Delta Airlines 2006 Annual Report Download - page 68

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
•Generating Cash Flow from Operations Necessary to Fund Capital Expenditures and Reduce Debt.Over an extended period following emergence
from Chapter 11, we intend to balance long-term operating growth with overall credit improvement. At emergence from bankruptcy, we expect to
have significantly reduced our total debt levels from pre-petition levels. Ongoing improvements to our financial condition are, however, necessary
for us to withstand industry and economic volatility and to have favorable, consistent access to capital markets.
Filing of Plan of Reorganization with the Bankruptcy Court. In order to successfully exit bankruptcy, the Debtors must propose and obtain confirmation from
the Bankruptcy Court of a plan (or plans) of reorganization that satisfies the requirements of the Bankruptcy Code. The Debtors had the exclusive right to file
a plan of reorganization until February 15, 2007, and have until April 16, 2007 to obtain the necessary acceptances to a plan. These periods may be extended
by the Bankruptcy Court for cause. If the Debtors’ exclusivity period were to lapse, any party in interest may file a plan of reorganization for any of the
Debtors.
On December 19, 2006, we filed with the Bankruptcy Court our Plan of Reorganization and a related Disclosure Statement, which contemplate that Delta will
emerge from Chapter 11 as an independent airline. The Plan of Reorganization, as amended (the “Plan”), addresses various subjects with respect to the
Debtors, including the resolution of pre-petition obligations as well as the capital structure and corporate governance after exit from Chapter 11.
The Plan provides that most holders of allowed unsecured claims against the Debtors will receive common stock of reorganized Delta in satisfaction of their
claims. Some holders of allowed unsecured claims against the Debtors would have the right to request cash proceeds of sales of common stock of reorganized
Delta in lieu of such stock, and certain others would receive cash in satisfaction of their claims. Current holders of Delta’s equity interests would not receive
any distributions, and their equity interests would be cancelled once the Plan becomes effective.
On February 7, 2007, the Bankruptcy Court approved the amended Disclosure Statement, and authorized the Debtors to begin soliciting votes from creditors
to approve the Plan. The official committee of unsecured creditors (the “Creditors Committee”) and the two official retiree committees appointed in the
Debtors’ Chapter 11 proceedings each support the Plan. To be accepted by holders of claims against the Debtors, the Plan must be approved by at least one-
half in number and two-thirds in dollar amount of claims actually voting in each impaired class.
April 9, 2007 is the deadline for creditors to vote on the Plan. The Bankruptcy Court has scheduled a confirmation hearing on April 25, 2007 to consider
approval of the Plan. If the Plan is approved by the creditors and confirmed by the Bankruptcy Court, the Debtors are planning to emerge from Chapter 11
shortly thereafter.
Under certain circumstances set forth in Section 1129(b) of the Bankruptcy Code, the Bankruptcy Court may confirm a plan even if such plan has not been
accepted by all impaired classes of claims and equity interests. A class of claims or equity interests that does not receive or retain any property under the plan
on account of such claims or interests is deemed to have voted to reject the plan. The precise requirements and evidentiary showing for confirming a plan
notwithstanding its rejection by one or more impaired classes of claims or equity interests depends upon a number of factors, including the status and seniority
of the claims or equity interests in the rejecting class (i.e., secured claims or unsecured claims, subordinated or senior claims, preferred or common stock).
Generally, with respect to common stock interests, a plan may be “crammed down” even if the shareowners receive no recovery if the proponent of the plan
demonstrates that (1) no class junior to the common stock is receiving or retaining property under the plan and (2) no class of claims or interests senior to the
common stock is being paid more than in full.
Notices to Creditors; Effect of Automatic Stay.Shortly after the Petition Date, the Debtors began notifying all known current or potential creditors of the
Chapter 11 filing. Subject to certain exceptions under the Bankruptcy Code, the Debtors’ Chapter 11 filing automatically enjoined, or stayed, the continuation
of any judicial or administrative proceedings or other actions against the Debtors or their property to recover on, collect or secure a claim arising prior to the
Petition Date. Thus, for example, most creditor actions to obtain possession of property from the Debtors, or to create, perfect or enforce any lien against the
property of the Debtors, or to collect on monies owed or otherwise exercise rights or remedies with respect to a pre-petition claim, are enjoined unless and
until the Bankruptcy Court lifts the automatic stay. Vendors are being paid for goods furnished and services provided after the Petition Date in the ordinary
course of business.
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