The outstanding miles probably are unsecured claims in BR, just like anyone else who is owed money by a bankrupt entity. In an 11, a plan of reorg is proposed and eventually approved. The plan MUST pay each creditor at least as much as they would have gotten in a 7--liquidation; however, that is peanuts. So first the plan must treat the FF'ers at least as good as in a liquidation. Next the plan must be approved by the creditors and judge. Plans typically pay some creditors better than others--employees, small claimants, critical vendors, etc. It would not be shocking for the plan to treat FF'ers at 100%, but yes creditor and BR judge approval is required.

Its a completely different case in a liquidation. There, its a zero sum game and a dime extra to one creditor means it came out of another creditor's pocket. In a liquidation, the company does not continue so no one has an incentive for forego payment today in the hopes of getting more in the future. FF'ers will likely get nothing unless another airline views the obligation to honor the miles as an "asset" and decides to honor them. I guess that has happened before but I am skeptical that it will happen in this environment. It would be much cheaper for an airline to just comp status.

Just to clarify: I'm talking about how the FF program is dealt with eventually. I don't think BR approval is needed the day of a BR filing to continue to honor those obligations.

[This message has been edited by LemonThrower (edited 03-26-2003).]