Northwest, creditors committee blast equity holders' examiner request

By Caroline Salls

Pittsburgh, March 13 - Northwest Airlines Corp. and its official committee of unsecured creditors objected to the company's informal equity committee's motion for appointment of an examiner, according to a Tuesday filing with the U.S. Bankruptcy Court for the Southern District of New York.

According to the company's objection, the motion is an attempt by the informal committee to continue "its unrelenting and indiscriminate campaign of guerilla warfare."

"The demand is based on the extremely serious - and entirely baseless - allegation that Northwest has "parked" an agreement to merge with Delta Airlines," Northwest said in the objection.

Without the "parking" allegation, the company said the motion is "nothing more than a transparent attempt to circumvent the court's order quashing discovery related to potential merger activity."

According to the creditors committee's objection, the informal equity committee is asking the court to appoint an examiner to investigate an overly broad expedition into the company's affairs "in the hopes that the examiner unearths a skeleton in the debtors' closet that substantiates the ad hoc equity committee's fanciful allegations."

According to the creditors committee, since November, the informal equity committee has asserted, "based on speculation, contingencies, and unlikely events," that a merger or sale by Northwest would produce enough value to provide shareholders with a meaningful recovery.

The creditors committee said the equity holders' efforts have proven fruitless and have involved the expenditure of hundreds of thousands of dollars of estate funds "to address speculative and overly broad document requests and subpoenas."

Given the fact that the informal equity committee's request to appoint an examiner comes at this late date - only weeks before the disclosure statement hearing and just two months before the scheduled confirmation hearing - the creditors committee said the court should find that the informal committee has waived its rights to seek an examiner and that the proposed examination will interfere with Northwest's pending confirmation process.

Northwest, an Eagan, Minn.-based airline, filed for bankruptcy on Sept. 14, 2005. Its Chapter 11 case number is 05-17930.

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