US retailer Bed Bath & Beyond files for bankruptcy

NEW YORK -- Bed Bath & Beyond filed for bankruptcy Sunday, cementing a years-long decline that saw losses surpass a billion dollars annually as the US retailer struggled to adapt to an uncertain economy and the dominance of online shopping.

The home goods chain filed voluntary petitions for relief under Chapter 11 at the United States Bankruptcy Court for the District of New Jersey, a court filing showed.

The New Jersey-based retailer, seller of everything from shower curtains and soaps to vacuum cleaners and duvet covers, for years was a fixture on the Fortune 500 list of biggest American companies.

It said in a statement it had sought bankruptcy protection "to implement an orderly wind down of its businesses while conducting a limited marketing process to solicit interest in one or more sales of some or all of its assets."

Bed Bath & Beyond shares dove in January as it warned of "substantial doubt about the Company's ability to continue as a going concern," a sign that was widely interpreted to mean it could file for bankruptcy.

The company said at the time that it expected a loss of $386 million in the just-finished quarter.

Despite several efforts to restructure -- including the closure in 2022 of 150 of its underperforming stores -- Bed Bath & Beyond was unable to turn its slumping finances around.

It says it has secured a commitment of $240 million in debtor-in-possession financing from a lender to support its operations during bankruptcy.

The company has listed both its estimated assets and estimated liabilities at between $1 billion and $10 billion, according to a court filing.

Closing sales at the stores will start on Wednesday.

"Thank you to all of our loyal customers," a banner on the company's website read Sunday.

"We have made the difficult decision to begin winding down our operations."

Chief Executive Officer Sue Gove said the company "will continue working diligently to maximize value for the benefit of all stakeholders."

"Millions of customers have trusted us through the most important milestones in their lives -- from going to college to getting married, settling into a new home to having a baby," she said in the company statement.

"We deeply appreciate our associates, customers, partners and the communities we serve, and we remain steadfastly determined to serve them throughout this process."

The company said its "360 Bed Bath & Beyond and 120 buybuy BABY stores and websites will remain open and continue serving customers as the Company begins its efforts to effectuate the closure of its retail locations."

Last September, its chief financial officer Gustavo Arnal fell to his death from a New York skyscraper in what was ruled a suicide.

No date has been set for the company's first debtors' hearing, it said.

Bed Bath & Beyond, founded in 1971, grew to operate stores in all 50 US states plus Puerto Rico, Canada and Mexico.

As sales plummeted last year, the company struggled to maintain supply in its stores, and share prices tumbled.

While competitors like Amazon and Target invested heavily in improving the online shopping experience in recent years, Bed Bath & Beyond labored at "evolving" its business and adapting, Richard McMahon, a former executive at the company who departed in 2015, told the New York Times.

"The internet started to become real and consumer behavior was changing through that process," he added.

Agence France-Presse

Hertz allowed to sell $1 bn in shares despite bankruptcy

Coronavirus-hit car rental company Hertz was granted permission Friday to sell $1 billion in shares, an extraordinary move after it declared bankruptcy in the United States and Canada.

The unusual green light was given by a bankruptcy court in the US state of Delaware, which "held a hearing and approved the Motion," according to documents filed by Hertz with the Securities and Exchange Commission (SEC).

The company says it will sell the shares at its discretion in terms of timing and volume.

Hertz is trying to capitalize on a surge in its volatile stock price since it filed for bankruptcy on May 23.

Trading at less than a dollar at the end of last week, shares are now worth three times as much, even peaking at $5.53 at the beginning of the week.

On Friday the stock climbed 37.38 percent during the day, but fell 10.5 percent to $2.53 at 2130 GMT in after-market trading.

Traditionally, shares of bankrupt companies lose value with debt repayment taking precedence.

Experts say in Hertz's case, however, the price has been affected by the abundance of cheap money flooding the economy after the US Federal Reserve turned on the tap to combat the economic impact of the coronavirus pandemic.

Traders after a good deal are also playing a role.

According to the Wall Street Journal, Hertz -- which filed for bankruptcy after lockdowns imposed to stop the spread of COVID-19 devastated the car rental industry -- is buried under $19 billion in debt.

Agence France-Presse

California utility meets with governor amid bankruptcy case

SACRAMENTO, California — California’s governor called the chief executive of a troubled utility to his office on Tuesday for a closed-door meeting as the company struggles to emerge from a high-profile bankruptcy while facing criticism for its practice of shutting off power for millions of people to prevent wildfires.

A spokesman for Gov. Gavin Newsom says the first-term governor “spelled out in vivid detail” how the blackouts have prevented people from “refilling lifesaving prescriptions and power breathing machines” and how small businesses and schools were closed for days.

Newsom also reiterated the state would consider a potential takeover of the utility if the bankruptcy is not resolved by June 30.

Pacific Gas & Electric Corp. CEO Bill Johnson defended the company, telling reporters after the meeting that the power shutoffs have been “well planned and executed.”

“I came to California with one basic purpose: Let’s make sure we don’t kill anybody at our operations,” said Johnson, who worked for a Tennessee power supplier before joining PG&E in April. “I think we achieved that this year. I understand the hardship, I apologize for it, but for me, safety has to come first.”

State and local government leaders disagree, saying PG&E has communicated poorly and often given conflicting accounts about when the lights would go out. In a response to the Public Utilities Commission last week, the company acknowledged “various, and in some cases, extreme, shortcomings.”

Last year, strong winds knocked down some of PG&E’s power lines, which sparked a series of devastating wildfires. One in Northern California mostly destroyed the town of Paradise, burning down more than 18,000 buildings and killing 85 people. In January of this year, facing potential damages of up to $30 billion, PG&E filed for bankruptcy.

This year, the company has been aggressive in shutting off power during dry, windy conditions to prevent wildfires. Johnson said Tuesday he believes the company won’t have power shutoffs on this scale in 10 years as it works to “sectionalize the system.”

“There will be fewer (power shutoffs) every year, and eventually we will get out of it,” he said.

Since the utility’s bankruptcy filing in January, PG&E’s shareholders and creditors have battled for control of the company, putting forth competing plans in bankruptcy court that would maintain PG&E’s long-running setup as a for-profit company. It’s a structure that critics contend caused management to look for ways to cut corners instead of investing in equipment and other measures that would have made its electricity system far safer than it is now.

A judge appointed a mediator, and the first meeting is scheduled for Wednesday in San Francisco. But Tuesday, mayors and local leaders from more than two dozen cities and counties scattered across PG&E’s sprawling service area endorsed an alternative proposal by urging regulators to consider a still-nascent proposal to convert the utility into a customer-owned cooperative.


The request outlined in letter to the California Public Utilities Commission echoes an idea already floated by Newsom and San Jose Mayor Sam Liccardo, who joined the chorus of other leaders pushing for an alternative to keeping PG&E under the ownership of profit-driven investors.

Turning the utility into a nonprofit company “would allow PG&E to begin the process of restoring public confidence, in part by allowing the public to have greater role in determining decisions that increasingly have come to define matters of life and death,” the letter asserted.

To make it happen, the participating counties and cities would likely have to raise tens of billions of dollars in the municipal bond market to buy PG&E and then pay for the expensive improvements needed to ensure the utility could keep the power on instead of resorting to planned blackouts during the late summer and early autumn when California’s climate traditionally escalates the risk of wildfires.

Johnson, the PG&E CEO, told reporters Tuesday he understands the cities’ interests. But he said it is not the best solution for customers in the 70,000 square miles (181,300 sq. km.) covered by the company as it would potentially shift costs to rural customers outside of the big cities.

“I think the way it is structured now is the best idea for the majority of customers,” he said. /jpv

source: newsinfo.inquirer.net

5 Ways to Get out of Debt: Which Method Is Right for You?

Getting out of debt can improve an individual’s quality of life and open new doors. There are many unexpected events that can negatively affect a person’s personal finances and cause serious financial stress. Debt management is possible, however, and is available in many different forms. Some of the most common methods to get out of debt include credit counseling, debt consolidation, cash-out refinance, debt settlement, and bankruptcy.


Credit Counseling

Credit counseling is one of the best ways to help a person better understand the depth of their financial situation, and the options they have to improve it. A professional counselor acts as a liaison between the individual and their creditors to try to negotiate lower interest rates. They can also create a plan for the individual to organize and better manage their debt related expenses. This debt management plan allows the individual to make lower payments though their counselor, who then pays the creditors.

While credit counselors can be very beneficial, they do not have the ability to directly reduce the amount of debt an individual owes. Lowering interest rates is of course helpful, but the principal amount cannot be negotiated or changed. Speaking with a credit counselor can also give you a negative reputation among lenders. They may see you as a credit risk if you are having a counselor negotiate your account details. Also, credit counselors are not free, so the individual should be careful to know how much they are paying their credit counselor to avoid accumulating even more debt from this expense. Monthly payment amounts are often increased in debt management plans, which could leave the individual right back where they started.

Debt Consolidation

Debt consolidation is a very popular method that combines all outstanding debt across multiple creditors into one, single debt amount. A person can apply for a personal or debt consolidation loan so that they are only making payments to one creditor instead of multiple, often at a lower interest rate. All monthly payments are combined into one monthly payment of a determined amount.

Something to consider when using debt consolidation is that loans can at times require collateral. Collateral secures the loan through an asset owned by the applicant, such as their car or house. If the individual fails to pay the loan, these assets could be repossessed by the lender. Those who do not have collateral could expect to see higher interest rates when applying for a personal loan. Also, being approved for a loan will not reduce the principal amount of debt owed.

Being approved for a personal or debt consolidation loan requires good credit, which can be difficult for those who are already under financial stress. Fortunately, taking out one of these loans does not impact the credit of the applicant unless they are unable to pay the loan back. Terms of the loan are often customized to a certain degree to help the individual choose the best plan for their situation.

Cash-Out Refinance

Cash-out refinance lets homeowners work with a mortgage lender to help pay off their debt. Those who own a home can refinance their mortgage, add up the amount of debt they owe, then apply that amount to their current mortgage balance. They can then take that excess amount out in cash and use it to pay off the creditors, thus only having to repay the remaining balance to their mortgage company. This lowers the interest rate and creates one payment that is made each month.

Cash-out refinancing is only appropriate for homeowners with good standing credit, a steady income, and equity in their home. This is crucial to consider because many will need to choose this option before their debt gets unmanageable and hurts their credit, decreasing the chances of being able to use a cash-out refinance in the future. There are also other costs to consider when refinancing a home, including closing costs and the impact of increased mortgage debt.

Debt Settlement

Debt settlement, also known as debt resolution, is when a company that offers debt settlement tries to convince creditors to allow the debtor to pay a lower total amount than what is owed. The individual would then pay the settlement company that lower amount. Much like a credit counselor negotiates to lower interest rates, debt settlement negotiates to reduce the principal amount owed. If done correctly, this can be extremely beneficial to the individual. They can save a significant amount of money if approved.

Debt settlement, unfortunately, can put a damper on a person’s credit. However, credit can be rebuilt by consistently paying the new smaller monthly payments. This may be a good option for those who have already become financially overwhelmed and are facing repercussions for not being able to make their current monthly payments.

Bankruptcy

Bankruptcy is typically seen as a last resort for those who are entirely unable to pay back their debt. This is a legal process that is often extremely damaging to an individual’s credit and financial status. There are two different kinds of bankruptcy: Chapter 7 and Chapter 13. Chapter 7 is the most commonly used method that removes all debt from the individual, allowing them to start over. This can have devastating affects on the person’s credit, and they may even lose assets to cover the debt owed. Chapter 13 does not always completely clear a person of debt, but can lower the principal amount, so the individual owes much less. The individual then owes payments to the court who passes the money to the creditors. This can also severely hurt a person’s credit.

Can I Pay My Debt Myself?

There are ways a person can take control of their personal finances on their own. By organizing finances and using free tools online, those who are struggling to manage their debt can create a plan to help get back on track.

source: usa.inquirer.net

Options For Your Debt

Do you still stop by the pizza place for your lunch?  Do you still fill up on drive-through coffee every morning to fuel your commute in to work?  Do you still pick up a burger and fries on your way home?

If you have the money to outsource your meals, your snacks and your coffee, then you are probably using it to your best enjoyment. But if your debt is mounting, eating out and even eating take-out is not a very wise move.

And if you start having to scrounge for change to pay for that iced cappuccino, that is a clear sign that you really are down to your last dollar…  and that alone tells us that you could use some help better balancing your budget and managing your debt load.

Ironically, those coffees, snacks and meals you grab during the day are not just luxuries that need to be avoided because of debt; those luxuries are probably part of the reason you are in over your head. Sure, one take-out coffee is not enough to put anybody in debt. But a daily ritual adds up over a few years.

According to Consolidated Credit Counseling, people should not be ashamed to seek help when they need it.  We seek the help of doctors when we are sick. We seek the help of plumbers and electricians when our houses are in need of repair. We should be just as ready to seek the help when our finances are in trouble.

And options do exist:

• Bankruptcy
• Credit counselling
• Debt settlement 

Bankruptcy

Bankruptcy is the most severe option, and the one you might be stuck with if you really went to far and cannot climb back. But it is also the most disruptive. When you declare bankruptcy you really have to start all over again, and it can be long while before you bounce back.

Not surprisingly then, most people do everything they can to avoid bankruptcy. That is why credit counselling and debt settlement companies exist.

Credit Counselling 

Credit counselling is not the same thing as debt settlement. The idea of credit counselling is to find the best path for you to manage your finances and pay off all your debts properly, then budget to keep yourself out of debt in the future. The goal is to avoid bankruptcy, and also to keep your good financial name intact.

Before contacting a credit counselling service, be forewarned – you will have to step outside of your comfort zone. Way outside your comfort zone. You will have to follow a very strict and frugal budget.
In order to come up with the cash to pay down the debt, you will likely have to cut spending deeply. It is by overspending that you most likely got into this mess in the first place. That is your comfort zone and that is what needs to be overturned.

Debt Settlement

Debt settlement companies offer a different service. They offer a bit of a shortcut by getting some of your debts paid off at a lower rate. This can be very tempting, and sometimes even necessary. But it comes with a price. They don’t help you solve the problem that got you into the mess. They don’t help you fix your budgeting.

It is fair to note that debt settlement works with only some debts, and some might still come back to haunt you.

And both credit counselling  and debt settlement companies do charge a fee; even not-for-profit services cost something.

It stands to reason, if you are considering either credit counselling or debt settlement, that you are determined to avoid bankruptcy. If you are determined enough, you can cut your spending and fix your problems. If you are not determined enough, the comfort zone will win. In many ways, this is like dieting, but for your personal finances.

So back to those pizza slices and take-out coffees and drive-through French fries. They are not helping you balance your budget. They are not helping you avert bankruptcy. And in many cases, they are not helping your diet (but that really is another story altogether).

source: financialhighway.com

Holsum Lofts among latest Las Vegas real estate bankruptcies

Commercial real estate bankruptcies continue to accumulate in Las Vegas — the latest two involving properties on Charleston Boulevard.

The owner of the Holsum Lofts redevelopment project at a former bakery, which has been hailed as key to the burgeoning downtown Las Vegas arts scene, filed for Chapter 11 reorganization on Thursday.

Headed by Jeffrey LaPour, the company formerly known as LaPour Grand Central LLC was sued last month in Clark County District Court by investors in its debt.

The creditors charged in the lawsuit that LaPour Grand Central had defaulted on debt of $6.46 million.

The Holsum Lofts retail and office complex has 46,505 square feet and 19 units that are leased, lawsuit records say. It’s at 231 W. and 241 W. Charleston Boulevard.

At the request of the creditors, Clark County District Court Judge Elizabeth Gonzalez on Thursday approved their request that the property be turned over to a receiver for management purposes while it’s foreclosed on — but her order may be delayed or blocked at least temporarily by the bankruptcy filing.

Under Chapter 11, businesses continue to operate while trying to restructure their debt. Creditors have a say in the process and can propose their own reorganization plan.

Separately, Charleston & 28th LLC filed for Chapter 11 reorganization on June 22 to block a threatened foreclosure.

That company is trying to restructure $2.33 million in debt backing a 7,985-square-foot, four-building shopping center at 2877 E. Charleston Blvd., east of Fremont Street.

source: lasvegassun.com

Bad Credit History Loans - Bad Credit Disputes are Solved Easily

Bad credit history loans can surely be considered as a life savior for those individual's who are suffering from unfavorable credit scores. These will be offered to you on the basis of your current monetary standing as well as re - payment ability. Thus, in difficult times these loans are proved to be perfect for you. With the help of these loans you will be capable to access strong financial backing for meeting some of the essential fiscal needs that requires big budget. Under the provision of such loans, lenders are not bothered about your bad credit scores and allow you to acquire finance without feeling any kind of hesitation.

Here, all your bad credit excuses are acceptable which may be such as IVA, bankruptcy, late payments, insolvency, foreclosures, CCJs and so on. By simply repaying the loan installments within the stipulated time, you will get an amazing chance to improve your credit scores. Bad credit history loans can be acquired in both the forms which may be secured as well as unsecured form. This secured type of loan will be offered if you put any of your valuable assets such as your home, automobile, vehicles, shares or stocks as security to the lender against the particular loan you want to avail. With the help of these loans you can obtain large amount of loan at lower rate of interest and for a long time which varies from 5 to 25 years.

In comparison, unsecured type of loan is free from the obstruction of placing any of their valuable thing as collateral against the loan amount. With the help of Instant Bad Credit Loan you can derive sufficient loan funds till the flexible re - payment duration of 1 to 10 years. These loans certainly carry higher interest rates due to its security free nature.

The clients can even acquire this type of loan for fulfilling their various kinds of personal needs or desires and that may vary from one individual to another and even upon their preferences as well as choices. Their requirements may include all sorts of utility bills such as electricity bills, household bills, grocery bills, telephone bills, purchasing a vehicle expenses, educational bills which may include admission fees along with examination fees, medical expenses, wedding expenses, shopping bills, home improvisation bills, car repair bills and many more of similar sorts. So people with bad credit score can easily avail loan with the help of bad credit history loans.

Allan Marwick is working as senior financial analyst with Loans For People with Bad Credit. For more information about Bad Credit History Loans, Instant Bad Credit Loan and Bad Credit Personal Loans please visit http://www.loansforpeoplewithbadcredit.net/

Article Source: http://www.ArticleBiz.com

Donita Rose's mom sees bankruptcy in positive light

MANILA, Philippines – Evelyn Cavett, the mother of actress-TV host Donita Rose who is now based in Nevada, has finally moved on three years after filing for bankruptcy and losing the five houses her family has worked so hard to acquire.

“We have always lived in a house. Now we’re living in a rented house. It’s okay, it’s okay. We can make it. It’s just a matter of your attitude. It happened to be that recession hit, it’s global, and so we have to accept it,” Evelyn told The Filipino Channel’s “Balitang America,” with the video clip posted on its official website on March 19.

According to Evelyn, most of the money used to invest for the houses had been from Donita’s showbiz earnings. Donita was not only a popular actress-model in the Philippines, but was also well-known across Asia as one of the video jocks for MTV Asia.

“Large portion of it [investment] was initiated by Donita. She really spared her income, huge, just a lot of money that we put into the down payment. That’s how we started to have all these homes.

“We collected five homes [using] of course my savings, and then my sister worked for the bank, and my hard-earned income being a teacher. We put it together with Donita’s [money],” Evelyn related.

Bankruptcy is usually a cause for humiliation for many, but Evelyn believes otherwise.

“Why the embarrassment? No! You should not be. I’m not. You know, it happened to me and so be it. Make sure that we keep our job… We know how to cook, we know how to budget, shopping-wise, food-wise. We are the survivors,” she said.

Accepting their condition might have been difficult, but Evelyn can now say, “It’s gone! What can you do? You have to move on. There’s nothing that you can do [but] face it.”

Evelyn, now 64, still works as a teacher during weekdays and a tutor for kids during weekends.

source: mb.com.ph

An overview of bankruptcy law

Put in simple words, bankruptcy law is what allows you, as a creditor to be able to solve your financial problems. It creates a forum where you can develop a repayment plan and stick to it. In some cases your assets will need to be divided and given to creditors. This is often done under a court-appointed trustee who will oversee the entire process. There are several categories under which you can file for bankruptcy. Some of them allow you to continue in your line of work to generate the funds to repay your debts.

Bankruptcy laws also provide for the ability to get discharges where are creditor can free himself of accumulated debt. Once provided by the court a creditor will not be required to pay all of his debts in full.

Bankruptcy law comes under the purview of Federal Law and comes under Title 11 of the United States Code. While the overall law has to be adhered to, each state can be laws that further guide the creditor-debtor in the process of claims. All proceedings in relation to bankruptcy claims are dealt with in the United States Bankruptcy Courts. Bankruptcy proceedings are of two kinds. The most commonly opted for is under Chapter 7 which calls for liquidation. A trustee is appointed to supervise the division of assets to creditors. Bankruptcy can also be filed for under Chapters 11, 12, and 13. These proceedings can be voluntary or can be initiated by the creditors. What these Chapters provide for is a means to allow the debtor to work off his debt.

Once bankruptcy is filed for, creditors will have to wait to claim their dues within the boundaries of the ongoing proceedings. The debtor cannot move any asset that is a part of the proceeding. Any such transfers that had been initiated before the proceedings will be cancelled or invalidated. The Bankruptcy code has several provisions that allow creditors to build priorities. Recent rulings however have held that Individual Retirement accounts cannot be used for withdrawal in bankruptcy cases. This gives some measure of protection to debtors who are already in serious financial trouble.

There have been several revisions of guidelines with regards to dismissals and conversions in relation to proceedings in each of the chapters. The role of the trustees too has been expanded to include more supervisory responsibilities.

Brian Joneta also writes about Bankruptcy and Credit issues including Declaring Personal Bankruptcy and Cost of Declaring Bankruptcy

Article Source:
http://www.articlebiz.com/article/626273-1-an-overview-of-bankruptcy-law/

American Airlines files for bankruptcy protection

DALLAS (AP) - The parent company of American Airlines filed for bankruptcy protection Tuesday, seeking relief from crushing debt caused by high fuel prices and expensive labor contracts that its competitors shed years ago.

The company also replaced its CEO, and the incoming leader said American would probably cut its flight schedule "modestly" while it reorganizes. The new CEO, Thomas W. Horton, did not give specifics.

For most travelers, though, flights will operate normally and the airline will honor tickets and take reservations. American said its frequent-flier program would be unaffected.

AMR Corp., which owns American, was one of the last major U.S. airline companies that had avoided bankruptcy. Rivals United and Delta used bankruptcy to shed costly labor contracts, reduce debt, and start making money again. They also grew through mergers.

American — the nation's third-largest airline and proud of an 80-year history that reaches back to the dawn of passenger travel — was stuck with higher costs that meant it lost money when matching competitors' lower fares.

In announcing the bankruptcy filing, AMR said that Gerard Arpey, 53, a veteran of the company for almost three decades and CEO since 2003, had retired and was replaced by Horton, 50, the company president.

Horton said the board of directors unanimously decided on Monday night to file for bankruptcy. In a filing with federal bankruptcy court in New York on Tuesday, AMR said it had $29.6 billion in debt and $24.7 billion in assets.

With reductions to the flight schedule, Horton said there would probably be corresponding job cuts. American has about 78,000 employees and serves 240,000 passengers per day.

AMR's move could also trigger more consolidation in the airline industry. Some analysts believe American is likely to merge with US Airways to move closer to United Continental Holdings Inc. and Delta Air Lines Inc. in size. Such a merger would leave five large U.S. airlines compared with nine in 2008.

US Airways declined to comment.

American will delay the spinoff of its regional airline, American Eagle, which was expected early next year.

AMR, however, wants to push ahead with plans to order 460 new jets from Boeing and Airbus and take delivery of more than 50 others already ordered. New planes would save American money on fuel and maintenance, but the orders will be subject to approval by the bankruptcy court.

Analysts said all airlines will benefit if American reduces flights — especially if the cutbacks are more severe than American's new CEO is letting on. They said the chief winners were likely to be United and Delta, which compete for the same business travelers and have global networks like American's.

The losers will be American Airlines employees and AMR stockholders.

Shareholders almost certainly will be wiped out. The stock had already lost 79 percent of its value this year on fears of bankruptcy. The stock fell to 26 cents Tuesday, down $1.36 from the day before. In January 2007, after a 4-year rally, the shares peaked at $41.

AMR has lost more than $12 billion since 2001, and analysts expect it will post more losses through 2012. Speculation about an AMR bankruptcy grew in recent weeks as the company was unable to win union approval for contracts that would reduce labor costs. The company said it was spending $600 million more a year than other airlines because of labor-contract rules — $800 million more including pension obligations.

On Tuesday, Horton said no single factor led to the bankruptcy filing. He said the company needed to cut costs because of the weak global economy, a credit downgrade that raised borrowing costs, and high, volatile fuel prices. The price of jet fuel has risen more than 60 percent in the past five years.

Expectation of a bankruptcy filing increased in November as contract talks with the pilots' union stalled and union leaders rejected a company offer without sending it to members for a vote.

Ray Neidl, an analyst with Maxim Group LLC, an investment banking company, said AMR was wise to file for bankruptcy while it still had about $4 billion in cash. That way, the company will have a cushion to keep operating without worrying immediately about lining up new financing, he said.

Fitch Ratings analyst Bill Warlick said American will focus on shuttering pension plans and getting wage concessions from workers. Both Neidl and Warlick said American might be pushed into a merger with US Airways because size and global networks are more important than ever in the airline business.

Darryl Jenkins, a consultant who has worked for the major airlines, said, "American will still be with us in one form or another 10 years from now." But, he said, its workers will "take a major hit. Their pensions are in danger."

Union leaders expressed unease.

James C. Little, president of the Transport Workers Union, which represents mechanics, baggage handlers and other ground workers at American, was harsh in his assessment of the impact on labor.

"This (bankruptcy) is likely to be a long and ugly process and our union will fight like hell to make sure that front line workers don't pay an unfair price for management's failings," Little said.

AMR, which has headquarters in Fort Worth, Texas, lost $162 million in the third quarter and has lost money in 14 of the past 16 quarters.

The company barely escaped bankruptcy in 2003, when it was still reeling from the drop in air travel caused by a recession and the September 2001 terror attacks. That downturn helped drive United, Delta and US Airways into bankruptcy while American used the threat of a filing to wring wage and benefit concessions from workers.

American was founded in 1930 from the combination of many smaller airlines. Its hubs are in New York, Los Angeles, Dallas-Fort Worth, Chicago and Miami. Major international partners include British Airways and Japan Airlines.

News of the bankruptcy swept through AMR's hometown.

"American Airlines is an institution in Dallas-Fort Worth, and when institutions start to crumble, you look at everything around you," said Elaine Vale, a jewelry store owner who flew back from a Thanksgiving holiday on American. "After American, then who?"

source: philstar.com