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Delta to begin soliciting votes for bankruptcy reorganization plan after judge’s approval

SHARE Delta to begin soliciting votes for bankruptcy reorganization plan after judge’s approval

NEW YORK — A judge approved a disclosure statement on Wednesday that will be sent to creditors along with a Delta Air Lines reorganization plan, a step that accelerates the airline's bankruptcy exit.

U.S. Bankruptcy Judge Adlai Hardin's approval allows Delta Air Lines Inc. to begin soliciting votes for its plan to emerge this spring as a stand-alone company worth more than $9.5 billion, Delta lawyer Marshall Huebner said in court. In court documents, Delta has estimated it could be worth between $9.4 billion and $12 billion.

Huebner said the approval was a "momentous event" as the company worked to emerge from court protection. The judge also ruled to block any strike action by pilots of Delta subsidiary Comair.

Speaking after the hearing, Delta Air Lines Chief Financial Officer Edward Bastian declined to offer details about the search to replace Chief Executive Gerald Grinstein.

Grinstein is 74 and has said he will step down after a transition period with his successor once the company exits Chapter 11.

Bastian said the company is expected to announce the make up of its board of directors on March 30. It will consist of the CEO and 10 outside directors.

Bastian said there are no discussions now about whether Delta would combine with another airline once it exits bankruptcy, and that it would not consider whether it should carve out regional airline Comair until it has emerged from Chapter 11.

Lawyers for the Atlanta-based company said in court filings on Tuesday that it had resolved all remaining objections to the disclosure statement, both "formal and informal, filed or unfiled, represented or pro se." Eleven objections were filed, and they included the city of Los Angeles, the city and county of Denver, Travelocity and a number of banks.

"The completely consensual nature of today's hearing is the result of breathtakingly hard work by many, many people," Huebner said.

Delta originally filed a reorganization plan and disclosure statement on Dec. 19, and has amended it twice since then.

The court scheduled a hearing for April 25 to consider approval of the reorganization plan. Within the next two weeks, Delta will begin sending out solicitations for votes from creditors. The plan has key support from the official committee of unsecured creditors and two committees representing pilots and other workers.

Tempe, Ariz.-based US Airways Group Inc. withdrew its bid to buy Delta on Jan. 31 after a group of creditors said it supported Delta's stand-alone plan. US Airways had sought the support of creditors as Delta rebuffed its hostile bid, which was estimated to be worth $9.8 billion at the time it was abandoned.

At the hearing, Hardin also granted an injunction that blocks any strike or other job action by the 1,500 pilots at Comair, a Delta subsidiary based in Erlanger, Ky., near the Cincinnati/Northern Kentucky International Airport. The pilots have authorized a strike if the airline imposes concessions.

The airline has been seeking concessions of $15.8 million per year from the pilots as part of its restructuring plan to save $70 million annually.

Bastian said the judge's ruling was appropriate and that Comair still intends to settle with its pilots.