I think he meant "creditors" not debtors.

The creditors will certainly get something. The former bondholders are now secured creditors, since there are assets pledged to secure their investments, and they will be paid back from the sale of those assets. Its probably better for them to sell the assets and close the business down instead of taking a bad deal from Frontier or anyone else. This puts their interests at odds with Spirit employees interests, which is a bad sign.

 

Assets? You mean the HQ??

There's not much to sell lol. If this place closes up they are seriously hosed.


But who knows (I surely don't), maybe that's the grand plan.

 

I have been through an airline chapter 11. Far from an expert however the first thing the judge does is appoint a creditors committee. That committee decides the path the airline will take. The creditors committee(Debtors) can basically do whatever they feel is in their best interest. They can convert chapter 11 to chapter 7 and sell the parts or stay in 11 and pursue continuing operations as a standalone or seek a partner or partners. They have more control over the process than anyone else. At Delta the creditors emerged from the Chapter 11 basically whole. Only the employees got crushed!

 

Id say at this point, from what I DO know, there’s far more outstanding debt than tangible value to NK at the moment. Kind of a scary place to be. For all parties.

i too am not all well versed in this sort of thing. But this was clearly always part of the plan. It’s only been 4 months since the airline emerged from CH11. Obviously the result and state of the company today couldn’t pull a complete 180 in 4 months. Did anyone think Spirit would be in a different place in that short of a span? With a few new options and some marketing? Please tell me it wasn’t expected to even stop bleeding by now. No where near enough time. Like I say, this is just one of the tools they planned to use.

 

The timing of the emergence from Chapter 11 has always seemed odd to me.

 

Exactly. There is next to nothing to sell. The price offered from Frontier was essentially the same as the liquidation price and the owners said no. The owners are also the main creditors so they get to make all the decisions now even out of ch11. They got the company that was the deal. They don’t need another CH11 to reorganize their own debt on the company they own.

They told Frontier no and then didn’t turn the lights off themselves. Why in the world keep operating at a loss? They could just close it up and sell what few assets there are. They might get about what Frontier offered which is why Frontier offered it. Instead they went and spent money adding new products and continue spending money on marketing and reconfiguring planes. Why? None of it makes sense.

Selling to Frontier cheap and getting ULCC stock or just selling all the assets themselves while closing the doors both seem like better deals than continuing to operate at a loss and then closing the doors anyway. They aren’t dumb enough to think that the new products will turn this place around. There must be another plan bc losing a bunch more money then liquidating isn’t better than just liquidating tomorrow.

They aren’t airline managers. They aren’t going to just plug along hoping it gets better. They are money people. Best ROI will win. They aren’t in the business of just throwing more money at a loser to make it a bigger loser.

 

the creditors’ committee is comprised of creditors. Not debtors. It’s not a debtors’ committee.

I know you like to be the expert in, well, everything. But maybe, just maybe…the laws have changed a bit in the last 20 years. But thanks for the cool story.

 

They dont own the company anymore. The largest single shareholder is citadel at just over 6%. Worth about 6.8 million dollars.

https://www.investing.com/equities/s...ings-ownership

 

The debtors have extended credit to the airline. Where do you think debtors come from? At Delta the committee was composed of the 9 organizations owed the most. DALPA got one of the seats. You are correct changes were made in the chapter 11 laws. There have probably been a dozen changes since 1978 when the main law went into effect. BAPCPA was the biggest change in 2005.

 

Which was a total waste of FPL.

I won't bog down this thread other than to say for the benefit of those tempted to bite off on the authoritative wording of your posts, that whatever deep insights you think you have are stale, and pro-Delta managment opinions.