NORMAL ENVIRONMENT

UNDER CHAPTER 11

All current provisions can be opened, by either mutual agreement or by virtue of Sections II or VI of the Railway Labor Act (RLA) for negotiations or renegotiation of any section or issue with the company

Deal with Judge, whose primary role is to protect the creditors and the corporate entity

In the hands of the stockholders and the management who have a vested interest in the company and a fiduciary responsibility to the shareholders

Initially in the hands of the Debtor in possession (current management), with the permission of the creditors and the Judge.  After a period of exclusivity (180 days) anyone can propose an alternative plan of reorganization, which could be adopted with the support of the creditors committee.  The group(s) or individual(s) providing Debtor-in-Possession (DIP) financing typically extract enormous control in return for the high-risk financing they are providing.  This is the natural habitat for "corporate raiders"

All avenues to assure contractual compliance or adherence are available, including grievances and, if necessary for egregious behavior, injunctions or restraining orders.

All grievances and litigation is "stayed" or frozen by the Judge.  There is no litigation or grievance process except before the Bankruptcy Judge. 

Continue to have the potential value of the instrument or plan

Basically become worthless as common stock and linked equity instruments such as options or warrants have value only after or behind; Priority claims, Secured creditors, Unsecured creditors and then any residual monies would be distributed to common stockholders in a liquidation.  More likely is a full restructuring and replacement of all equity instruments.

Vacations and similarly earned and accrued benefits remain a financial obligation to the company

All accrued employee liabilities, including wages earned to date and accrued vacations, furlough pay, etc. are considered unsecured liabilities or claims and pooled with all other unsecured creditors, with the exception that the first $2,000 of employees claims are considered priority claims and take precedence over all other claims

An obligation that is required and protected by various State and Federal laws

Employee claims are secured only to the limits of "Employee priority claims" of a maximum of $2,000 dollars.  This would include wages, accrued vacation pay, grievance awards and any other monies due from the corporations.  Company must receive permission from the Court to resume paying wages.

Funding compliance required by various Federal laws and would include both payments for Defined Benefit Plans and Defined Contribution Plans

Contributions would cease and resumption subject to the plan of reorganization.  The PBGC gets a seat on the creditor's committee  by virtue of the funding obligations and has the power to "Distress Terminate" the Plan(s) if their evaluation would show funding insufficient to cover accrued obligations to the level of the PBGC minimums.

Completely negotiable and would become part of the CBA.  If in the form of equity, would become part of the capital structure of the company

None