Originally Posted by
BearX220
In simpler days when an airline went bankrupt, it was out of business -- think Braniff or Eastern. After 9/11 the more common convention became going Chapter 11 and continuing to operate whilst protected from obligations to creditors and employees -- United operated in bankruptcy from December 2002 to February 2006, which many considered an abuse of a statute intended to give a distressed company time to reorganize, not become a way of life.
Assuming this federal bailout comes through I think all this will be moot -- there is no way USG will allow airlines to both survive on federal funds and be protected from their creditors. The whole point of the liquidity dose is to help airlines pay creditors.
Eastern filed Chapter 11. I believe (but am not sure that) Braniff did, too. That doesn't mean a company won't cease operations immediately or at some point. It means that the debtor entity begins (and often stays) in possession of its own assets until plan confirmation or other court orders. In a nutshell, if a company survives Chapter 11, and any creditor group is impaired (i.e., it doesn't get paid in full), without creditor consent, ownership of the post-confirmation debtor won't be the same as ownership of the pre-filing debtor.