When a company files for bankruptcy protection, the goal is usually to restructure the business so that it can stay afloat. Businesses typically file Chapter 11 bankruptcy to reorganize their debts and continue to operate. Reorganization under commercial bankruptcy can help a business get back on the road to financial solvency.
Tennessee-based Pinnacle Airlines announced that it had reached agreements that will allow it to come out of bankruptcy protection by becoming a subsidiary of Delta Air Lines. Pinnacle CEO John Spanjers said this move would give the company a way to exit bankruptcy with a business plan in hand.
Pinnacle reports that it has until Feb. 15 to file a reorganization plan that is deemed acceptable to its creditors and to Delta. Pinnacle currently operates approximately 1,000 daily flights in Canada and the United States and has agreed to take delivery of 40 regional jets for Delta Connection this fall. Currently, Pinnacle has hubs in major cities across the United States. The company reached agreements that call for $30 million in loans to maintain operations and $22 million for payments to be made to pilots.
The global economic recession has been tough on many companies. The airline industry has especially been hit hard by economic declines. Businesses that are struggling because of poor economic conditions have the option to file for business bankruptcy. These businesses need to stay informed about how bankruptcy laws apply in their situations to make viable choices for their businesses.
Source: MSN, “Pinnacle Airlines outlines plan to exit bankruptcy,” Jan. 3, 2013