deadline for AMR to tell the SEC (and the public) about the SERP.

The unions need to make sure that the judge makes sure that UAIR management produces ALL financial data--starting with where the did the extra $70 million come from. <_<

 

[FWAAA]

Go back and re-do your math. UAIR is required to maintain $725 million cash on hand. According to a certain pilot who knows better than anyone else, UAIR is going into bk with $1.45 BILLION in cash. Making a $110 million pension payment would NOT put UAIR into default with that amount of cash on hand. That was my whole point.

According to the financials which UAIR filed with the government at the end of 2nd quarter, they had $975 million cash on hand and were burning cash at the rate of approx. $2 million/day. A little over 2 months later, instead of having $60 million less cash, all of a sudden they have $70 million MORE than they had on 30JUN. :huh: That's what doesn't seem right.

[post="179478"][/post]​

You need to go back and review the facts and, perhaps, to learn the difference between restricted and unrestricted cash.

U is required to maintain an unrestricted cash balance of $725 million at the end of each month.

On September 10, U's unrestricted cash balance was $750,353,000, just $25 million more than the minimum end of month covenant.

http://www.donlinrecano.net/dr201/mwc/04-1...000006-0000.pdf

Had U made the $110 million pension payment on Wednesday, U would have been under the minimum and would have been in default.

The remaining $720 million of cash on hand (making the total $1.45 billion) is restricted cash, which U could not count in meeting its cash covenant.

Perhaps less cockiness (especially when you are wrong) might be a good thing for you.

 

[jimntx]

Not being cocky. I'm just trying to figure out where the money came from.

Again on 30JUN, UAIR reported to the government that they had $975 million cash on hand TOTAL of which $725 million was "unrestricted cash" restricted to the ATSB loan covenant. That means that they had $250 million for all other purposes.

Now, regardless of whether you call it restricted, unrestricted, or a grilled cheese sandwich, the company is saying they have $1.45 billion in cash on hand. Subtracting the $725 million for the ATSB loan covenant, that leaves $720 million in cash for all other purposes.

$720 million - $250 million = $470 million dollars additional since 30JUN not supporting the ATSB loan. Where did it come from?

 

[FWAAA]

Not being cocky. I'm just trying to figure out where the money came from.

Again on 30JUN, UAIR reported to the government that they had $975 million cash on hand TOTAL of which $725 million was "unrestricted cash" restricted to the ATSB loan covenant. That means that they had $250 million for all other purposes.

Now, regardless of whether you call it restricted, unrestricted, or a grilled cheese sandwich, the company is saying they have $1.45 billion in cash on hand. Subtracting the $725 million for the ATSB loan covenant, that leaves $720 million in cash for all other purposes.

$720 million - $250 million = $470 million dollars additional since 30JUN not supporting the ATSB loan. Where did it come from?

[post="179561"][/post]​

You have understated the total cash USAir reported as of June 30 by $756 million.

The total cash and short term investments totaled $1.731 billion as of June 30, of which $756 million were restricted cash.

Now, on September 10, the total cash equals only $1.45 billion, of which $720 million is restricted cash.

Your number of $975 million omits the restricted cash entries of $161 million plus $595 million which are easily located on the balance sheet of the 10-Q, which can be found here:

http://investor.usairways.com/EdgarDetail....04-27&SID=04-00

USAir filed for Ch 11 protection because it has burned thru $281 million since June 30 and didn't have enough breathing room to make its September 15 pension contributions.

Talk all you want about management "hiding" money or "where did this cash come from?" - it doesn't change the facts. Plain as day from reading the publicly filed documents.