Originally Posted by
Cujo665
American. Over $4B in cash on hand. Convinced a BK judge that their debt structure was to become unstable unless BK restructuring of debt occurred.
Board of Directors actually replaced the CEO because he didn’t believe in bankruptcy and was stubbornly trying to renegotiate all labor contracts for over half a decade. BOD replaced him and promptly declared bankruptcy.
American had been losing money for years. They had 4 billion in cash, but their liabilities also exceeded their assets by 5 billion.
A key to surviving bankruptcy is to go into it with cash on hand. Wipe out the debt side, or at least give it a good hair cut, then march on. Going in with a weak cash position often leads to Chapter 7.
It should be no surprise that a CEO who gets a company into that position gets replaced. There is an entire subclass of CEOs who specialize in restructuring.
And it was not just labor that took it in the shorts. As usual, the leasing companies took big hits and the debt was restructured.