Shareholders Group Fighting Northwest's Extension

MINNEAPOLIS (AP) - Bankrupt Northwest Airlines Corp. had almost a year and a half to come up with its own bankruptcy reorganization plan. Now some shareholders say it's time for someone else to get a turn.

Northwest's exclusivity period is set to run out Friday. It has asked a New York bankruptcy judge for an extension until June 29, which is around the time Northwest has said it expects to exit Chapter 11 protection.

But late Monday, a group of shareholders that has been fighting with the airline asked the judge to deny the extension. The shareholders, mostly hedge funds, said Northwest's plan fails to explore how much the airline might be worth if another carrier bought Northwest. The hedge funds have argued that a deal might make Northwest worth enough for shareholders to receive something. Currently, Northwest expects those shares to be canceled.

'All indications point to consolidation among the legacy airlines, but the Debtors refuse to exploit this opportunity,' the shareholders wrote. 'Terminating exclusivity -- and allowing all qualified bidders and plan proponents due diligence -- will ensure that the estate does not lose this opportunity.'

Roughly a dozen hedge funds have formed what they called an Ad Hoc Equity Committee led by Owl Creek Asset Management. The group has said it owns 27 percent of Northwest's shares. In a Jan. 19 court filing the group also said it owns claims worth an estimated $264.3 million.

A hearing on their motion was set for Thursday.

On Tuesday, Northwest lashed back at the hedge funds for claiming that the airline has 'parked' a merger until after it emerges from bankruptcy protection. In a court filing, it accused the shareholders of an 'unrelenting and indiscriminate campaign of guerrilla warfare' for asking the judge to appoint an examiner to look into Northwest's merger plans. The request followed other battles between the hedge funds and the airline over merger plans.

The airline wrote that it has 'no present plans or intentions to engage in a strategic transaction post-confirmation.'

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