Originally Posted by
RJSAviator76
That's the point of bankruptcy... restructuring and ditching the debt.
Frontier could essentially do Section 363 where they'd simply buy assets. I think depending on the size and scope of the 363 sale, the pilots would most likely go with the aircraft.
It makes sense why Frontier is interested in Spirit, but I do think they'll have to dismantle a lot of their East Coast/FL presence to make it clear DOJ even if the acquisition could be framed as saving the company and preserving jobs.
BK doesn't "ditch debt". It allows reorganization of debt, which is mostly ordering of debt priority. But courts don't just wipe out debt to the detriment of creditors and just hand over those assets free and clear to companies. Spirit has been in BK twice now and except for some leases that were terminated there was little change in the total debt picture. In reality there is more non-lease debt now because of 2 rounds of DIP financing which was more than any debt converted to equity.
Also any 363 sale would have to have the cerditors agree to those, so they can't just buy a plane or some other asset for $1 and get it free and clear. There would have to be over 50% to require the purchaser to bring over employees, but if its over 50% they have to bring them ALL over if they are unionized. So this is actually a barrier for companies.
That's the ultimate problem here. If you want to buy Spirit, you have to choose between the entire airline, which includes all the debt, or just a few pieces.