May 4, 2007 – The Machinists Union scored a major bankruptcy court victory this week when Judge Allan Gropper ruled that IAM members at Northwest Airlines (NWA) are entitled to Series C claims against the bankrupt carrier worth $212 million.
The ruling confirms an earlier state court judgment over the carrier’s refusal to repurchase shares of preferred stock issued to IAM members in exchange for pay cuts in 1993. Judge Gropper said he was bound by law to recognize the state court ruling.
“The rare bankruptcy court win came despite fierce objections from a group of Northwest bondholders who were intent on preventing employees from recouping anything from our Series C judgment,” said District 143 President and Directing General Chairman Steve Gordon, who credited the solidarity of IAM members at NWA in addition to the dozens of IAM members who packed Judge Gropper’s courtroom for this week’s hearing. “It is rare that such a pre-bankruptcy claim has any value when a company restructures, but the IAM memberships’ strength and solidarity made this victory possible.”
This week’s ruling will impact IAM members who were holding shares of NWA preferred stock in 2003, when the carrier refused to buy back shares at the agreed upon price. Following confirmation of Northwest’s plan of reorganization, an independent Series C trustees will distribute to affected employees their pro-rata share of the claim.