Get Started for Free Contexxia identifies hard-to-find pieces of information in SEC filings. No more highlighters, no more redlining, no more poring over huge documents. REPUBLIC AIRWAYS HOLDINGS INC (1159154) 10-Q published on Oct 19, 2016 at 9:44 pm
Reporting Period: Sep 29, 2016
In accordance with Section 1110 of the Bankruptcy Code, as of September 30, 2016, the Debtors had (1) rejected leases relating to one E170 aircraft, 29 E145 aircraft and 11 related spare engines and 27 Q400 aircraft and six related spare engines; (2) surrendered and returned 11 E140/145 aircraft, one E175 aircraft and two spare engines subject to mortgages; (3) made elections under section 1110(a) of the Bankruptcy Code with respect to 83 E170/175 aircraft, 19 spare engines related to the E170/175 fleet and certain spare parts collateral; (4) transferred title to 15 E140/145 aircraft that were previously subject to a 1110(a) election; (5) assumed amended leases on two E170 aircraft; (6) reached stipulations with secured parties with respect to the prompt consensual surrender and return of seven leased E140/145 aircraft and 16 owned E140/145 aircraft subject to mortgages; (7) moved to reject leases on 17 E170 aircraft in a motion to be heard by the Bankruptcy Court on October 20, 2016; and (8) amended the aircraft agreements with respect to 45 E170 and 34 E175 aircraft for which the Debtors previously filed 1110(a) elections or section 1110(b) stipulations. On October 3, 2016 the Debtors sought Bankruptcy approval of amendments to aircraft agreement with respect to eight E175 aircraft.
On September 22, 2016, the Bankruptcy Court approved amendments to the Company’s agreements with American. The amended agreements consolidate all of the Company’s flying for American under a single codeshare agreement, provide for American to continue to pay the Company market-competitive rates, facilitate the Company’s fleet restructuring by allowing for a reduction in the aircraft the Company is required to allocate to American, extend the terms of the agreement with respect to certain aircraft, and provide for a two-phase transition regarding the configuration of seats in certain aircraft. The allowed unsecured prepetition claim is scheduled to be heard before the Bankruptcy Court on November 2, 2016.
This Update addresses the following eight specific cash flow issues: Debt prepayment or debt extinguishment costs; settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; contingent consideration payments made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance policies ("COLIs") (including bank-owned life insurance policies ("BOLIs")); distributions received from equity method investees; beneficial interests in securitization transactions; and separately identifiable cash flows and application of the predominance principle. ASU 2016-15 is effective for fiscal years beginning after December 15, 2017, including interim fiscal periods, with early adoption permitted. The Company has not yet adopted ASU 2016-15 and is currently evaluating the impact that this ASU will have on its consolidated financial statements and related disclosures.
Net cash used in financing activities was $156.4 million for the nine months ended September 30, 2016, compared to $61.1 million provided by financing activities for the first nine months of 2015. The $217.5 million decrease in cash used in financing activities primarily relates to the significant decrease from debt issuance proceeds as a result of the reduction in aircraft deliveries taken during the nine months ended September 30, 2015 compared to the nine months ended September 30, 2016. This decrease was offset by a reduction in scheduled debt service payments from an increase in aircraft rejected in conjunction with the Chapter 11 restructuring along with a reduction in early debt extinguishment for the nine months ended September 30, 2016 as compared to 2015.
Claims Resolution Process
As of the date of this report, creditors have asserted approximately 1,450 claims totaling $9.6 billion against the Debtors, of which 75 claims totaling approximately $880.0 million were filed after the deadline to file proofs of claim with the Bankruptcy Court. We expect amended claims to be filed in the future, including claims amended to assign values to claims originally filed with no designated value. We have identified and expect to continue to identify and objected to claims that we believe will be disallowed by the Bankruptcy Court on the basis that they have been duplicated, relate to post-petition liabilities, and are without merit for various reasons, including that the claims were filed past the deadline to file proofs of claim. As of October 19, 2016, the Bankruptcy Court has disallowed approximately $90.0 million of claims and has not yet ruled on our other objections to additional other substantive and non-substantive claims. We expect to continue to file objections in the future for claims aggregating to approximately $8.6 billion. Because the process of analyzing and objecting to claims is ongoing, the amount of disallowed claims is expected to significantly increase. The Debtors have recorded amounts for claims which can be reasonably estimated.