Chicago – United Airlines’ parent company on Thursday said it had resolved its differences with a committee representing unsecured creditors, moving the airline one step closer to its planned exit from bankruptcy next month.
Elk Grove Village, Ill.-based UAL Corp. said both sides have settled objections over the company’s Chapter 11 reorganization plan, including its controversial management stock plan.
United is the largest carrier at Denver International Airport and has more than 5,000 employees in Denver.
Thursday’s announcement keeps the nation’s second-biggest airline on schedule to emerge from Chapter 11 in February. A final agreement will be filed with the U.S. Bankruptcy Court in Chicago, and a judge must sign off on the exit plan following a hearing Wednesday.
“We’re still going to have to go through a number of things at the hearing to prove we meet the standards,” said United’s chief financial officer, Jake Brace.
However, the creditors committee’s objection was “probably the most important objection that there was out there to resolve,” Brace said.
“This agreement with them means that the body fiduciarily charged with looking after the creditors as a whole think that this plan of reorganization ought to be confirmed, and that’s a very important message to all constituents,” Brace said.
The new agreement calls for 8 percent of the new United stock, or 10 million shares, to be reserved for management equity incentives, instead of the 15 percent United originally proposed. It also reduces a distribution to about 400 salaried and management employees but allows a director equity incentive plan as proposed by the company.
The deal with the creditors committee also calls for a bylaw saying the board will not adopt a “poison pill” to deter hostile takeovers without the approval of stockholders.
Also under the new reorganization plan, United will have 12 board members, and the U.S. Pension Benefit Guaranty Corp., which took over United pension plans, will be allowed a $10.2 billion claim.
Of 54 objections originally filed to United’s plan of reorganization, many remain unresolved, including objections by unions. Brace said United would continue to work with them to resolve their objections.
Last month, the creditors committee asked a federal bankruptcy judge to block United’s plan to give management and other salaried workers at least $96 million in stock and other equity as part of its restructuring plan.
“This has been an extraordinarily complicated restructuring, and we look forward to United’s successful exit from bankruptcy as the vital competitor it is,” Dana Lockhart, head of the group representing unsecured creditors and chief financial officer at Airbus of North America, said in a statement.
In a related development Thursday, a bankruptcy judge denied a motion filed Monday by retired United pilots seeking a recount of votes cast in the reorganization plan.
Associated Press staff writer David Brummer and Denver Post staff writer Kelly Yamanouchi contributed to this report.
