Northwest Airlines Files Its Disclosure Statement As It Prepares To Exit Bankruptcy Protection

Northwest Airlines says it is on schedule to exit Chapter 11 bankruptcy protection during the second quarter of this year. The airline carrier filed its disclosure statement, as well as provided the amended details of its reorganization plan, which values the company at close to $7 billion. The plan needs to be approved by the U.S. Bankruptcy Court for the Southern District of New York, as well as by Northwest’s unsecured creditors.

Northwest is the 5th largest carrier company in the U.S. It filed for bankruptcy protection last September. A court hearing regarding its disclosure statement is scheduled for March 26.

According to Northwest’s proposed plan, holders of general unsecured claims would receive stock valued at 66% to 83% of the claims, which are estimated at anywhere from $8.75 billion to $9.5 billion. Northwest would sell new common stock worth $750 million and let unsecured creditors decide first whether they wish to buy new stock. $1.5 billion/distributions would be given to employees. Current shareholders would not receive any distribution, and current shares would be cancelled.

Chapter 11 bankruptcy
Even when a company manages to successfully exit bankruptcy, the bondholders and creditors usually become the new owners and existing equity shares are usually cancelled.

When a company emerges from bankruptcy, there may be two kinds of common stock: The old common stock (the existing stock prior to the company filing for bankruptcy) and the new common stock (issued during the reorganization phase). Old common stock may lose their value once a company has new common stock.

To find out more information about the stocks of a company that is under bankruptcy protection, you should contact: The company’s investor relations department, the broker who sold you the stocks, the Securities and Exchange Commission, the U.S. Trustees at the Justice Department, or the bankruptcy court where the company filed for bankruptcy protection. You should also consider speaking with an experienced bankruptcy attorney who can discuss the matter with you and make sure that your rights are represented and protected.

Sagaria Law, P.C. represents clients in the cities of Berkeley, Sunnyvale, Burlingame, Carmel, Cupertino, and Los Gatos, as well as clients in other cities located in Monterey County, Alameda County, and Santa Clara County. We handle Chapter 13, Chapter, 11, and Chapter 7 bankruptcy claims, as well as other bankruptcy-related matters. Contact Sagaria Law, P.C. today to schedule your free consultation.

Northwest Airlines details reorganization plan, Reuters, February 15, 2007

Corporate Bankruptcy, SEC.gov

Related Web Resource:

Northwest Airlines Corporate Information

US Trustee Program, Department of Justice