Northwest Airlines files reorganization plan
Northwest Airlines Corp. filed a plan to exit bankruptcy.
The filing today to exit as an independent company aims to give fresh stock to some creditors and raise capital from investors, including private equity firms.
The plan, which will be fleshed out in a more detailed filing next month, moves the number five US airline a step closer to exiting bankruptcy and adds urgency to any rival airlines considering a bid for the company, as consolidation fever grips the sector.
The reorganization plan and the disclosure statement require court approval. Upon receipt, the airline will seek creditor approval of the plan. Northwest said it hopes to exit Chapter 11 between April and the end of June.
Northwest said it will issue stock in the restructured company to unsecured creditors in exchange for their claims and will cancel its current common and preferred stock. Holders of those shares will get nothing.
Northwest has been in talks with bankrupt Delta Air Lines Inc. about a possible link-up after exiting Chapter 11, according to a source familiar with the talks. Delta itself is the target of a $10.5 billion bid by US Airways Group Inc.
Northwest filed its plan in a federal New York bankruptcy court ahead of its Jan. 16 deadline to do so without interference from outside parties.
Judge Allan Gropper also granted a request by Northwest, which had the consent of its creditor committee, for an extension until Feb. 15 to file a disclosure statement, which would give details of the restructuring plan.
