UAL unsecured creditors oppose request to change votes on plan

By Caroline Salls

Pittsburgh, Jan. 18 - UAL Corp.'s official committee of unsecured creditors responded to the company's trustees' motion to allow some creditors to change their plan votes, saying the affected creditors cast their votes knowing that a settlement may be reached between the company and the committee.

Trustees U.S. Bank, NA, the Bank of New York and Wells Fargo Bank Northwest, NA requested the vote change on Monday, citing the "last-minute settlement" that would give unsecured creditors a significant recovery from a United agreement with the Pension Benefit Guaranty Corp.

According to motion, on the eve of confirmation, UAL and the committee announced an unfair, discriminatory settlement whereby the entire unsecured creditor body, except the trustees and the public debtholders they represent, would receive a significant portion of the consideration flowing from the PBGC settlement.

In its response filed Tuesday with the U.S. Bankruptcy Court for the Northern District of Illinois, the committee said the votes of the public debtholders were cast with full knowledge that a settlement with the committee might well result in the direction of additional consideration to classes other than the PBGC and public debtholder classes, as well as other beneficial changes reflected in the settlement.

In addition, the committee said the plan as amended by the settlement does not violate the public debtholders' own settlement because the plan still gives them precisely what they bargained for - their share of the unsecured distribution and that portion of the PBGC claim assignment not to exceed $100 million.

According to the response, the direction of the PBGC assignment claim is consistent with the requirements of the PBGC settlement.

The trustees' motion also said the post-balloting agreement also amends the plan to provide a previously undisclosed, expanded role for the committee on the post-confirmation plan oversight committee.

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

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