Article
BREAKING: UST Objects to Spirit Airlines Wind-Down Motion, Hints at Possible Chapter 7 Conversion; Hearing Set for Today at 11 a.m. ET
Relevant Document:
UST Objection
UCC Reservation of Rights
The US Trustee has just objected to approval of Spirit Airlines’ wind-down process motion, arguing the debtors “request sweeping discretionary authority, prospective releases and exculpations, an administrative stay, and approval of key employee programs with minimal detail—all predicated on complete deference” to their business judgment. According to the UST, the debtors “seek to rewrite” Bankruptcy Code and “rules-based protections” with “their custom-made wind-down procedures” on unjustifiably short notice.
A hearing on the wind-down motion is set for today, Tuesday, May 5 at 11 a.m. ET.
The UST specifically objects to the payment of bonuses to employees and exculpation protections sought by the debtors. According to the UST, the wind-down motion also fails “to explain why the Procedures, on shortened notice, are a benefit to the Debtors’ estate over a conversion to a Chapter 7 liquidation proceeding.” The UST suggests that “conversion to Chapter 7 would allow for the orderly distribution of assets by an impartial trustee while also reducing the professional costs accruing to the estate during the liquidation process.”
The official committee of unsecured creditors filed a reservation of rights indicating that it “supports the Debtors’ decision to conduct an orderly wind-down of their operations using the chapter 11 process” but “continues to evaluate the emergency relief requested in the Wind-Down Motions.” “The Committee believes that its concerns with the Wind-Down Motions have been resolved, but reserves all rights with respect to the Wind-Down Motions pending its review of the revised proposed orders and Wind-Down Budget,” the reservation provides.
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