Mexicana Files for Bankruptcy

Mexicana Airlines, already financially struggling and having some of its aircraft seized, filed for Chapter 15 bankruptcy on Monday.
Mexicana, having also sought protection from the Mexican alternative of American Chapter 11 bankruptcy, filed for bankruptcy under Chapter 15 in a New York court to protect its assets from its creditors.
The privately held carrier, which is the largest in Mexico, is asking the Manhattan court to issue a temporary restraining order to avoid creditors from seizing its assets in the U.S ( previous incidents took place in Canada ).
Under Chapter 15 a company may seek a U.S bankruptcy court’s recognition of its foreign bankruptcy case as the main proceeding. If recognized by a court, it would halt creditors from seizing the carrier’s remaining assets.
The company intends to keep flying during the restructuring, albeit with a reduced network. The proposal also calls for cost cutting with laying off 40% of its pilots and flight attendants and wage cuts of 39% and 41% for FAs and pilots respectively.
As the second alternative, stockholders have offered to sell the carrier to the employees for a token sum of one peso. The management had also expressed willingness to transfer control of the carrier to unions.
The case number is 10-14182 and Judge Stuart M. Bernstein has initially been assigned for the court case.
Mexicana, which is the oldest existing North American carrier, began in 1921, has debts of over one dollar billion.

Source : NASDAQ

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