Uddrag fra Law360:
SAS advokat til den amerikanske konkursret:
Holtzer said the debtor has continued its efforts to come to final terms with a DIP lender, which have been made easier after the resolution of the labor strife.
“We are targeting filing a DIP motion in mid-August, and we would expect to have a hearing to approve the DIP sometime after Labor Day,” he said.
————————
Law360 (July 27, 2022, 6:59 PM EDT) — Bankrupt Scandinavian airline SAS AB told a New York federal judge Wednesday it has resolved a pilot labor action that threatened its restructuring plan, and it is moving toward a $700 million Chapter 11 financing package.
During a virtual hearing, debtor attorney Gary T. Holtzer of Weil Gotshal & Manges LLP said the 900 pilots that had gone on strike the day before the airline filed for bankruptcy had returned to work July 19, and a new collective bargaining agreement is forthcoming.
“This resolution required hard work by all the parties … and is an important step toward SAS’s overall reorganization planning process,” Holtzer said.
The deal calls for a new five-year contract with the pilots’ union and is subject to the union’s approval as well as the bankruptcy court’s approval through a restructuring support agreement to be filed soon, he said.
The strike drove SAS into bankruptcy earlier than it had planned, it said in initial court filings, and was costing it about $10 million per day during the approximately two weeks of the work stoppage. Coming into court earlier than expected meant the company did not have the opportunity to secure commitments for $700 million in debtor-in-possession financing it says it needs to implement its restructuring goals.
Holtzer said the debtor has continued its efforts to come to final terms with a DIP lender, which have been made easier after the resolution of the labor strife.
“We are targeting filing a DIP motion in mid-August, and we would expect to have a hearing to approve the DIP sometime after Labor Day,” he said.
The debtor has been able to operate with its cash on hand since filing for bankruptcy, but Holtzer said the company will soon require the cash flow created under the future DIP financing to continue ordinary course operations.
U.S. Bankruptcy Judge Martin Glenn approved a handful of bridge motions Wednesday that extend interim relief he approved earlier in the case that will accommodate SAS’ needs with respect to paying its tax obligations and what it owes fuel suppliers. The debtor had originally intended to seek final approval of those motions at Wednesday’s hearing, but adjourned them until next week, requiring the entry of extended interim relief.
The debtor filed for Chapter 11 protection July 5, a day after the pilot strike commenced. Its troubles began in 2020 with the onset of the COVID-19 pandemic, which led to in travel restrictions and other government mandates that especially hurt the airline industry, according to a first-day declaration by SAS AB Chief Financial Officer Erno Hildén. As a result of those restrictions and the general decline in airline business, SAS sustained revenue declines of 56% and 70% for the years 2020 and 2021 when compared to 2019 revenue figures, the declaration said.
In February 2022, SAS began implementing its “SAS Forward” program, designed to reduce annual operational costs by $750 million by redesigning its operating model, overhauling its fleet construction, raising new capital and improving customer experiences through a digital transformation, the declaration said.
SAS had about $1.5 billion in unsecured debt on its balance sheet when it filed for bankruptcy, and it intends to convert much of those obligations into equity in a reorganized company while also raising $950 million in new capital through equity offerings.
SAS is represented by Gary T. Holtzer, Kelly DiBlasi, David Griffiths and Lauren Tauro of Weil Gotshal & Manges LLP.
The case is In re: SAS AB, case number 1:22-bk-10925, in the U.S. Bankruptcy Court for the Southern District of New York.
