http://www.nasdaq.com/aspx/stock-ma...for-chapter-15-bankruptcy-in-us#ixzz0vYTX5YY4
(Wow-what history-first flew in 1921 by Charles Lindbergh.)
Mexicana Airlines Files For Chapter 15 Bankruptcy In US
By Patrick Fitzgerald, Of DOW JONES DAILY BANKRUPTCY REVIEW
Struggling airline Compania Mexicana de Aviacion filed for bankruptcy protection in the U.S. and Mexico Monday amid labor unrest and mounting financial woes.
Mexicana, which also sought protection restructuring under the Mexican equivalent of Chapter 11, filed for bankruptcy under Chapter 15 in a New York bankruptcy court to protect its U.S. assets from creditors.
The privately held airline, Mexico's largest, is asking Judge Stuart M. Bernstein of the U.S. Bankruptcy Court in Manhattan to issue a temporary restraining order to bar creditors from seizing its assets in the U.S.
Maru E. Johansen, Mexicana's U.S. vice president of legal affairs and corporate affairs, said in court papers a U.S. court order is necessary to block creditors from throwing a wrench in the company's restructuring.
"The seizure of even one aircraft, for example, could disrupt Mexicana's global operations and potentially trigger or encourage the subsequent exercise of remedies by other parties," Johansen said.
The company's concerns are well-founded. Three Mexicana jets were seized on behalf of leasing companies worried about payments in Canada and the U.S. last week.
Under Chapter 15, which was added to the U.S. bankruptcy code in 2005, a company may seek a U.S. bankruptcy court's recognition of its foreign bankruptcy case as the main proceeding.
If recognized by a U.S. judge, the bankruptcy filing effectively puts the brakes on lawsuits and halts creditors from seizing the company's assets. Pending recognition, the company needs an injunction, Johansen said.
Mexicana, which listed debt of more than $1 billion in its bankruptcy petition, says it intends to keep flying, with some minor adjustments to its international schedule, during its restructuring.
On Monday, Mexicana, a subsidiary of Nuevo Grupo Aeronautico, or NGA, said it has presented its pilots' and flight attendants' unions with two alternatives as part of its restructuring.
The company is proposing new labor pacts with cuts of 41% and 39% in wages and fringe benefits for pilots and flight attendants, respectively. The proposal also calls for additional cost-cutting measures, including downsizing 40% of the airline's pilots and flight attendants.
As a second alternative, stockholders have offered to sell the airline to its unions for the token sum of one peso. The airline's management has stated that it will be willing to transfer control of the airline to its unions.
Mexicana, whose roots go back to 1921, is the oldest commercial carrier in North America. Charles Lindbergh piloted the first trip for Mexicana between Brownsville, Texas, and Mexico City.
The company's U.S. bankruptcy case is being handled by the law firm of Duane Morris.
The case number is 10-14182. Judge Stuart M. Bernstein has initially been assigned the case.
(Wow-what history-first flew in 1921 by Charles Lindbergh.)
Mexicana Airlines Files For Chapter 15 Bankruptcy In US
By Patrick Fitzgerald, Of DOW JONES DAILY BANKRUPTCY REVIEW
Struggling airline Compania Mexicana de Aviacion filed for bankruptcy protection in the U.S. and Mexico Monday amid labor unrest and mounting financial woes.
Mexicana, which also sought protection restructuring under the Mexican equivalent of Chapter 11, filed for bankruptcy under Chapter 15 in a New York bankruptcy court to protect its U.S. assets from creditors.
The privately held airline, Mexico's largest, is asking Judge Stuart M. Bernstein of the U.S. Bankruptcy Court in Manhattan to issue a temporary restraining order to bar creditors from seizing its assets in the U.S.
Maru E. Johansen, Mexicana's U.S. vice president of legal affairs and corporate affairs, said in court papers a U.S. court order is necessary to block creditors from throwing a wrench in the company's restructuring.
"The seizure of even one aircraft, for example, could disrupt Mexicana's global operations and potentially trigger or encourage the subsequent exercise of remedies by other parties," Johansen said.
The company's concerns are well-founded. Three Mexicana jets were seized on behalf of leasing companies worried about payments in Canada and the U.S. last week.
Under Chapter 15, which was added to the U.S. bankruptcy code in 2005, a company may seek a U.S. bankruptcy court's recognition of its foreign bankruptcy case as the main proceeding.
If recognized by a U.S. judge, the bankruptcy filing effectively puts the brakes on lawsuits and halts creditors from seizing the company's assets. Pending recognition, the company needs an injunction, Johansen said.
Mexicana, which listed debt of more than $1 billion in its bankruptcy petition, says it intends to keep flying, with some minor adjustments to its international schedule, during its restructuring.
On Monday, Mexicana, a subsidiary of Nuevo Grupo Aeronautico, or NGA, said it has presented its pilots' and flight attendants' unions with two alternatives as part of its restructuring.
The company is proposing new labor pacts with cuts of 41% and 39% in wages and fringe benefits for pilots and flight attendants, respectively. The proposal also calls for additional cost-cutting measures, including downsizing 40% of the airline's pilots and flight attendants.
As a second alternative, stockholders have offered to sell the airline to its unions for the token sum of one peso. The airline's management has stated that it will be willing to transfer control of the airline to its unions.
Mexicana, whose roots go back to 1921, is the oldest commercial carrier in North America. Charles Lindbergh piloted the first trip for Mexicana between Brownsville, Texas, and Mexico City.
The company's U.S. bankruptcy case is being handled by the law firm of Duane Morris.
The case number is 10-14182. Judge Stuart M. Bernstein has initially been assigned the case.
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