U.S. trustee names panel of US Airways creditors

Members will negotiate terms of debt repayments

August 17, 2002|By BLOOMBERG NEWS

ARLINGTON, Va. - A 13-member panel of US Airways Group Inc.'s creditors was named by a Justice Department official yesterday to negotiate the terms for repayment of billions of dollars in debts as the bankrupt airline reorganizes.

The seventh-largest U.S. airline filed for Chapter 11 protection from creditors Sunday as losses worsened after the terrorist attacks of Sept. 11. US Airways, the second-biggest carrier at Baltimore-Washington International Airport, said bankruptcy would help it reduce costs and return to profitability.

More than 150 creditors and their lawyers assembled in a hotel ballroom five blocks from US Airways' Arlington headquarters as U.S. Trustee W. Clarkson McDow Jr. chose the panel. The committee will negotiate on creditors' behalf as the airline restructures its operations and sheds debt. Companies in bankruptcy are legally obligated to serve creditors' interests.

"We tried to get creditors reflecting various interests to somewhat reflect the debt," said McDow, a Justice Department official responsible for overseeing bankruptcy cases in Virginia. "There's no perfect way to select the committee."

The members of the creditors committee are Airbus North America Holdings Inc., the Air Line Pilots Association, Charles E. Smith Commercial Realty, Electronic Data Systems Corp., First Union National Bank, J.P. Morgan Trust Co., LSG Sky Chefs, Pension Benefit Guarantee Corp., Rolls Royce North America Inc., State Street Bank & Trust Co., Wilmington Trust Co., Honeywell International Inc., and the Machinists union.

At the meeting, US Airways officials made a presentation outlining the carrier's plan to emerge from bankruptcy.

Jack Butler, the company's bankruptcy lawyer, said US Airways expects to file a Chapter 11 recovery plan with the court before Dec. 31 and complete a "fast-track" reorganization by the end of April.

US Airways' bankruptcy filing listed $10.65 billion in debts, but Butler told the gathering that the company's debts are $16 billion to $16.5 billion "all told." He said about $4 billion in engine lease obligations are not on the company's balance sheet.

US Airways initially listed $7.83 billion in debts in its bankruptcy filing. The company amended the figure late Sunday.

It won approval Monday from a federal bankruptcy judge to tap $75 million of a new $500 million loan to help keep its planes aloft while it reorganizes.

U.S. Bankruptcy Judge Robert Mayer in Alexandria, Va., set a hearing for Sept. 26 to consider final approval for the loan.

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.