updated 12/22/2006 11:15:14 AM ET 2006-12-22T16:15:14

Seventeen creditors who hold $2.25 billion in unsecured claims against Delta Air Lines Inc. in its bankruptcy case urged the carrier Friday to consider alternatives to its stand-alone reorganization plan.

Their announcement comes a day after the chief executive of US Airways Group Inc. issued a scathing rebuke of Delta’s stand-alone reorganization plan and said he is more determined than ever to push ahead with his company’s hostile $8.4 billion bid to buy Delta.

The 17 creditors, who form an unofficial committee of unsecured claimholders, said in a statement that while they appreciated Delta’s progress to date in its restructuring efforts, the committee “expects Delta to consider methodically, proactively and fairly strategic alternatives to its proposed stand-alone Chapter 11 plan to ensure that creditor recoveries are maximized in the Chapter 11 process.”

The statement said the unofficial committee consists of 17 members that hold unsecured notes, unsecured deficiency claims relating to aircraft equipment leasing arrangements and other unsecured claims totaling more than $2.25 billion of unsecured claims against Delta.

The total value of all unsecured claims in Delta’s case, which it disclosed in its reorganization plan, is $15 billion, Delta spokesman Michael Freitag said. That means the unofficial creditors committee represents only 15 percent of the total claims. Also, Delta’s pilots union, which supports management’s desire to remain an independent carrier, holds an almost equal share of unsecured claims, $2.1 billion.

A spokesman for the committee, Todd Miller, did not elaborate on the committee’s statement.

That committee is separate from the official committee of unsecured creditors in Delta’s bankruptcy case that has a key role in deciding Delta’s fate.

The official committee has said it supports Delta’s decision to file its stand-alone reorganization plan on Tuesday, but will also weigh alternatives.

Other creditors, such as those on the unofficial committee, could put pressure on larger creditors to force Delta’s hand. It remains to be seen how that will all play out.

Typically, in each class of creditors, Delta’s plan would have to be approved by holders of two-thirds of the claims and a majority of the number of individual creditors. If a class is not impaired — that is, if they are guaranteed of getting all of their money back no matter what — they generally don’t get to vote.

If one or more classes of creditors do not approve the plan, Delta could still confirm the plan through a so-called cramdown, a maneuver in which it must show the court that the dissenting class will receive more under the plan than it would under a Chapter 7 liquidation. The company also would have to show that any subordinate class, such as shareholders, would get nothing in the way of recovery under the reorganization plan.

Delta already has met that second test because its plan calls for current shares of the company to be wiped out.

If a competing plan were filed, creditors would vote on each individually. There have been bankruptcy cases where two competing reorganization plans were approved by creditors; in such a case, a judge decides which plan is confirmed after holding a hearing to determine which plan is in the “better interest” of the creditors.

As Christmas approached, US Airways CEO Doug Parker’s comments Thursday made it clear his company isn’t going to back down.

Delta shot back Thursday that it hasn’t changed its position that it wants to remain independent, intensifying the war of words that started when Tempe, Ariz.-based US Airways disclosed its offer to buy Atlanta-based Delta on Nov. 15.

Copyright 2006 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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