San Jose Bankruptcy Attorney Discusses Under Bankruptcy Protection, Northwest Airlines To Pay Lenders Over $23 Million
San Jose Bankruptcy Attorney Discusses Under Bankruptcy Protection, Northwest Airlines To Pay Lenders Over $23 Million
Last Week, Northwest Airlines worked out a deal to pay J.P. Morgan and Co. and other lenders more than $23 Million—less than 50% of the $55 million to $60 million that lenders were asking for in relation to a dispute over a $975 million loan. The settlement must be approved in court.
The airline company filed Chapter 11 Bankruptcy last year. In order to exit bankruptcy, Northwest says it has to cut $2.5 billion in costs.
A U.S. Bankruptcy Court must also approve the agreement reached between Northwest Airlines, Boeing Co., and Rolls-Royce PLC that will let the airline accept delivery of its new Boeing 787 planes beginning the 3rd quarter of 2008.
Two major types of Bankruptcy under US law are:
Chapter 7: (of the U.S. Bankruptcy Code says that):
· The company stops all operations and goes completely out of business.
· A trustee is appointed to liquidate the company’s assets.
· The money acquired in the sale is used to pay off the company’s debts.
Chapter 11:
· Involves reorganizing the debtors’ business affairs and assets.
· The company filing Chapter 11 expects to become restored to normal business and a healthy financial future.
· Is filed by corporations needing time to restructure debt that has become unmanageable.
· Let’s filers retain control of their company and the bankruptcy process.
· Involves the assignment of a committee to help the bankrupt company develop a reorganization plan.
The Law Offices of Scott Sagaria handles bankruptcy-related legal matters in the counties of Alameda, Santa Clara, and Monterey. Contact the Law Offices of Scott Sagaria for a free consultation.
Northwest to Pay JP Morgan $23 Million To End Dispute, Reuters.com, October 20, 2006
Northwest Airlines Reaches Pact With Boeing, Rolls-Royce on 787 Aircraft Buy, Forbes.com, October 19, 2006
An Overview of Corporate Bankruptcy, Investopedia.com, July 8, 2005
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