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?
Yes to both - this is the consensus. Who knows since we can not go back and try an alternate path but that is the concensus. It is lot easier for a labor judge to reduce compensation by 10% than 40%.
There is also a school of thought that says better to fight and lose XX then give away XX - when you are trying to recapture XX. Like I said all of this is opinion but in any case we (DALPA) were played like a fiddle in BK.
Scoop