San Mateo Bankruptcy Attorney Discusses Chapter 11 Bankruptcy Case, Creditors For Delta Ask The Airlines To Consider More Than “Stand-alone” Option For Bankruptcy Reorganization
San Mateo Bankruptcy Attorney Discusses Chapter 11 Bankruptcy Case, Creditors For Delta Ask The Airlines To Consider More Than “Stand-alone” Option For Bankruptcy Reorganization
Delta Airlines’s unofficial committee of unsecured creditors are asking the airline to consider other options besides the “stand-alone” option the company had presented earllier this month when announcing their reorganization plan. Delta has said that it plans to emerge from bankruptcy as an independent airline carrier.
The unofficial committee is separate from the official committee of creditors who must approve any reorganization plan by Delta if the plan is to be executed successfully. While the official committee says that they currently support Delta’s stand-alone plan, they are asking the company to consider other options also.
Delta filed for Chapter 11 bankruptcy protection in 2005.
Ideally, each class of creditors must approve of the plan by a 2/3rds majority. If at least one class of creditors disapproves of the plan, Delta could still get the plan approved by a “cramdown”—where Delta must then prove to the bankruptcy court that the dissenting creditor group would get more under the desired reorganization plan than if the company were to file for Chapter 7 bankruptcy.
Delta Airlines Timeline:
June 17, 1929
Delta starts its first passenger flights over a route from Dallas to Jackson, Miss., via Shreveport and Monroe, La.
March 1, 1941
Delta headquarters moves from Monroe, La., to Atlanta.
April 17, 1957
Delta stock begins trading on the New York Stock Exchange.
Aug. 1, 1972
Northeast Airlines merges with Delta. Delta becomes a major carrier in New York and Boston, with direct routes from New York and New England to Florida. Delta begins operating the Boeing 727.
1982
After Delta suffers financial losses, employees raise $30 million in payroll deductions to purchase the first Boeing 767, named "The Spirit of Delta."
April 1, 1987
Delta merges with Western Airlines; becomes the fourth-largest U.S. carrier and fifth-largest in the world. First trans-Pacific service begins: Atlanta to Portland, Ore., to Tokyo. Ronald W. Allen becomes chairman and CEO.
Nov. 1, 1991
Delta purchases substantially all of Pan Am's trans-Atlantic routes and the Pan Am Shuttle, making this the largest acquisition of flights in airline history. Delta becomes a global carrier.
1995
Delta returns to profitability in the fourth quarter.
Aug. 14, 1997
Leo F. Mullin is named president and CEO.
Sept. 11, 2001
Terrorist attacks leave airlines reeling. Substantial losses at the major airlines follow.
2001 - 2003
Delta eliminates roughly 16,000 jobs, or 21 percent of its workforce compared to pre-Sept. 11 levels, by mid-2003.
Feb. 6, 2003
Delta announces pay cuts for top executives, including 10 percent cuts for CEO Mullin and president Fred Reid.
April 30, 2003
Delta proposes 22 percent pay cut for pilots and canceling of pilot pay raises due over the next year, according to union. Company later asks for 30 percent pay cut and other concessions. Pilots, meanwhile, offer a 9 percent cut and to forego a 4.5 percent raise due in May 2004.
Summer 2003
Revelations emerge that amid the layoffs at Delta, a select group of executives received millions in company payments to a program to protect their pensions even in the event of a bankruptcy.
Aug. 11, 2003
Amid uproar over executive perks, Delta cancels the final payment to participants of its supplemental executive retirement plan and discontinues the program.
Nov. 4, 2003
Mullin tells AP more job cuts possible if airline doesn't get pilot concessions.
Nov. 24, 2003
Mullin says he will step down as CEO on Jan. 1, and as chairman that April. Company says Mullin will be replaced by board member and industry veteran Gerald Grinstein.
May 10, 2004
Delta warns in regulatory filing that it may file for bankruptcy if it doesn't get deep concessions from pilots.
May 28, 2004
Source says Delta has hired a law firm specializing in restructuring to discuss options in case airline files for bankruptcy.
July 20, 2004
Pilots up concessions offer to airline, say they are willing to take a 23 percent pay cut.
July 30, 2004
Grinstein tells pilots the survival of the company depends on at least $1 billion in concessions from them, says their proposal for up to $705 million in cuts is inadequate.
Sept. 8, 2004
Delta says it will cut up to 7,000 more jobs over 18-month period and shed its Dallas hub as part of a sweeping turn-around plan aimed at saving the airline.
Oct. 27, 2004
Delta, pilots reach tentative agreement on pay cuts and other concessions that will save airline $1 billion a year. Around same time, Delta gets $1.1 billion in fresh financing from creditors.
Jan. 20, 2005
Delta blames persistently high fuel prices as it reports a $2.2 billion fourth-quarter loss.
May 10, 2005
Delta warns it will record a substantial loss for the final nine months of the year and says it will need to file for bankruptcy if its cash reserves fall too low or some of its lenders demand immediate payment of its debts.
July 26, 2005
Delta CEO says in memo that current transformation plan, which includes cutting annual costs by $5 billion by the end of 2006, is not enough to save the struggling carrier.
Sept. 14, 2005
Delta files for bankruptcy.
March 1, 2006
The airline and its 6,000 pilots miss the deadline to reach a deal on long-term pay and benefit cuts.
April 4, 2006
Delta pilots vote 94.7 percent in favor of authorizing a strike. The vote gives union leaders the authority to set a strike date. They didn't set a date immediately and gave no indication exactly when they might act. An arbitration panel must decide by April 15 whether to void the pilots contract.
April 14, 2006
Delta negotiators for its pilots union reach a tentative agreement on long-term pay and benefit cuts that could avert a strike. The Atlanta-based airline's 5,930 pilots have to ratify the undisclosed deal; If they don't, the company's contract rejection request could resurface, as could the union's strike threat. Delta says a strike could put the airline out of business.
May 23, 2006
A group that represents some retired Delta pilots asks a bankruptcy court judge to reject the carrier's latest wage concession agreement with its pilots union. The Delta Pilots' Pension Preservation Organization said that if the agreement reached last month is approved, it would set the stage for drastically reducing certain pension benefits of the airline's 5,800 retired pilots. A hearing is scheduled for May 31 -- the same day Delta's active pilots are scheduled to complete their voting on the agreement.
May 31, 2006
A bankruptcy judge approves the $280 million-a-year concessions agreement between Delta and its pilots, hours after rank-and-file pilots agree to the deal. The agreement runs through 2009 and takes effect June 1. It replaces an interim pact agreed to in December and includes an initial 14 percent pay cut and assurances the pilots union won't fight any company effort to terminate the pilots' pension.
Aug. 8, 2006
Delta asks a bankruptcy court judge to allow it to use IBM rather than its own employees to maintain its computer systems. If approved, a Delta spokeswoman said the outsourcing agreement would result in "substantial savings." About 200 of the 1,800 employees in the Delta technology unit would be affected, though it's unclear how many might lose their jobs.
Aug. 9, 2006
With higher ticket prices and fuller planes driving up revenue, the airline says it turned its first adjusted profit in nearly six years during the second quarter -- despite a wider loss of $2.21 billion.
Aug. 22, 2006
A bankruptcy judge approves an agreement between Delta and a group of retired pilots that paves the way for the airline to pay $9 million in pension obligations. The deal was presented ahead of a hearing that begins Sept. 1, when Delta will ask the court to terminate its obligations under qualified pension plans. The Delta Pilots' Pension Preservation Organization withdrew earlier objections to reach a deal with the airline in late July.
Nov. 2, 2006
A bankruptcy judge grants Delta a deadline extension to file its plan of reorganization as it tries to emerge from Chapter 11 by the middle of 2007. The nation's third-largest airline now has until Feb. 15, 2007, to file a plan and until April 16 to solicit approval for the plan from creditors, according to a court document dated Oct. 31, 2006. It is the third extension Delta has sought.
Nov. 15. 2006
Delta Air Lines officials say they will review the proposal from Tempe-based U-S Airways, but they will push ahead with a goal to file a reorganization plan by February. U.S. Airways has made an $8 billion hostile takeover offer for the Atlanta-based airline. Delta has said repeatedly thatit isn't interested in a merger.
Dec. 4, 2006
Delta Air Lines Inc. and the Pension Benefit Guaranty Corp. reach a settlement involving the carrier's request to terminate its pilots pension plan that will award the government's pension insurer an unsecured claim of $2.2 billion.
Dec. 6, 2006
Delta Air Lines' pilots union said it plans a massive rally to show its opposition to U-S Airways' hostile takeover bid. The union said it will lobby members of Congress to block the deal. U.S. Airways says it won't back down, and its shares rose sharply.
Dec. 19, 2006
Delta Air Lines files a five-year reorganization plan with the bankruptcy court that calls for it to emerge from Chapter 11 as a stand alone company. The carrier says it has rejected Tempe-based US Airways' unsolicited offer to buy Delta in a hostile bid now worth $8.4 billion.
Sagaria Law, P.C. handles bankruptcy filings in Alameda County, Monterey County, and Santa Clara County. Contact Sagaria Law, P.C. today for more information or to set up an appointment for a free consultation.
Delta creditors to weigh options, Chron.com, December 20, 2006
Delta bankruptcy: 17 creditors wary of stand-alone plan, Saltlaketribune.com, December 22, 2006
Delta Airlines Timeline, CBS News.com
Related Web Resource:
Chapter 11 Bankruptcy Basics, U.S. Courts.gov
