Weekly News Roundup on Bankruptcy-Related Topics for the Week Ended 11/25/05
Below are some notable news posts for the week ended 11/25/05 on the following topical bankruptcy issues of interest to the bankruptcy litigator and practitioner:
Management-Labor Bankruptcy Issues at Northwest, Delta, and Delphi
Delta Bankruptcy News
US Air Post-Confirmation Results
Management-Labor Bankruptcy Issues at Northwest, Delta, and Delphi:
Continuing articles on the varying strategies and results regarding management-labor disputes at Northwest, Delphi, and Delta are found here (Delta-11/18/05-AJC), here (Northwest-11/17/05-W$J, here (Delphi, 11/16/05-W$J), here (Delphi, 11/17/05-NYT), here (Delphi, 11/23/05-Financial Times), and here (11/25/05-W$J).
Delta Bankruptcy News:
The W$J reported on 11/18/05 that Judge Beatty's "ruminations are [a] legal sideshow" in the Delta bankruptcy, and include some classic quips from Judge Beatty, such as:
You know, what's really weird is why anybody [agreed] to pay them as much money to begin with," the judge said, according to a transcript of the hearing. "I mean, they get paid an awful lot of money. The only good thing about them is they can't work after they're 60.
They have a real cost-savings plan on that airline. They start at the beginning of every flight with the stewardesses uncorking three or four bottles of liquor and they just go down the aisle...until it runs out. You see how you could save money that way....It's so much faster than dealing with all those little bottles.
Judge Beatty is also quoted here (11/25/05-AJC-on We$tlaw) as cryptically saying:
I say you're throwing darts at the pilots because they are smaller than you and you think you can stomp on them. And I'd add this, too: I bet "you're" -- whoever "you're" was -- iced the pilots' dreams of scoring six points and getting to victory lane.
Business Week, in its 11/21/05 issue, asks: "Can GM Stop Blowing Cash?: If not, the company won't have the money needed for a radical restructuring." Available at We$tlaw.
In a similar vein, the Economi$t offers similar gloom in its story, entitled "General Motors: That sinking feeling."
GM's Wagoner says here that GM has no plans for bankruptcy.
The W$J reports in an article entitled "Betting on GM," on the rising cost of insuring against GM's credit default. In August, insurance against a GMAC default within five years on $10 million of debt cost about $400,000 annually, while similar protection on GM itself cost about $585,000 annually. Earlier this week, the paper reports, the annual fee on $10 million of GM debt grew to more than $1 million a year, and dealers were reportedly demanding some payment upfront. Apparently, the price of protection on GMAC's debt shot up too as prospects of a quick and easy sale of GMAC dimmed.
A NY Times story compares the success of German auto parts maker, Continental, with the "jolts that have rattled its American counterparts," such as Delphi.
Crain's Detroit Business in an article entitled "New York firm wants to buy Delphi bankruptcy claims" reports that Riverside Claims L.L.C. ran an ad in the Nov. 7 issue of Automotive News announcing its intention to buy Delphi claims from suppliers for immediate cash. The article quotes Skadden's Jack Butler as saying that virtually all Delphi debt is "up for sale."
US Air Post-Confirmation Results:
The W$J reports in a story entitled "US Airways Says Losses Are Likely to Continue," that US Air warned in an SEC filing that "its integration with America West faces "significant challenges" and that the carrier's operating losses likely will continue into next year." What about those glowing projections of plan feasibility?
The W$J reports here that Calpine Corp. lost its "fight in Delaware's state court with holders of its senior bonds over plans to use $852 million in sale proceeds to buy natural gas to fuel its plants." According to the article:
Holders of Calpine's notes said the use was improper and breached terms of their loans to the California energy company.
Vice Chancellor Leo Strine agreed, and barred Calpine from using what is left of the cash to buy more natural gas. The judge also said a "fitting and reasonably prompt restorative remedy is in order" for the $313 million already spent on natural gas and burned in Calpine's electric generating plants. But he stopped short of ordering that the cash be immediately returned to the bondholder trustee, saying he would defer on the proper remedy.
The ruling was in keeping with statements from the judge at a trial in Delaware last week, when he said he would be reluctant to order remedies that might force Calpine, based in San Jose, Calif., into bankruptcy.
Thanks to Allison Grow for her help in compiling this post.
© Steve Jakubowski 2005