Union employees to get $277 million in NWA claims

[Omaha Steve]

http://www.startribune.com/535/story/1159591.html

Union employees to get $277 million in NWA claims

Despite the objection of a group of investors, a bankruptcy judge agreed with the union and airline on the unsecured claims.

By Christopher Scinta, Bloomberg News

Last update: May 02, 2007 – 9:54 PM

Northwest Airlines workers represented by two labor unions will receive $277 million in unsecured claims against the company.

U.S. Bankruptcy Judge Allan Gropper in New York ruled Wednesday that the International Association of Machinists and Aerospace Workers (IAM) and the International Brotherhood of Teamsters were entitled to the claims, which are tied to preferred stock that the company granted the workers in 1993 in exchange for contract concessions.

"This court encouraged the parties to make the necessary sacrifices, but also to recognize that those making the sacrifices should be given a claim," said Sharon Levine, an attorney for the machinists union.

Gropper's ruling came over the objection of a group of investors.

The group, which holds claims against Northwest, argued that elevating the unions' claims to the same level as its own was improper and that other creditors would get 3 percent more on the value of their claims if the union's were disallowed.

Northwest granted the preferred shares to the workers when they took pay cuts 14 years ago in a deal meant to help keep the airline out of bankruptcy.

FULL story at link.