"Delta facing some objections from municipalities to its reorganization plan"

Monday, April 9, 2007

Delta facing some objections from municipalities to its reorganization plan 
By Harry R. Weber
The Associated Press


ATLANTA - Several municipalities have objected to Delta Air Lines Inc.'s
reorganization plan out of concern their tax claims may not be paid in full.


Monday was the deadline to file objections to the plan, though some parties
may be allowed to file objections later. Monday also was the deadline for
creditors to vote on whether to accept or reject the plan. 

Among the recent objectors to the reorganization plan are officials in
Multnomah County, Ore., and King County, Wash. 
The Oregon objection involves an $890,145 tax claim related to Delta's
operations at Portland International Airport. 

Multnomah County officials say Delta's reorganization plan fails to
separately classify claims that may be secured by different property or, if
secured by the same property, with different rank in priority. 

"This defect is substantial because there may be multiple liens on aircraft
or other transitory property of the debtor, some consensual, and some
involuntary as is the case with secured tax creditors," the objection says. 

King County, with a tax claim of as much as $1.25 million, said it was
filing a conditional objection because it is uncertain whether Delta's
reorganization plan will provide for full payment of the county's secured
tax liens before its statutory tax liens are released. 

"Such a result would impair King County's claim," the county said in court
papers. 

The Atlanta-based airline expected some objections to the plan, but has said
it believes the plan will ultimately be approved by creditors and the court.
Chief Financial Officer Ed Bastian said last month there are no "show
stoppers" that Delta is aware of. 

"We have confidence we will obtain confirmation of Delta's plan of
reorganization by the bankruptcy court, " Delta spokeswoman Betsy Talton
said Monday. 

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 of creditor,
such as shareholders, would get nothing in the way of recovery under the
reorganization plan. Delta already has met that second test because its plan
calls for current shares of the company to be wiped out. 

Delta, the nation's third-largest carrier, filed for Chapter 11 in September
2005. It expects to exit bankruptcy on April 30. 

A confirmation hearing is scheduled for April 25 in U.S. Bankruptcy Court in
New York.

 Do you have an opinion about this story?
Share it with other readers in our CAA Discussion Forums

http://www.californiaaviation.org/dcfp/dcboard.php


*****************************************