Bankruptcy

Northwest Cleared to Exit Bankruptcy

The airline, which filed for Chapter 11 protection on the same day as Delta, will fly clear of bankruptcy one month after the Atlanta-based carrier.
Stephen TaubMay 18, 2007

Northwest Airlines, whose reorganization plan was overwhelmingly approved by creditors earlier this month, now has the go-ahead from bankruptcy court to emerge from Chapter 11.

Northwest filed for bankruptcy protection on the same day as Delta Air Lines, in September 2005; the Atlanta-based carrier flew clear of bankruptcy three weeks ago.

“We are pleased to have completed our restructuring successfully,” said president and chief executive officer Doug Steenland in a statement. Northwest added that it expects to emerge from bankruptcy protection on May 31, after all closing conditions of the plan have been met and the company’s $750 million new equity-rights offering has been funded.

Under its reorganization plan, Northwest’s secured creditors will be paid in full, while most unsecured creditors will receive between 66 cents and 83 cents on the dollar in new shares of the company, according to the Associated Press. As is generally the case, existing shares will be cancelled and deemed worthless.

Although the company anticipates regular trading to begin May 31, its new shares, which will be offered through the New York Stock Exchange, are expected to begin trading on May 21 on a “when issued” basis.

“They’re going to be in a very strong position,” airline industry consultant Mike Boyd told the AP. “They have a strong vision of what they want to do. If you’re going to bet on an airline, I’d bet on them.”

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