Liquidation Process
 

Currently at trending a -$400 million or so loss at the low end per year. This operating loss will grow substantially as planes are parked. With liquidity of around $1 Billion and a bond that has to be rolled over by September 2025 there is a good chance we will be entering bankruptcy to liquiditate to our creditors.

When this happens, how are our non-vested 401k contributions, sick time, and vacation time handled? I assume we lose all these?

Would it be worthwhile to bid vacations to be earlier in the year to get that money before the company dies?

If we lose our 401k contributions, is it worthwhile to withdraw our 401ks, even with the penalty fees, to keep at least some portion of our 401k balances from being clawed back by creditors or an insolvent company? I saw this happen at PSA - guys got furloughed and their 401ks were seized by the company. Can that happen here?

Do sick time get paid out when the company shuts down?

Is there a risk of not being paid at the end? I understand if I ride this thing all the way to liquidation I may end up stranded somewhere and have to pay my way home - do we immediately lose CASS access?

This is not a discussion about stay/go. I am simply trying to understand how I can extract as much value out of this enterprise if it becomes a necessary course of action for me/waiting for response from applications. Thank you.

I think your way too early on this. Appeal process needs to play out and I have to believe other suitors are out there. but as someone who went through an airline bankruptcy I can answer a few of those questions and guess on a few others.

Any Of your own $ and all of your vested company contributions cannot be touched by creditors. I verified this with I believe it was fidelity at the time. As far as unvested company contributions I’ll guess those can’t be touched either. I don’t believe you can withdrawal those anyhow so it doesn’t really matter. Bottom line your 401k is safe. I wouldn’t touch that. You could call your provider to verify no weird law went into effect over the last several years I don’t know about.

This is a guess, Your sick goes away and you become a creditor for unused and acrued vac. This is in a liquidation scenario and again you’re pretty far away from that imo.

I know a lot of people didn't want this outcome, but I hope everything works out for you guys. I am sure you will be alright in the end because a lot of companies would want those planes/pilots and I am sure F9 won't let go without at least attempting again.

Goodluck to all of you guys over there. A lot of going to change over the next year.

You can do an "in-service withdrawal" from your 401k and be exempt from taxes and penalties but only if you roll your funds over to another qualified plan. That includes the portion of the company contribution in which you are vested. As far as the unvested portion goes, I imagine that the same thing happens to it in the event of a liquidation that happens if you find another job; which is to say it goes back to the company. You can call Schwab and ask if there are any restrictions on doing so. But having said all of that, I think your money is safe where it is.

Not a bad idea. I wouldn’t touch it. Just wait and if for some crazy reason your W-2 this year is low enough because your starting over consider converting some or all to a roth with a different provider.

You cannot do any sort of withdrawal or rollover unless you are 59 1/2 or still employed by the company who sponsors the 401k plan.

Spirit has a vesting period for 401k? I find that hard to believe. Regardless, anything vested is untouchable, its yours

6 years.

for your health

It's on a schedule.

2 years service with the company, you keep 20% company contributions
3 years 40%
4 years 60%
5 years 80%
6 years 100%

You can roll out/withdraw rollover funds if there are any but yes that’s my understanding as well.

Yes you can but you’ll pay the taxes on the withdrawal as well as a 10% tax penalty.

Sick: Use it or lose it. If it's some kind of PTO arrangement, it might get treated all or in part like vacay but that would be complicated.

Back Pay & Vacay: Fed guarantees protection up to a certain $ cap. Additional protections vary by state law, but in many places it will be treated as a priority, secured debt. But that's assuming there's any actual money left... If all the cash is gone, you might get pennies on the dollar a few years down the road. FAA will not allow airlines to operate without any cash reserves (Mx, safety), so one can assume a major airline will still have cash on hand when they file.

401k: It will go down just like if you quit or got fired. You keep your contributions, and any vested employer contribitions. Non-vested goes to the company.

I would *assume* that your union is researching this stuff wrt state law, and will inform everyone if it looks like it's happening. If that's not a good assumption, maybe ask your reps about it.

In regards to sick, our CBA has separation and retirement payouts of sick time. Certain percentage of your bank based on years of service for those starting with 10 or more years. How would that work in a liquidation? Same as vacation?

Dart?

.....

Im not saying anyone on committee won’t know what happens to our sick time in a full liquidation seeing as we have a payout provision, but I put the odds pretty low anyone has this expertise.