Continental Submits Plan for Bankruptcy Emergence

HOUSTON —  Unsecured creditors of Continental Airlines could get as little as 4.8 cents or as much as 36.1 cents on the dollar for their claims, according to details of the airline’s bankruptcy reorganization plan released Tuesday.

The plan, based on a $450-million cash infusion from Air Canada and other investors, would give most secured debt holders nearly everything they are owed.

It comes one week after Continental announced that it had selected the $450-million buyout offer from Air Canada.

The blueprint, which must be approved by a federal bankruptcy judge, would leave the airline with debt of $1.79 billion. The majority of its stock would be held by Air Canada and its partners, with the remainder in the hands of Continental’s creditors.

The Houston-based carrier, which has been in bankruptcy court for nearly two years, submitted the plan to U.S. Bankruptcy Court in Delaware late Monday afternoon. Judge Helen Balick ordered that copies of it not be distributed until Tuesday.

Under the plan, unsecured creditors with claims against Continental would get about 4.8 cents on the dollar; those with claims against its parent, Continental Airlines Holdings Inc., would get about 5.8 cents; those with claims against the airline’s commuter system will receive about 5.6 cents, and those with claims against its reservation system will get about 36.1 cents.

However, they could get more since the reorganized company will issue common stock and warrants for general unsecured creditors.

Secured creditors with smaller claims would get travel vouchers for a 50% discount on Continental tickets. Common stockholders, however, would receive nothing.

Under the plan, Continental’s debt will be converted into new stock.

The carrier’s commuter airline business will emerge as a wholly owned subsidiary, Continental Express Inc., and be operated by commuter debtors.

System One Corp., the reservation division, will also be a wholly owned subsidiary run by System One debtors.

The reorganized Continental also will transfer its Air Micronesia assets into a subsidiary that will be an independently certificated airline called Continental Micronesia Inc. Continental will own 91% of it.

Air Canada would get 27.5% of Continental; the investor group Air Partners would also get 27.5%, and creditors would receive 35.6%. Air Partners is led by investors James Coulter and David Bonderman of Ft. Worth, Tex.

Assuming the plan is approved and the Air Canada-Air Partners investment goes through, Continental said it would have $4.65 billion in liabilities, which among other items includes debt and stockholder equity, and $4.65 billion in total assets as of March 31, 1993.