Comair BK Claim Question

[Caveman]

If the TA passes what's the deal on the BK claim? Does it only apply to pilots still on the seniority list? What about those of us that recently left? Me and a lot of other pilots were there for several months post BK filing. Do we have any stake in this? I'm not trying to be greedy I just don't understand exactly how any of this works.

 

[wmuflyguy]

If the TA passes what's the deal on the BK claim? Does it only apply to pilots still on the seniority list? What about those of us that recently left? Me and a lot of other pilots were there for several months post BK filing. Do we have any stake in this? I'm not trying to be greedy I just don't understand exactly how any of this works.

The MEC has not announced how they will distribute the plan or what the elegiblity criteria is. They have sold the claim for 75 cents on the dollar, so for the 82mil we had we got 61mil, it will be a little over 60mil after the financial advisor gets his cut.

The only thing we know is it will go into the 401k, no cash payouts.

 

[Otto]

My understanding is that it's for damages as a result of the new TA (pending ratification) so it would only be for pilots on the roster from the date of signing forward. Kind of a raw deal if you just retired. Just passing along what I heard...don't shoot the messenger. As far as disbursement, this thing has the potential to get ugly and it's spelled G-R-E-E-D.

 

[Nindiri]

Sorry for the dumb question, but what is a BK payout claim? I've never heard of it before.

 

[Caveman]

My understanding is that it's for damages as a result of the new TA (pending ratification) so it would only be for pilots on the roster from the date of signing forward. Kind of a raw deal if you just retired. Just passing along what I heard...don't shoot the messenger. As far as disbursement, this thing has the potential to get ugly and it's spelled G-R-E-E-D.

O.k., thanks. That actually makes sense I guess. It's not a payout for damages done in the past, but as an offset for incurring damages with the concessionary TA.

 

[wmuflyguy]

Sorry for the dumb question, but what is a BK payout claim? I've never heard of it before.

Claim is a pretty broad term in BK. IT essentailly means you were owed money and have not recieved compensation. You can also secure a claim for breach of performance, if it falls into a a certain category.

Claims fall into two categories, secured and unsecured.

Secured Claims
Usually involve a lien on property (like the bank has on your car or house) and allow you to sieze that property, if the company can not pay you in full. So essentially you will get the collateral for whatever debt is owed to you, less any equity the company has in it.

Unsecured Claims:
Is more risky, you gave credit to the company and have no collateral. So you get what the debtor can afford to pay you. You also have to get in line with peopel with other unsecured claims, and they just start from the top of the list and pay out until the money is gone. If they get to you and no money is left you are out of luck.


Now the CMR MEC sold the pilots claim to some investor. The investor paid 75 cents on the dollar for it(about 61 million for the 82 million dollar claim). That investor now gets the pilots place in line on the unsecured claims list. The investor is banking that he will get better than 3/4 of the 82 million dollar claim, so the investor is now taking a risk instead of the pilots. He may get more than 3/4 of the payout, but if they run out of money he may get less.

 

[Caveman]

Claim is a pretty broad term in BK. IT essentailly means you were owed money and have not recieved compensation. You can also secure a claim for breach of performance, if it falls into a a certain category.

Claims fall into two categories, secured and unsecured.

Secured Claims
Usually involve a lien on property (like the bank has on your car or house) and allow you to sieze that property, if the company can not pay you in full. So essentially you will get the collateral for whatever debt is owed to you, less any equity the company has in it.

Unsecured Claims:
Is more risky, you gave credit to the company and have no collateral. So you get what the debtor can afford to pay you. You also have to get in line with peopel with other unsecured claims, and they just start from the top of the list and pay out until the money is gone. If they get to you and no money is left you are out of luck.


Now the CMR MEC sold the pilots claim to some investor. The investor paid 75 cents on the dollar for it(about 61 million for the 82 million dollar claim). That investor now gets the pilots place in line on the unsecured claims list. The investor is banking that he will get better than 3/4 of the 82 million dollar claim, so the investor is now taking a risk instead of the pilots. He may get more than 3/4 of the payout, but if they run out of money he may get less.

Great explanation. Thanks.

So, if I'm following you, could a former Comair pilot have a claim because he/she was subject to a concessionary TA from 2 years ago that the company reneged on? Since we gave up a portion of our earnings as part of that agreement do we have a legitimate claim to a portion of the BK claim? IOW, we were part of the concessionary TA, we gave back a part of our income in return for something from the company which we never got, we were still employed as of the date of BK filing and were still part of the creditors list (ALPA). Does changing jobs invalidate a potential claim?

 

[wmuflyguy]

Great explanation. Thanks.

So, if I'm following you, could a former Comair pilot have a claim because he/she was subject to a concessionary TA from 2 years ago that the company reneged on? Since we gave up a portion of our earnings as part of that agreement do we have a legitimate claim to a portion of the BK claim? IOW, we were part of the concessionary TA, we gave back a part of our income in return for something from the company which we never got, we were still employed as of the date of BK filing and were still part of the creditors list (ALPA). Does changing jobs invalidate a potential claim?

I wish I could answer you. That seems to be a question a lot of people are asking and I don't know. All of what I wrote was from some research I did for myself on the internet, to better understand what we were getting and what risk was associated with it.

I have heard that these claims have been associated with litigation at UAL and other places, because of the way the money was allocated. Mesaba recently got a claim, so maybe someone there, who is in the know, can say how the distribution will work out, I haven't come upon any details of it yet.

You may have a legitimate claim, I'm not sure how the law or the union will tackle the situation of compensating recently retired or resigned pilots. This strikes me as the likely place we could see a lawsuit

 

[JECKEL]

Caveman,

Not to ruin your hopes but the Comair MEC was very specific on who is to get money and who is not provided the TA passes. To have a stake in the claim, you must be on property on 02 March, 2007.

The monies involved in the claim are reparations for damages incured by Comair pilots involved in the new BK TA of 2007, not for any freezes or lost money from anytime before 02 March. 2007. It is for losses moving foward.

How money will be / might be divided among participating pilot has yet to be decided but will probably be along seniority and years of service and not an equal split since damages will not be equal between all pilots of all years.

Hope this helps.

 

[BUCK]

So the younger you are the more you should get since the TA can damage your earnings longer. i.e. 20 years compared to 10 or less for the old (senior) guys. he he

 

[JECKEL]

No, just the opposite.

The losses/damages are estimated only over a four year period (the "written" life of the contract).

A Captain with X years making $100,000/year who takes a 12% pay cut will lose $12,000/year would incur "greater" damages than an FO with X years making $30,000/year who takes a 8% pay cut and loses $2,400 a year. Over the four year period the Captain's damage award would be $48,000 while the FO's damage award would be $9,600.

If the TA passes, the payout would, more than likely, follow something simular to the above method, or so I'm hearing.

 

[DrewBlows]

Your above example doesn't take category into consideration. It's possible that some CR7 FO's have greater damages than some CRJ Captains, since -200 guys will take a 7.5% cut and -700 guys will take a 13% cut.

 

[Caveman]

Jeckel,

Thanks for the info. I didn't really expect anything out if this but I thought it was prudent to ask. I've moved on to greener pastures and I'm happy where I'm at. I'm glad all my colleagues and friends still at Comair are at least going to recoup a small portion of their losses.