MINNEAPOLIS_Northwest Airlines Corp. has sued the Metropolitan Airports Commission in hopes of voiding a $130 million debt.
The lawsuit, filed Thursday in bankruptcy court in New York and reported by the Minneapolis Star Tribune, claims that a special facility financing deal for space Northwest uses at Minneapolis-St. Paul International Airport is really a loan, not a lease.
In a bankruptcy, leaseholders continue to get paid. But according to the lawsuit, if the financing is a loan, "Northwest has no obligations ... with respect to the financing."
It also says that bondholders, as unsecured creditors, aren't owed anything except what they might get after a reorganization plan or Chapter 7 liquidation.
The lawsuit also names a trustee for bondholders - Manufacturers and Traders Trust Co. - as a defendant.
MAC spokesman Pat Hogan said Monday the MAC would argue on behalf of bondholders that the financing is a lease.
On Tuesday, Northwest issued a statement saying that the airports commission has not guaranteed the payments and would not be responsible if Northwest doesn't repay the debt.
"United and Delta took similar actions during their bankruptcies," Northwest said, referring the UAL Corp.'s United subsidiary and Delta Air Lines Inc.
Standard & Poor's credit analyst Kurt Forsgren wrote Feb. 27 that "current and future attempts by airlines to retroactively identify certain lease payments as 'disguised financings' as opposed to a 'true lease' could limit special facility financings of airline-related infrastructure for many years."
The lawsuit said the agreement dates to 1999, when Northwest and the MAC, which owns and operates the airport, entered into an operating agreement and terminal-building lease.
The MAC issued bonds in 2001 and the proceeds from the bonds, which mature in 2025, were used for new gates, expansion of luggage systems, construction of new passenger facilities, and other projects.
In the lawsuit, Northwest is also seeking the return of a $426,041.26 bond payment it made Sept. 30.
Northwest filed for Chapter 11 bankruptcy Sept. 14.
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Information from: Star Tribune, http://www.startribune.com
