Provisions for Officers to 'Skip' on Liability Meets With Disapproval

Saying that letting current and former executives and officers of US Airways off the hook was "...not part of any global settlement or deal that benefits this bankruptcy estate," trustee W. Clarkson McDow Jr. informed US Airways that this part, at least, of the airline's reorganization plan wasn't going to get approved.

In fact, such a provision would make a mockery of both federal and state (Virginia) law.

It is not uncommon, though, for filings such as this one to have such provisions; occasionally, they sneak through, and the officers and executives get immunity; but more-commonly, this is the result. "You can't blame them for trying," seems to be the operative sentiment among those in the law profession.

Even so, trustees' lawyer Dennis Early wrote in a brief, answering the request, "Standards of professionalism dictate that attorneys not shield themselves from liability potentially resulting from carrying out fiduciary duties on behalf of clients."

At any rate, the really important parts of US Airways' plan to emerge from Chapter 11 are going to get a thorough going-over, by Bankruptcy Judge Stephen Mitchell as well as the trustees, employees, and creditors.

The "big" hearing started Tuesday, and is ongoing. A company spokesman said, "We are working to resolve as many of these objections as possible prior to Tuesday's hearing; but, if not, we believe we will prevail before the court." The airline said that, in polling its major creditors Monday, that it found most of them support the emergence plan.

FMI: www.usairways.com