Originally Posted by
TED74
I wasn't around for bankruptcy. Does this "starting point" concept accurately reflect how a BK judge actually thinks and behaves? It's a commonly repeated theme... should we enter BK court, we want to do it from the highest water mark possible. But I honestly don't get it. In BK, operating costs and debts exceed revenue, so the company is attempting to restructure to get projected costs and debt obligations below projected revenue, right? Doesn't a judge just validate if a proposed (or executed) departure from the existing PWA is necessary... not that it is or isn't above or below some percentage value?
If I'm cutting my family's budget to balance cash flow, I don't honestly care what I used to spend. I need to get down to X, no matter what Y USED to be.
What am I missing? Is the consensus from last time that had the union NOT agreed to a 32% pay cut before BK, the end state 40+% cut wouldn't have been so big? Or is the desire to maximize income before it eventually falls per the BK judge's decree?
No one can know for sure (except the BK judge) what the BK judge thinks but........ I’ll lay pretty good odds that any deal that reduces our contractual provisions and helps the company before a BK is declared, will be a pretty good starting point for him/her. It’s EXACTLY what happened in the previous BK. The company didn’t get all it asked for but it got a substantial amount. IMO more than it needed.
Again IMO, the dollar amount you you are looking for to determine debt vs revenue is a moving target in BK. There are so many other things that affect it other than the pilot contract. I might even go so far as to say thePWA isn’t in the top 5 affecting it.
The company uses the BK process to extract the maximum amount it can. Dalpa of course fights to keep as much as it can. You can bet that the pendulum is on the company’s side and that’s where the judge will come down. It’s just a question of how far........and if you start mor towards the middle, guess what happens......my opinion of course.
Obviously no one can know for sure how much would have been taken in the last BK if now cuts had been taken. But in the court of public opinion a 46% pay cut is waaaaaay different than a 14% pay cut. I will say again, if you start more towards the middle, guess what happens.......my opinion of course
Denny