NEW YORK (AP) — Northwest Airlines can begin seeking creditor approval of a plan to exit bankruptcy that values the company at an estimated $7 billion, a judge ruled Monday.
The decision puts the airline in the last stages of bankruptcy before it can emerge from court protection.
U.S. Bankruptcy Judge Allan Gropper said that once Northwest revises its disclosure statement to incorporate agreements reached Monday, the statement could be released to creditors along with a restructuring plan.
Eagan, Minn.-based Northwest Airlines Corp. wants to cancel all existing shares in the company and issue 272 million new ones, with a stock offering to sell 27.78 million shares at $27 apiece.
Another hearing will be held this week to determine whether an examiner will be appointed to investigate merger discussions that may have taken place with Northwest, Gropper said. A reorganization plan could be mailed to creditors as early as April 6.
A hearing to confirm the company's reorganization plan is scheduled for May 16.
Two of the company's labor unions, the Association of Flight Attendants and Air Line Pilots Association, as well as certain shareholders and bondholders had objected, arguing that the disclosure statement did not provide enough information.
The unions complained that Northwest was not disclosing the terms of a stock grant plan for 400 top managers. At the judge's instruction, Northwest consulted Securities and Exchange Commission lawyers, who approved the airline's plan to wait until 20 days before the voting deadline to release more details.