lowecur
Well-known member
- Joined
- Sep 14, 2003
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Looks like ATA dumped a ton of debt into C8, and still owes them $16.8M. This can't make SWA very happy.
Examiner to Probe ATA dealing with Chicago Express
Outlook for Chicago Express in South Bend still uncertain
By JOHN DOBBERSTEIN
Tribune Staff Writer
A financial examiner will probe financial dealings between bankrupt ATA Airlines Inc. and its regional commuter line, Chicago Express.
U.S. Bankruptcy Judge Basil Lorch III approved the move Monday in Indianapolis at the request of NatTel LLC, an unsuccessful early bidder for Chicago Express.
But the investigation will be smaller in scope than proposed by the Connecticut firm. The examiner will have just 10 days to pore over financial records and issue a report to the court.
The examiner will investigate the validity of loan guarantees provided by Chicago Express to ATA, and what considerations Chicago Express received for those guarantees -- as well as the fate of $16.8 million in fare revenue that Chicago Express says it is owed from ATA.
If possible, attorneys also want the examiner to use "informed business judgment" to determine whether it's in the best interest of Chicago Express to be sold intact, rather than being liquidated.
After NatTel was disqualified from bidding on Chicago Express earlier this year, the firm filed a motion asking for an examiner to investigate a wide range of issues between the commuter line and ATA.
NatTel alleged that ATA and non-Chicago Express creditors have saddled Chicago Express with $517 million in debt guarantees before and after ATA's October bankruptcy filing, hurting the airline's value on the market.
Lawyers for ATA and the airline's unsecured creditors criticized NatTel's move and expressed concern about the cost to pay the examiner. During behind-the-scene discussions this month, the parties agreed to cap the cost at $75,000.
It was unclear Monday who the examiner would be, but the appointment was expected to happen immediately.
NatTel's attorney, Aaron Hammer, said he suggested four different firms to the court with no ties to ATA. On Monday morning, just before the court hearing, ATA said Bridge Associates LLC was its choice.
Hammer flagged the nomination because Bridge's managing director, Anthony Schnelling, was a first-year associate years ago in New York with two attorneys representing ATA's unsecured creditors, David Botter and Lisa Beckerman.
Botter defended choosing Bridge, a New York firm that specializes in corporate restructuring and turnarounds.
"We should select the most qualified candidate, but also the most qualified candidate who can bring the job home for the stated amount," he said. "We do not want anything being done that is a wild goose chase, that will penalize these estates with huge fees. I think the Bridge folks will be able to do that.
"If we were to disqualify people who started their careers together, there would have to be a lot of disqualifications," Botter added. "There are no connections other than we started as first-year associates."
Meanwhile, ATA's lawyers said Monday was the deadline for bidders to inquire about Chicago Express. The company said it had "a number of bids already" with 27 confidentiality agreements signed.
The company refused to disclose more information about the bidders in public.
ATA has said it will close Chicago Express on March 28 if it can't find a suitable buyer. Lorch plans to hold discussions with lawyers Friday to decide where the sale process will go.
Hammer said he believes NatTel is still in the running to buy Chicago Express, which employs about 600 people -- including about 70 in South Bend that could lose their jobs.
The company is now offering $100,000 for ATA Holdings' stock in Chicago Express, and NatTel would waive about $20 million in claims against ATA "and bring in new money to run the business," Hammer said.
"We would continue to operate Chicago Express as a going concern."
Examiner to Probe ATA dealing with Chicago Express
Outlook for Chicago Express in South Bend still uncertain
By JOHN DOBBERSTEIN
Tribune Staff Writer
A financial examiner will probe financial dealings between bankrupt ATA Airlines Inc. and its regional commuter line, Chicago Express.
U.S. Bankruptcy Judge Basil Lorch III approved the move Monday in Indianapolis at the request of NatTel LLC, an unsuccessful early bidder for Chicago Express.
But the investigation will be smaller in scope than proposed by the Connecticut firm. The examiner will have just 10 days to pore over financial records and issue a report to the court.
The examiner will investigate the validity of loan guarantees provided by Chicago Express to ATA, and what considerations Chicago Express received for those guarantees -- as well as the fate of $16.8 million in fare revenue that Chicago Express says it is owed from ATA.
If possible, attorneys also want the examiner to use "informed business judgment" to determine whether it's in the best interest of Chicago Express to be sold intact, rather than being liquidated.
After NatTel was disqualified from bidding on Chicago Express earlier this year, the firm filed a motion asking for an examiner to investigate a wide range of issues between the commuter line and ATA.
NatTel alleged that ATA and non-Chicago Express creditors have saddled Chicago Express with $517 million in debt guarantees before and after ATA's October bankruptcy filing, hurting the airline's value on the market.
Lawyers for ATA and the airline's unsecured creditors criticized NatTel's move and expressed concern about the cost to pay the examiner. During behind-the-scene discussions this month, the parties agreed to cap the cost at $75,000.
It was unclear Monday who the examiner would be, but the appointment was expected to happen immediately.
NatTel's attorney, Aaron Hammer, said he suggested four different firms to the court with no ties to ATA. On Monday morning, just before the court hearing, ATA said Bridge Associates LLC was its choice.
Hammer flagged the nomination because Bridge's managing director, Anthony Schnelling, was a first-year associate years ago in New York with two attorneys representing ATA's unsecured creditors, David Botter and Lisa Beckerman.
Botter defended choosing Bridge, a New York firm that specializes in corporate restructuring and turnarounds.
"We should select the most qualified candidate, but also the most qualified candidate who can bring the job home for the stated amount," he said. "We do not want anything being done that is a wild goose chase, that will penalize these estates with huge fees. I think the Bridge folks will be able to do that.
"If we were to disqualify people who started their careers together, there would have to be a lot of disqualifications," Botter added. "There are no connections other than we started as first-year associates."
Meanwhile, ATA's lawyers said Monday was the deadline for bidders to inquire about Chicago Express. The company said it had "a number of bids already" with 27 confidentiality agreements signed.
The company refused to disclose more information about the bidders in public.
ATA has said it will close Chicago Express on March 28 if it can't find a suitable buyer. Lorch plans to hold discussions with lawyers Friday to decide where the sale process will go.
Hammer said he believes NatTel is still in the running to buy Chicago Express, which employs about 600 people -- including about 70 in South Bend that could lose their jobs.
The company is now offering $100,000 for ATA Holdings' stock in Chicago Express, and NatTel would waive about $20 million in claims against ATA "and bring in new money to run the business," Hammer said.
"We would continue to operate Chicago Express as a going concern."
