Several municipalities have objected to Delta Air Lines Inc.'s reorganization plan out of concern their tax claims may not be paid in full.

Monday was the deadline to file objections to the plan, though some parties may be allowed to file objections later. Monday also was the deadline for creditors to vote on whether to accept or reject the plan.

Among the recent objectors to the reorganization plan are officials in Multnomah County, Ore., and King County, Wash.

The Oregon objection involves an $890,145 tax claim related to Delta's operations at Portland International Airport.

Multnomah County officials say Delta's reorganization plan fails to separately classify claims that may be secured by different property or, if secured by the same property, with different rank in priority.

"This defect is substantial because there may be multiple liens on aircraft or other transitory property of the debtor, some consensual, and some involuntary as is the case with secured tax creditors," the objection says.

King County, with a tax claim of as much as $1.25 million, said it was filing a conditional objection because it is uncertain whether Delta's reorganization plan will provide for full payment of the county's secured tax liens before its statutory tax liens are released.

"Such a result would impair King County's claim," the county said in court papers.

The Atlanta-based airline expected some objections to the plan, but has said it believes the plan will ultimately be approved by creditors and the court. Chief Financial Officer Ed Bastian said last month there are no "show stoppers" that Delta is aware of.

"We have confidence we will obtain confirmation of Delta's plan of reorganization by the bankruptcy court, " Delta spokeswoman Betsy Talton said Monday.

If one or more classes of creditors do not approve the plan, Delta could still confirm the plan through a so-called cramdown, a maneuver in which it must show the court that the dissenting class will receive more under the plan than it would under a Chapter 7 liquidation.

The company also would have to show that any subordinate class of creditor, such as shareholders, would get nothing in the way of recovery under the reorganization plan. Delta already has met that second test because its plan calls for current shares of the company to be wiped out.

Delta, the nation's third-largest carrier, filed for Chapter 11 in September 2005. It expects to exit bankruptcy on April 30.

A confirmation hearing is scheduled for April 25 in U.S. Bankruptcy Court in New York.

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On the Net:

Delta Air Lines Inc.: http://www.delta.com

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