Case No. 04-13819, Jointly Administered.United States Bankruptcy Court, E.D. Virginia, Alexandria Division.
January 11, 2005.
Brian P. Leitch, Esq., Daniel M. Lewis, Esq., ARNOLD PORTER LLP, Denver, Colorado, and Washington, DC.
Robert A. Siegel, Esq., Tom A. Jerman, Esq., O’MELVENY MYERS LLP, Washington, D.C.
Lawrence E. Rifken, Esq., Douglas M. Foley, Esq., David I. Swan, Esq., McGUIREWOODS LLP, McLean, Virginia, Counsel to the Debtors and Debtors-in-Possession.
Jeffrey R. Gans, Sherwin Kaplan, Sara Pikofsky, Martin G. Bunin, Daniel A. Lowenthal, Craig Freeman, THELEN REID PRIEST LLP, Washington, DC, and New York, NY, Counsel to the Section 1114 Retiree Committee.
CONSENT ORDER APPROVING AGREEMENT TO MODIFY CERTAIN RETIREE BENEFITS
STEPHEN MITCHELL, Bankruptcy Judge
The Debtors and debtors-in-possession in the above captioned Chapter 11 cases have filed a motion pursuant to §§ 105 and 1114 of the Bankruptcy Code (the “Motion”)[2] seeking the entry of an Order approving agreed-upon modifications of certain retiree
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benefits, as that term is defined in § 1114 of the Bankruptcy Code, (“Retiree Benefits”), which modifications are described in the documents attached as Exhibit B to the Motion (the “Agreement”), and to the extent necessary, to authorize the Debtors to perform under the Agreement.
Upon consideration of the Motion and any timely opposition thereto, and upon consideration of the arguments of counsel and any evidence presented or proffered in support of and in opposition to the Motion, the Court finds[3] that (i) it has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157
and 1334; (ii) this proceeding is a core proceeding within the meaning of 28 U.S.C. § 157(b)(2); (iii) venue is proper in this District pursuant to 28 U.S.C. §§ 1408 and 1409; (iv) proper and adequate notice of the Motion has been given and no other notice is required under any provision of the Bankruptcy Code, the Federal Rules of Bankruptcy Procedure or the Local Rules of this Court; (v) the relief sought in the Motion is in the best interests of the Debtors’, their bankruptcy estates, their creditors and other parties-in-interest and the Debtors’ entry into the Agreement is reasonable and appropriate; and (vi) the Agreement strikes a reasonable balance among the interests of the Retiree Committee’s constituency in maintaining certain health benefits and the interests of the Debtors in reducing costs in order to survive competitively, and the Retiree Committee’s and the Debtors’ consent to the Agreement is reasonable and appropriate pursuant to § 1114(e)(1)(B). After due deliberation and sufficient cause appearing therefore,
IT IS HEREBY ADJUDGED AND DECREED THAT:
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1. The Motion is GRANTED.
2. The Agreement is hereby approved pursuant to § 1114(e)(1)(B). The Retiree Benefits are hereby deemed to be modified as reflected in the Agreement. The Debtors are authorized to perform under the Agreement.
3. Pursuant to the Agreement, the Debtors may seek further relief pursuant to § 1114, if the Debtors can demonstrate that such relief is necessary because the Debtors are in grave and imminent danger that they will be forced to suspend, discontinue, or materially reduce their mainline flight operations, as compared to the operations as of the effective date of the Agreement.
4. If, after the Agreement is effective, but prior to the effective date of a chapter 11 plan of reorganization filed by the Debtors in this case, the Debtors seeks to have the Court modify the Section 1114 Retiree Benefits consistent with paragraph 3 of this Order, upon such modification, or in the case of any liquidation of the Debtors under Chapter 7 or otherwise, any claims arising from the Debtors’ inability or failure to perform under the terms of the Agreement shall be treated as general unsecured claims and not as administrative expense claims, except to the extent that such claims are for compensation or benefits for services rendered during the pendency of these chapter 11 cases and prior to such liquidation, in which case such claims shall be accorded administrative claim status to the full extent permitted by law.
5. Nothing contained herein shall be deemed to convert a prepetition claim into a postpetition claim or an administrative expense.
6. This Order applies to all Retiree Benefits for all retired employees having claims for Retiree Benefits against the Debtors, except those retired employees for
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whom either the International Association of Machinists and Aerospace Workers or the Transport Workers Union, Locals 545, 546 and 547 serve as their authorized representative, as that term is defined in § 1114(b) of the Bankruptcy Code.
7. This Court retains jurisdiction with respect to all matters arising from or related to the implementation of this Order.