IMO, just reported $17.8mil net income for the month of July and $57.6mil in stockholders' equity will prevent "the plan of reorganization announced in June 22nd and revised August 13th with Republic Airways.
"9. Plan of reorganization
On June 22, 2009, the Company filed its proposed plan of reorganization and a related disclosure statement with the U.S. Bankruptcy Court for the Southern District of New York. The Company also filed a motion to approve an investment agreement with Republic Airways Holdings, Inc. (“Republic”), subject to higher and better proposals under a court-supervised auction. On August 13, 2009, the Debtors concluded the auction and determined that Republic had submitted the highest and otherwise best proposal for the purchase of the Compnay. As part of the winning proposal, Republic agreed to waive recovery on its allowed $150.0 million unsecured claims increasing the potential recovery for the remaining unsecured claims. The Company entered into the Second Amended and Restated Investment Agreement with Republic on August 13, 2009. This revised Investment Agreement retains a purchase price of $108.8 million, with $28.8 million of the purchase price allocated to payment of the unsecured creditors. Under the revised Investment Agreement and the Debtors’ Plan of Reorganization, the Company’s current outstanding common stock will have no value and will be canceled. The confirmation hearing on the Plan of Reorganization is currently scheduled for September 10, 2009. Assuming the Plan of Reorganization is confirmed at that hearing, the Company expects to consummate the Plan and the Investment Agreement and emerge from Chapter 11 in September 2009. There can be no assurance at this time, however, that the Plan of Reorganization will be confirmed by the Bankruptcy Court, or that the plan will be implemented successfully."
Bankruptcy judge can't allow stockholders' equity given away to the winning bidder, Republic Airways, leaving its current shareholder holding the empty bag. I don't think so.
Cancelling of common share is not done deal until the judge approves the plan of reorganization. You can bet many common shareholders, to late to sell and with big losses, will voice strong opposition.
