UAL reorganization plan draws pilot group, DIP, trustee objections

By Caroline Salls

Pittsburgh, Dec. 12 - UAL Corp.'s plan of reorganization drew objections Monday from the United Retired Pilots Benefit Protection Association, debtor-in-possession Independence Air, Inc. and pass-through trustee Wells Fargo Bank Northwest, NA, according to documents filed with the U.S. Bankruptcy Court for the Northern District of Illinois.

The retired pilots said the plan is not fair because they are not being compensated for the loss of pension benefits, but members of the Air Line Pilots Association, International and active pilots are being compensated.

The retired pilots also said the plan's third-party release provisions should not be approved and that "United's refusal to provide voting ballots that acknowledge the non-qualified claims of pilots who retired in 2005 warrants disapproval of the plan."

In addition, the pilots said the management and director equity and incentive plans proposed under the plan of reorganization should not be approved because plan documents do not provide sufficient information on benefits to be provided under these plans and because they are unfair to United's retired pilots and the other retirees, employees and unsecured creditors "who have sacrificed so much in connection with United's reorganization efforts."

According to debtor-in-possession Independence Air, the plan is unconfirmable since it appears to vest exclusive jurisdiction in the court over any administrative claim that Independence may have against UAL.

Independence said it is determining whether it has administrative claims against the company arising from potential violations of federal antitrust laws.

Independence said the plan is also unconfirmable because it attempts to allow UAL to estimate and cap disputed claims without authority to do so under bankruptcy code.

Wells Fargo said the proposed plan fails to provide a mechanism for the discharge of the amounts owed to holders of the company's 1997-1 class A EETC certificates and fails to provide for equal treatment of all secured aircraft creditor claims, while at the same time providing an injunction against some actions, including repossession of aircraft.

A hearing on plan confirmation is scheduled for Jan. 18.

UAL, the Chicago-based parent of United Airlines, filed for bankruptcy on Dec. 9, 2002. Its Chapter 11 case number is 02-48191.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.