Opinion
Case No. 04-13819, Jointly Administered.
November 30, 2004
Brian P. Leitch, Esq., Daniel M. Lewis, Esq., Michael J. Canning, Esq., ARNOLD PORTER LLP, Denver, Colorado, Washington, DC, and New York, New York, Lawrence E. Rifken, Esq. (VSB No. 29037), Douglas M. Foley, Esq. (VSB No. 34364), David I. Swan, Esq., McGUIREWOODS LLP, McLean, Virginia, Attorneys for Debtors and Debtors-in-Possession.
Richard P. Krasnow, WEIL, GOTSHAL MANGES LLP, New York, NY, and Jerry L. Hall, Bradley R. Duncan, Va. Bar No. 28176, Linda Lemmon Najjoum, Va. Bar No. 22584, Jerry L. Hall, Va. Bar No. 41511, HUNTON WILLIAMS LLP, McLean, Virginia, Attorneys for General Electric Capital Corporation.
STIPULATION, AGREEMENT AND ORDER PROVIDING FOR SECTION 1110(b) EXTENSION REGARDING CERTAIN GENERAL ELECTRIC CAPITAL CORPORATION AIRCRAFT
US Airways, Inc., a debtor in possession in the above-captioned chapter 11 case ("Debtor" and together with the other debtors-in-possession in the above-captioned chapter 11 cases, the "Debtors"), and General Electric Capital Corporation, on behalf of itself and as agent for certain of its affiliates (the "Aircraft Creditor"), signatories to this Stipulation, Agreement and Order (this "Stipulation") stipulate and agree as follows:
1. On September 12, 2004 (the "Petition Date"), the Debtors filed voluntary petitions in this Court for reorganization relief under chapter 11 of the Bankruptcy Code. The Debtors continue to operate their businesses and manage their properties as debtor-in-possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code.
2. The Debtor represents that it holds an air carrier operating certificate issued pursuant to chapter 447 of title 49, U.S. Code, for aircraft capable of carrying 10 or more individuals or 6,000 pounds or more of cargo, and is engaged in domestic and international scheduled air transportation.
3. The Debtor and the Aircraft Creditor on the signature pages attached hereto are parties, whether directly or beneficially, to certain aircraft leases, security agreements or conditional sale contracts, as amended by the parties (collectively, the "Aircraft Agreements"). Pursuant to the Aircraft Agreements, the Debtor leases or has granted a security interest in or conditionally purchased the airframes and engines listed on Exhibit A hereto, together with engines, appliances and related parts and equipment (such property including all technical records and documents relating thereto, the "Aircraft Equipment"). The parties stipulate and agree that the Aircraft Equipment constitutes "equipment" within the meaning of sections 1110(a)(3)(A)(i) and 1110(a)(3)(B) of the Bankruptcy Code and, together with the Aircraft Agreements, is subject to the provisions of section 1110 of the Bankruptcy Code. The parties stipulate and agree that the Aircraft Creditor is entitled to section 1110 of the Bankruptcy Code protections with respect to the Aircraft Equipment.
4. Pursuant to section 1110(b) of the Bankruptcy Code, the Debtor has requested that the Aircraft Creditor extend the 60-day period (the "Section 1110 Period") with respect to the Aircraft Equipment for all purposes provided for in section 1110(a)(2) of the Bankruptcy Code, and the Aircraft Creditor has agreed to such extension, subject to the terms hereof.
5. The Debtors represent that: (a) the Aircraft Equipment, which is essential to the continued operation and viability of the Debtors, has been in the possession of the Debtors, and the Debtors have continued to use the Aircraft Equipment since the Petition Date in the operation of its business; (b) certain of the Aircraft Equipment will continue to be used by the Debtor going forward; (c) while currently essential for the operation of the Debtors, certain of the Aircraft Equipment are the subject of Aircraft Agreements that may be rejected by the Debtors by separate motion; and (d) the Debtors believe this Stipulation, which sets forth the payment terms and cure costs associated with the Aircraft Equipment described in (a), (b) and (c) above, is beneficial to and in the best interests of the Debtors, their creditors and estates.
6. The Section 1110 Period is hereby extended with respect to the Aircraft Equipment, for all purposes, effective November 10, 2004 until 11:59 p.m. on November 23, 2004 (as such date may be extended, the "Extension"); provided, however, that upon written notice by counsel for the Aircraft Creditor, given prior to 11:59 p.m. on November 23, 2004, to Debtor, the Extension shall be automatically extended from November 23, 2004 until 11:59 p.m. on December 17, 2004 (subject to termination by mutual agreement of the parties hereto at an earlier date or by the Aircraft Creditor consistent with the rights and remedies set forth herein).
7. The Debtor shall not reject leases governing the use of, or abandon, the Aircraft Equipment unless the effective date of such rejection or abandonment is on or after 12:01 a.m. on the final day of the Extension ("Final Day"), unless an earlier date is agreed to by the Debtor and the Aircraft Creditor (it being agreed that (1) the Debtor shall be authorized to serve a notice of rejection or abandonment upon the Aircraft Creditor prior to the Final Day in order to effectively reject leases governing the use of, or to abandon, the Aircraft Equipment effective on or after 12:01 a.m. on the Final Day and (2) any rejection that is effective on the Final Day shall be effective prior to the expiration of the Extension), provided, however, notwithstanding any rejection of any Aircraft Equipment, the Debtor shall pay the amount due under Section 8 of this Stipulation in a timely manner.
8. Subject to the provisions of this Stipulation, the parties agree that, except as otherwise set forth in the following sentence, the Debtor shall fulfill all of its obligations with respect to the Aircraft Equipment and Aircraft Agreements through and including the Extension. The parties agree that, on or before November 23, 2004, the Debtor shall make payment in the applicable amount set forth on Exhibit B as payment of both prepetition obligations accruing for the Aircraft Equipment and postpetition obligations accruing during the Section 1110 Period, provided, however, if the Aircraft Creditor provides notice of an extension of the Extension until December 17, 2004, the applicable amount shall be due and payable on or before December 17, 2004.
9. The parties hereby agree and acknowledge that this Stipulation does not constitute an assumption of the Aircraft Agreements under section 365(a) of the Bankruptcy Code (to the extent such section is applicable), and nothing contained herein shall be construed to constitute such an assumption. The preceding sentence does not otherwise limit or affect the rights, remedies or claims of the Aircraft Creditor or the Debtor under this Stipulation or section 1110 of the Bankruptcy Code.
10. Except as otherwise provided herein, this Stipulation does not otherwise limit or affect the rights, remedies or claims, if any, of the Aircraft Creditor or the Debtor under the Bankruptcy Code.
11. This Stipulation is an agreement within the meaning of section 1110(b) of the Bankruptcy Code. In the event the Debtor fails to perform any of its obligations under this Stipulation, such failure shall constitute an event of default under this Stipulation and the Aircraft Agreements unless cured in compliance with the terms of the applicable Aircraft Agreement(s) if cure is permitted thereunder. Upon the occurrence of such an event of default, (a) the Aircraft Creditor shall thereupon be permitted to exercise any and all rights, claims and remedies with respect thereto as it may have under the relevant Aircraft Agreement and the Bankruptcy Code, including section 1110 of the Bankruptcy Code, and (b) upon written demand by the Aircraft Creditor, the Debtor shall surrender and return the Aircraft Equipment (including its records and all related equipment) as required by section 1110 of the Bankruptcy Code.
12. The Aircraft Creditor reserves its right to file any proof of claim and to apply to the Court for any order appropriate under the Bankruptcy Code, subject to any objection of the Debtors, any official committee of unsecured creditors appointed in these chapter 11 cases or any party in interest.
13. This Stipulation shall be binding upon (a) the Debtor, the Debtors and any trustee or examiner in the pending chapter 11 cases, or their respective successors and assigns, (b) the Aircraft Creditor and its successors and assigns, (c) the trustee in the event that the above-captioned cases are converted to a case under chapter 7 of the Bankruptcy Code, and (d) all creditors and other parties in interest in this case.
14. This Stipulation is subject to the final approval of the Court and, upon such approval, shall be effective November 10, 2004. The Debtors shall promptly cause this Stipulation to be presented to the Court for approval in accordance with the Order Establishing Omnibus Hearing Dates and Authorizing Notice, Case Management and Administrative Procedures entered on September 15, 2004; provided, however, that the Debtors shall seek Court approval of this Stipulation on ten (10) days negative notice pursuant to Local Bankruptcy Rule 9013-1(M)(1).
15. This Stipulation may be executed in one or more counterparts, by facsimile or otherwise, each of which shall be deemed an original, and all of which, when taken together, shall constitute one and the same document.
16. This Stipulation, section 1110 of the Bankruptcy Code and the Aircraft Agreements, as modified hereby, together contain the entire agreement between the Aircraft Creditor and the Debtor as to the subject matter hereof, and all previous understandings, agreements and communications prior to the date hereof, whether express or implied, oral or written, relating to the subject matter hereof are fully and completely extinguished and superseded by this Stipulation and the Aircraft Agreements, as modified hereby. In the event of any inconsistency between this Stipulation and the Aircraft Agreements, this Stipulation shall govern. This Stipulation shall not be altered, amended, modified or otherwise changed, and no right hereunder may be waived, except by a writing duly signed by the Aircraft Creditor and the Debtors.
17. To the extent non-bankruptcy law governs any provision of this Stipulation, this Stipulation shall be interpreted, and the rights and duties of the parties hereto shall be determined, in accordance with the laws of the State chosen by the Debtor and the Aircraft Creditor in the Aircraft Agreements.
18. Unless otherwise specifically provided herein, all notices required or permitted by the terms of the Aircraft Agreements or this Stipulation shall be in writing, and any such notice shall become effective upon receipt by the addressee of such notice by certified mail, return receipt requested, overnight courier service or facsimile to the following addresses:
(A) If to the Debtor:
US Airways Group, Inc. 2345 Crystal Drive Arlington, VA 22227 Telephone: (703) 872-7000 Facsimile: (703) 872-5208 Attn: Howard L. Wu, Esq.
and
Arnold Porter LLP 399 Park Avenue New York, NY 10022 Telephone: (212) 715-1000 Facsimile: (212) 715-1399 Attn: Michael J. Canning, Esq.
(B) If to the Aircraft Creditor, then as provided in the Aircraft Agreements and to its counsel filing Notice of Appearance herein.
19. To the extent that there is an inconsistency between the terms of this Stipulation and any provision of the Order Authorizing Entry Into 1110 Agreements and Stipulations Extending Time to Comply With Section 1110 of the Bankruptcy Code, or between the terms of this Stipulation and any term of the Debtors' Motion with respect to the above-referenced Order, the terms of this Stipulation shall control.
This Court having determined that the approval requested in this Stipulation is in the best interests of the Debtors, their estates, and creditors; and it appearing that proper and adequate notice has been given and that no other or further notice is necessary; and upon the record herein; and after due deliberation thereon; and good and sufficient cause appearing therefor,
IT IS HEREBY ORDERED, ADJUDGED, AND DECREED THAT:
1. The Stipulation is APPROVED in its entirety. Exhibit A Aircraft Equipment Subject to 1110(b) Stipulation Tail Number Aircraft Type
N602AU B757-200 N604AU B757-200 N605AU B757-200 N607AU B757-200 N600AU B757-200 N601AU B757-200 N608AU B757-200 N609AU B757-200 N384US B737-300 N392US B737-300 N396US B737-300 N371US B737-300 N373US B737-300 N391US B737-300 N397US B737-300 N441US B737-400 N442US B737-400 N443US B737-400 N445US B737-400 N449US B737-400 N775US B737-400 N776US B737-400 N777US B737-400 N778US B737-400 N779US B737-400 N780US B737-400 N383US B737-300 N394US B737-300 N395US B737-300 N375US B737-300 N376US B737-300 N374US B737-300 N393US B737-300 N300AU B737-300 N603AU B757-200 N606AU B757-200 See Below for N numbers Airbus for Aircraft and Engines in 2001 Loan Tail Numbers for 2001 Loan as follows: N736US, N739US, N743UW, N115US, N116US, N120US, N179UW, N180US, N181UW, N182UW, N183UW. 2001 Loan is also secured by 28 spare engines with the following serial numbers: CFM 56-5B6 Engines: 779389, 779412, 779571, 779690, 779693, 779762, 779784, 779785, 779786, 779640, 779841, 779865, 779867, 575214 CFM 56-3B2 Engines: 721211, 724265, 725737, 722247, 724732, 721273, 721340, 721326, 721608, 724706, 725746, 721199, 722292, 721183Exhibit B
Aggregate amount of payments required to be made by the Debtor pursuant to this Stipulation is $24,741,124.99, provided, however, if Extension is extended to December 17, 2004, the amount is increased to $44,239,985.37 (including amounts due during the Extension period).