Bill Rochelle, the bankruptcy columnist for Bloomberg News, reports that Pinnacle Airlines Corp. told the court that unsecured creditors may have a long wait before they receive any part of the $2.25 million carved out for their claims under the Chapter 11 reorganization plan tentatively scheduled for approval at an April 17 confirmation hearing. According to the report, the bankruptcy court has a March 7 hearing for approval of disclosure materials explaining how Pinnacle will emerge from bankruptcy as a wholly-owned subsidiary of Delta Air Lines Inc. The disclosure statement tells unsecured creditors they will recover less than one percent on claims totaling as much as $690 million. The report notes that the recovery could be reduced even more depending on the outcome of claims arising from the crash of Colgan Air Inc. flight 3407 which went down during in an ice storm near Clarence Center, New York on Feb. 12, 2009. Families of victims filed claims for $900 million and say they are entitled to punitive damages. The plaintiffs so far have refused to accept Pinnacle's offer allowing the suits to go forward in return for agreement to collect only from insurance policies. Otherwise, Pinnacle says the plaintiffs can proceed with their suits after the Chapter 11 is finished, a delay of only a few more months, the company says. Unless the bankruptcy judge decides it's correct for the Pinnacle plan to allow payment on punitive damage claims only after unsecured creditors are paid, Pinnacle says it will be required to withhold payment on all unsecured claims until there is resolution to the crash victims' lawsuits. A hearing was slated in bankruptcy court Feb. 27 where the crash victims were to ask the judge for authority to proceed with the lawsuits seeking punitive damages. About Pinnacle Airlines Pinnacle Airlines Corp. (NASDAQ: PNCL) -- http://www.pncl.com/ -- a $1 billion airline holding company with 7,800 employees, is the parent company of Pinnacle Airlines, Inc.; Mesaba Aviation, Inc.; and Colgan Air, Inc. Flying as Delta Connection, United Express and US Airways Express, Pinnacle Airlines Corp. operating subsidiaries operate 199 regional jets and 80 turboprops on more than 1,540 daily flights to 188 cities and towns in the United States, Canada, Mexico and Belize. Corporate offices are located in Memphis, Tenn., and hub operations are located at 11 major U.S. airports. Pinnacle Airlines Inc. and its affiliates, including Colgan Air, Mesaba Aviation Inc., Pinnacle Airlines Corp., and Pinnacle East Coast Operations Inc. filed for Chapter 11 bankruptcy (Bankr. S.D.N.Y. Lead Case No. 12-11343) on April 1, 2012. Judge Robert E. Gerber presides over the case. Lawyers at Davis Polk & Wardwell LLP, and Akin Gump Strauss Hauer & Feld LLP serve as the Debtors' counsel. Barclays Capital and Seabury Group LLC serve as the Debtors' financial advisors. Epiq Systems Bankruptcy Solutions serves as the claims and noticing agent. The petition was signed by John Spanjers, executive vice president and chief operating officer. As of Oct. 31, 2012, the Company had total assets of $800.33 million, total liabilities of $912.77 million, and total stockholders' deficit of $112.44 million. Delta Air Lines, Inc., the Debtors' major customer and post- petition lender, is represented by David R. Seligman, Esq., at Kirkland & Ellis LLP. The official committee of unsecured creditors tapped Morrison & Foerster LLP as its counsel, and Imperial Capital, LLC, as financial advisors. The U.S. Bankruptcy Court in New York will hold a hearing March 7 for approval of the explanatory disclosure statement in connection with the reorganization plan of Pinnacle Airlines Corp.
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