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UAL Delays Filing

From Associated Press

United Airlines’ more than 2 1/2 -year stay in bankruptcy protection could extend into next year now that its parent company, UAL Corp., has delayed filing a plan for leaving Chapter 11 protection.

The nation’s No. 2 airline had expected to submit the plan Tuesday in U.S. Bankruptcy Court but said its creditors’ committee had requested more time to review “the complex, extensive documents.”

United now says it plans to file a plan of reorganization and disclosure statement, which together provide a blueprint for the carrier’s exit from bankruptcy protection, in about one month.

The delay probably will push back United’s goal of leaving bankruptcy this fall.

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“It may be later this year. It may be early next year,” United spokeswoman Jean Medina said. She said the extra time would result in “a smoother exit process.”

Carole Neville, an attorney for the unsecured creditors’ committee, said it continued to review the plan. She declined to discuss how long the process might take.

The committee represents 13 creditor groups, including some bondholders, vendors and unions representing United’s pilots, flight attendants and machinists.

The Bankruptcy Court, along with United’s unsecured creditors, lenders and others, must approve the reorganization plan before the carrier exits bankruptcy.

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Douglas Baird, a bankruptcy professor at the University of Chicago Law School who has tracked the case closely, said the delay was “not a big deal” and shouldn’t jeopardize United’s bid to exit bankruptcy.

“But the real question remains: When will they have exit financing?” Baird said.

United has said it has received four exit-financing proposals from lenders in the range of $2 billion to $2.5 billion, which is the amount the carrier estimates it needs. Medina said the company would “work on firming up financing” once it completed the reorganization plan.

Management’s exclusive right to file a reorganization plan for the company -- without the threat of competing proposals -- ends Sept. 1, although Judge Eugene Wedoff has granted several extensions in the past.

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