NEW YORK_A U.S. bankruptcy judge on Wednesday quashed subpoenas that Owl Creek, a hedge fund and shareholder of Northwest Airlines, issued to some of the United States' biggest airlines in seeking information about acquisition talks.
Judge Allan Gropper said the subpoenas were disruptive to Northwest's case and inappropriate since it would reveal trade secrets of competing companies.
Lawyers for Owl Creek issued subpoenas to at least 11 different parties after failing to secure the information directly from Northwest Airlines.
In filing its own objection to Owl Creek's information request, Delta Air Lines Inc. disclosed it had considered a "business combination" with Northwest. Delta, which is also under bankruptcy protection, has not confirmed the two airlines have held discussions.
A lawyer for American Airlines Inc. said in court that it has not bid for Northwest. United Airlines parent UAL Corp. and Continental Airlines Inc. were also subpoenaed.
Owl Creek had sought information about any merger talks and Northwest's valuation in an attempt to maximize its own recovery. Shareholders typically receive nothing in bankruptcy cases.
A lawyer for the hedge fund, Daniel Goldberg, had said in court that Delta and Northwest have both indicated they want to leave bankruptcy as stand-alone companies, leaving open the possibility they could combine once they exit.
"It looks like that's what may be going on here and that's why we're entitled to discovery," Goldberg said.
Delta and Northwest both filed for bankruptcy protection on Sept. 14, 2005.
Delta is further along in its case and has started soliciting creditor approvals of a plan to exit court protection this spring. The airline rebuffed a hostile takeover offer from US Airways that was withdrawn on Jan. 31.
In addition to any information about merger talks, Goldberg said Owl Creek seeks Northwest's evaluation of what it is worth.
Northwest lawyer Bruce Zirinsky said a preliminary valuation would be included in a disclosure statement to be filed on Thursday. The disclosure statement would be considered at a later hearing and, once approved, Northwest would be allowed to begin soliciting votes for its reorganization plan, the final phase before it could emerge from court protection.
Owl Creek, which said in court papers that it owns a 5 percent stake in Northwest Airlines, is leading an effort to establish an official committee of equity holders that would represent it and other shareholders. That request will be considered Feb. 28.
