Judge Approves Plan Bringing Continental Out of Bankruptcy
HOUSTON (AP) _ A federal bankruptcy judge approved a $925 million plan Monday that will allow Continental Airlines to emerge from bankruptcy protection in 60 days.
When completed, 30,000 creditors will have received 100 cents on the dollar plus interest, company officials said.
″It feels terrific,″ Continental President Phil Bakes said after Judge T. Glover Roberts approved the plan. ″It feels great.″
Included in the plan are provisions for the Houston-based Continental to pay $115.4 million to about 30 banks holding unsecured claims, and an additional $50.6 million in employee claims.
Continental also will pay American Airlines $50,000 in cash within five business days. American originally filed an indebtedness claim of $470,383.
Other payments include $23.7 million to Swissair and $1.3 million to the Bank of Hawaii.
Continental will make full or partial cash payments totaling $142 million to creditors within 60 days, then follow with installment payments to those holding the largest claims in the next 10 years with interest, Continental spokesman Bruce Hicks said.
″This is one of the largest steps to date obviously,″ Hicks said. ″We came in the court today virtually in agreement with all the creditors. This gives us the opportunity to operate like all other businesses and we don’t have to get court approval everytime we want to buy something.″
Continental filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code on Sept. 24, 1983, saying it was losing $1 million a day and was approximately $1 billion in debt.
At the time of its Chapter 11 filing, Continental owed $657.8 million in secured debts, $352.7 million in unsecured debts and $18.4 million of accrued interest.
The carrier has been paying principal and interest on about 45 percent of its long-term debt, officials said.
Under the reorganization plan submitted in September, the airline would pay up to $200 million of its debt within 30 days of confirmation. The plan approved by Roberts allows the airline to make its first payment in 60 days.
Attorneys will meet again Tuesday to discuss the distribution of $15 million in outstanding issues, including attorney’s fees.
The only creditors group that has not reached an agreement with Continental is the flight attendants union, Bakes said.
But Hicks said it is just a matter of days before an agreement settlement is reached.
Since filing for protection, Continental posted earnings of $50.3 million in 1984 and reported 1985 earnings of $60.9 million, the highest in its 51- year history.
The carrier now employs 14,000 people, about 20 percent more than three years ago. It also slashed wages as part of its strategy to become a low-fare, full-service carrier.