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"Unofficial creditors committee urges Delta to consider options"

Saturday, December 23, 2006

Unofficial creditors committee urges Delta to consider options 
By Harry R. Weber
The Associated Press

ATLANTA - Seventeen creditors who hold $2.25 billion in unsecured claims
against Delta Air Lines Inc. in its bankruptcy case urged the carrier Friday
to consider alternatives to its stand-alone reorganization plan.

Their announcement comes a day after the chief executive of US Airways Group
Inc. issued a scathing rebuke of Delta's stand-alone reorganization plan and
said he is more determined than ever to push ahead with his company's
hostile $8.3 billion bid to buy Delta.

The 17 creditors, who form an unofficial committee of unsecured
claimholders, said in a statement that while they appreciated Delta's
progress to date in its restructuring efforts, the committee ''expects Delta
to consider methodically, proactively and fairly strategic alternatives to
its proposed stand-alone Chapter 11 plan to ensure that creditor recoveries
are maximized in the Chapter 11 process.''

The statement said the unofficial committee consists of 17 members that hold
unsecured notes, unsecured deficiency claims relating to aircraft equipment
leasing arrangements and other unsecured claims totaling more than $2.25
billion of unsecured claims against Delta.

The total estimated value of all unsecured claims in Delta's case, which it
disclosed in its reorganization plan, is roughly $15 billion, Delta
spokesman Michael Freitag said. That means the unofficial creditors
committee represents only 15 percent of the total claims. Also, Delta's
pilots union, which supports management's desire to remain an independent
carrier, holds an almost equal share of unsecured claims, $2.1 billion.

A spokesman for the committee, Todd Miller, did not elaborate on the
committee's statement.

Freitag said Delta will consider what the committee has to say ''even though
they are not an officially sanctioned voice in the Chapter 11 process.'' He
added, ''As we have stated previously, we intend to move forward in a
constructive manner that serves the best interest of our creditors and other

That committee is separate from the official committee of unsecured
creditors in Delta's bankruptcy case that has a key role in deciding Delta's

The official committee has said it supports Delta's decision to file its
stand-alone reorganization plan on Tuesday, but will also weigh

Other creditors, such as those on the unofficial committee, could put
pressure on larger creditors to force Delta's hand. It remains to be seen
how that will all play out.

Typically, in each class of creditors, Delta's plan would have to be
approved by holders of two-thirds of the claims and a majority of the number
of individual creditors. If a class is not impaired - that is, if they are
guaranteed of getting all of their money back no matter what - they
generally don't get to vote.

If one or more classes of creditors do not approve the plan, Delta could
still confirm the plan through a so-called cramdown, a maneuver in which it
must show the court that the dissenting class will receive more under the
plan than it would under a Chapter 7 liquidation. The company also would
have to show that any subordinate class, such as shareholders, would get
nothing in the way of recovery under the reorganization plan.

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