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Continental Appealing TWA Bankruptcy Ruling

Continental Appealing TWA Bankruptcy Ruling

Old Feb 13, 01, 1:51 pm
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Join Date: Oct 2000
Location: Alexandria, VA, USA
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Continental Appealing TWA Bankruptcy Ruling

Passing along the word from AIRWISE:

Feb 13, 2001

Continental Airlines Inc. is appealing a federal bankruptcy judge's January 27 decision allowing the auction of Trans World Airlines Inc. under terms that it says favor the parent of American Airlines Inc.

The appeal comes after Houston-based Continental failed to persuade U.S. District Court Judge Sue Robinson to change some of the terms of the bidding process for TWA, which is in Chapter 11 bankruptcy proceedings.

The appeal was filed February 6 in U.S. Bankruptcy Court in Wilmington, Del.

Continental said last month it is willing to pay between USD$300 million and USD$400 million for some TWA takeoff and landing slots, gates and other facilities at four airports in New York, Chicago and Washington, as well as form a marketing partnership with the ailing carrier.

Continental had objected to a breakup fee, then set at USD$75 million, and other protections that Fort Worth-based AMR Corp. would receive if it fails in its bid to acquire TWA.

In addition, Continental wanted the bankruptcy court to allow bids for some of TWA's assets rather than only for the whole airline, and to extend the deadline for competing bids from March 1 to May 1.

So far, AMR is the only party that has made a bid for TWA.

A group called Jet Acquisitions Group Inc. said last Wednesday that it plans to make an offer for the airline as early as this week. The group is willing to pay USD$800 million in cash, compared with AMR's USD$500 million.

Donald Moody, an investment banker who runs his own firm in Portland, Ore., is Jet Acquisitions' majority shareholder, said Albert Vitale, a director of Jet Acquisitions.

Aviation consultants and aircraft leasing brokers would assist the airline through a newly formed Las Vegas company called Rio Del Oro Inc., Mr. Vitale said. A cadre of airline management personnel would form Cityjet Inc. and function as a turnaround team.

If successful in its bid, Jet Acquisitions plans to keep some TWA management to run the airline, Mr. Vitale said.

Jet Acquisitions of Scottsdale, Ariz., is not backed by any established airlines, and former Continental Airlines owner Frank Lorenzo is not one of its investors, Mr. Vitale said.

Mr. Moody's corporate biography states that he has provided financial consulting services to government officials of several countries, including Argentina, Ecuador, Russia, Indonesia, and China.

It also listed him as a professor of finance at Ohio University's College of Business and special financial adviser to the university.

Before starting his own firm, Mr. Moody worked at Security Life of Denver, US Life Corp. and New York Life Insurance Cos. in Colorado, New York, California and Oregon from 1965 to 1976, according to Dun & Bradstreet records.

Stanford Lerch, 68, and Anthony DePrima, 62, serve as Jet Acquisitions' lead attorneys.

The two run a small law firm in Scottsdale, Ariz., and have practiced law in Arizona since the 1960s, said Matt Silverman, a spokesman for the State Bar of Arizona.

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