Michael J. Edelman and Douglas J. Lipke on Airline-Debtor Strategies for Maximizing Aircraft Financing Savings in an Airline Chapter 11 Case

In this Emerging Issues commentary, Michael J. Edelman and Douglas J. Lipke discuss practice tips to help attorneys who are representing airline-debtors. The goal is to form strategies that maximize aircraft financing savings in a reorganization under Chapter 11. They write:

Excerpt:

"One of the primary goals of airline debtors in chapter 11 reorganization is to reduce their aircraft financing and leasing costs. In this regard, every aspect of their bankruptcy filings should be coordinated in an effort to maximize pressure upon Bankruptcy Code section 1110 creditors to provide the maximum financial concessions possible."

"Air carrier-debtors have sought to time the filing of their petitions to maximize negative market and economic pressure upon section 1110 creditors. For example, a debtor may seek to file its chapter 11 petitions on or about the same date as another carrier to maximize the negative economic news affecting aircraft values."

"Airline-debtors can list a greater number of aircraft in their rejection motions than they want to reject. By including too many aircraft, and providing for a leisurely motion process, air carrier-debtors can use the threat of rejection to negotiate better rates for some of the aircraft."

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Michael J. Edelman is a shareholder in the New York City office of Vedder Price P.C. Mr. Edelman's practice involves all aspects of bankruptcy litigation, proceedings, negotiation and restructuring. Mr. Edelman has experience in many of the significant chapter 11 reorganizations of the past decade as counsel to creditors, debtors and financial institutions, including, inter alia , Delta Air Lines, Lodgian, Inc., WCI Steel, Continental Grain, World Access, HomePlace Stores, Grand Union, Bidermann Industries/Maurice Bidermann, Foundation for New Era Philanthropy, Safety Components, Olympia & York and Maxwell Communication Corporation.

Douglas J. Lipke is co-chair of the Corporate Reorganization, Bankruptcy and Insolvency Group of Vedder Price P.C. in Chicago. Mr. Lipke concentrates his practice in the area of workout, bankruptcy and reorganization law. He represents a full range of national and international clients, including secured lenders, debtors, trustees and creditors' committees.