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Retired United Air pilots want recount

Retired pilots of United Airlines are demanding a recount of the votes cast for the airline's Chapter 11 plan of reorganization.
/ Source: The Associated Press

Retired pilots of United Airlines are demanding a recount of the votes cast for the airline's Chapter 11 plan of reorganization.

In an emergency motion submitted Monday to the U.S. Bankruptcy Court in Chicago, the United Retired Pilots Benefit Protection Association said the company failed to count the votes of more than 1,500 retired pilots because they sought to recover lost pension benefits in greater amounts than reflected on the ballots.

A hearing on the retired pilots' request has been scheduled for Thursday morning in Chicago.

The retired pilots said they have been disenfranchised by United's actions, adding that the company's report to the bankruptcy court saying votes for its plan were properly tabulated was false.

Since the plan was accepted by creditors by a comfortable margin, it is unlikely that a recount would change the result of the vote.

United said all of its unsecured classes of creditors but one — the 20 eligible voting creditors in one class didn't return ballots — voted for acceptance of the reorganization. The number of voters in each of those groups ranged from 64 percent to 100 percent voting for the plan, well above the necessary 50 percent per class. The dollar value of votes per class ranged from 84 percent to 100 percent, above the two-thirds threshold.

"United fully complied with the solicitation and tabulation procedures, which were approved by the bankruptcy court," company spokeswoman Jean Medina said Wednesday.

A hearing to confirm parent company UAL Corp.'s plan has been scheduled for Jan. 18 to Jan. 20 and would end the company's three-year run operating under Chapter 11 protection.

Prior to emerging from bankruptcy, companies must send a reorganization plan to creditors for a vote. That plan is supposed to explain how its debts will be paid. The bankruptcy court must then rule on the plan.

Retired pilots argued that United had an obligation under voting rules to count the ballots even though it disagreed with the amounts sought by its former pilots.

"Nowhere in the solicitation procedures does it state that a person who asserts a claim amount on his or her ballot that exceeds the claim amount calculated by United will have his or her vote disqualified," the retired pilots said.

Retired pilots said United took steps to lower the claim amounts that retired pilots are entitled to receive. For example, court papers said one retired pilot, Barry Butler, received a letter around September 2004, coinciding with his retirement, saying the value of his non-qualified benefits was $801,187. But a year later, when Butler received his ballot for the United plan, the value of his benefits was listed at $582,053.

Court papers filed by the retired pilots didn't indicate whether all of the retiree benefit amounts were reduced.

Retired pilots want the confirmation hearing postponed until United has "properly" counted the votes of retired pilots and submitted an amended voting report illustrating the results.

Under United's reorganization plan, all secured creditors will be paid in full, along with holders of priority tax claims and administrative claims. Unsecured creditors would receive 4 percent to 8 percent of their claims in new UAL Corp. common stock. Holders of existing common and preferred stock will receive no compensation.

United's flight attendants expressed continuing opposition Wednesday to the company's plan to give 400 top managers 11 percent of the new stock in the reorganized airline. In a court filing, the Association of Flight Attendants also contested a provision that would let the company cancel the group's labor contract after it emerges from bankruptcy.

"It would appear that management is willing to stop at nothing from attempting to prevent flight attendants from having the retirement security they deserve," the AFA said in a statement.