US Airways' trustee objects to plan of reorganization liability releases

By Caroline Salls

Pittsburgh, Sept. 13 - US Airways, Inc.'s Chapter 11 U.S. Trustee objected to professional liability releases in the company's joint plan of reorganization, according to a Monday filing with the U.S. Bankruptcy Court for the Eastern District of Virginia.

The trustee contends that the plan improperly releases professionals who served the company and the creditors' committee.

"The releases stand starkly alone in the joint plan unsupported by any legal justification and there is no indication that the releases are necessary to the joint plan or fair," the objection said.

According to the objection, limiting these parties' liability violates bankruptcy code. Also, the trustee said granting releases to attorneys violates state law.

The releases are binding regardless of a claimholder or interest holder's vote on the plan and automatically take effect upon plan confirmation, according to the objection.

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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