Delta Air Lines has reached an agreement with the Pension Benefit Guaranty Corporation(PBGC)that will resolve all issues in connection with the termination of the Delta Pilots Retirement Plan.
In settlement of its claims against Delta and its affiliates, the PBGC will be allowed a pre-petition unsecured claim against Delta of US$2.2 billion.
Also, the debtors’ proposed plan of reorganization will provide for the distribution to the PBGC of $225 million in senior unsecured notes.
“We are pleased we were able to work with the PBGC and our creditors’ committee constructively to reach this very important and complex agreement,” says Edward H. Bastian, Delta’s chief financial officer. “It represents another important milestone in Delta’s restructuring.”
Under the settlement agreement, the PBGC will make a final decision whether to accept the PBGC staff’s recommendation that the plan meets the statutory criteria for distress termination.
If the agency agrees that the plan meets all legal criteria for distress termination, the PBGC will become the plan’s trustee, establishing a Sept. 2, 2006 termination date for the plan.
The U.S. Bankruptcy Court previously determined that Delta could not reorganize or emerge from Chapter 11 unless the plan was terminated
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