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US Airways' creditor, landlord object to plan confirmation
By Caroline Salls
Pittsburgh, Sept. 12 - US Airways, Inc. creditor Nason and Cullen, Inc. and landlord Fourth Crystal Park Associates LP objected to confirmation of the company's plan of reorganization based on alleged bankruptcy code violations, according to Monday filings with the U.S. Bankruptcy Court for the Eastern District of Virginia.
Creditor Nason and Cullen said the plan is unconfirmable because it fails to give adequate assurance that dispute cure claims will be satisfied promptly after resolution of disputes.
"As Nason is well aware from experience in US Air's first bankruptcy case, the claims process will unfold on a timetable that is largely beyond its control and much can happen during that period," the objection said.
"In light of well-publicized operational difficulties plaguing the airline industry, including skyrocketing fuel prices, labor costs and market pressures that have driven passenger fares downward, it is appropriate to question whether US [Airways] will have the financial means on some later date to provide Nason the same treatment as it has afforded to similarly situated holders of cure claims, who are being paid cash in full shortly after the plan effective date."
Landlord Fourth Crystal Park said it objects to confirmation of the plan on the grounds the proposed treatment of its unexpired lease violates bankruptcy code.
According to the objection, US Airways plans to assume or reject leases and executory contracts within six months of the effective date of the plan of reorganization, but bankruptcy code requires leases to be assumed or rejected before plan confirmation.
A plan confirmation hearing is scheduled for Thursday.
US Airways, an Arlington, Va.-based airline, filed for bankruptcy on Sept. 12, 2004. Its Chapter 11 case number is 04-13819.
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