Originally Posted by
gojo
Lmao, Pinnacle's restructuring plan gone awry??? That thing was executed perfectly by Delta. And it all started when they sold, gave Pinnacle Mesaba. American Airlines situation is more like Skywest Inc. Both have or had a surplus of cash at the time of reorganization. And your wrong about Skywest having less control during a bankruptcy process. Bankruptcy gives them the ability to do almost whatever they want. Reorganizing out side of bankruptcy is more tricky as they are still tied to all existing contracts. I suppose Skywest Inc. could go that route. In any case, I would think it'll become obvious after the summer schedule winds down. I wish you all the best of luck
DAL was forced to buy PNCL or otherwise face the possibility of that bankruptcy turn to chapter 7. That's a risk they were not willing to take. Remember they waited to the very last minute to agree to be the DIP hoping someone else would step up. No one did so they were forced to do it.
And in bankruptcy, the laws are there to protect the creditors first, the owners last. That's why the shareholders usually lose all the value in their stock (ownership). Any creditor can oppose the restructuring plan. The judge rules in what he sees is in the best interest of the creditors and within the scope of bankruptcy laws. The judge decides if contracts can be cancelled or modified if it's in the creditors best interest, again within the confines of bankruptcy laws. Management has to make their case to the judge against those whose are party of any of those contracts or the creditors themselves. Management doesn't just get to do what they want. But when restructuring outside bankruptcy, they don't have a judge they are required to plea their case to and they don't have to worry about any possible vetoes to their restructuring plan. And lastly, it's way more cost efficient to do it that way instead of dealing with the costs to litigate a bankruptcy case. Not to mention the probable harm it would do to the holding company and the stock. Right now, it doesn't seem to be in the best interest of the shareholders. But that's right now only.
Either way, I don't hold my breath for any favorable outcome regardless of bankruptcy.