Judge Approves United Payments to Disney

WASHINGTON – United Airlines won court approval Friday to pay $150 million to settle billions of dollars in claims from aircraft leasers, including Walt Disney Co

United, a unit of UAL Corp., has said the settlement provides a “tremendous” boost to the airline’s bid to exit Chapter 11 bankruptcy proceedings early next year.

A bankruptcy judge in Chicago approved the settlement over the objections of United’s unsecured creditors. The creditors argued the payment was too generous to Disney and would “unfairly” reduce the pool of United assets available to them.

United offered to pay the $150 million to the financiers to compensate them for tax benefits they lost when the airline rejected leases on Boeing jets in its fleet. The payment to Disney, at $50 million, is the largest.

Disney, which got into the aircraft-leasing business partly because of the tax benefits, sought to recover money it said it was owed under a so-called tax indemnity agreement with United, according to court documents.

It said the contract required the airline to compensate Disney for any tax loss the company might suffer from a cancellation of aircraft leases. In 2003, Disney took a $114 million pretax charge because of aircraft-lease rejections by United, which had sought Chapter 11 bankruptcy protection the previous year.

United said the dispute over lost tax benefits threatened to set a legal precedent that might have left it on the hook for up to $5.1 billion in claims from other aircraft financiers.

United expects the Disney settlement to serve as a “template” for settlements with other financiers who have made similar tax-related claims against the airline.

The airline’s unsecured creditors committee, however, said the settlements threaten to set a different precedent, setting the stage for an “overpayment of possibly three-quarters of a billion dollars on tax indemnity claims.”

United and its unsecured creditors initially took the same position on the tax indemnity agreements. But the airline last month opted to settle claims from Disney and other aircraft financiers.

According to documents filed by the unsecured creditors, the airline also proposed to pay $48 million to settle an $859 million claim from Northwestern Mutual Life Insurance Co.; and $15 million to settle a $202.5 million claim from Bank One Equipment Finance Inc.

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Mr. DAPs

Mr. DAPs

Hi, I'm Mr. DAPs, the Founder, and Editor in Chief of DAPS MAGIC! I can be regularly found at Disneyland with my hat and bow tie taking pictures and simply enjoying the Happiest Place on Earth. I'm also the weekly host of GEEKS CORNER and your Disney reporter for DISNEY REPORTER on DAPS MAGIC's YouTube channel. I am also now honored to announced that I'm a Brand Ambassador with Her Universe! Find me on Twitter and Instagram. as I'd love to connect with you. Make sure and say hi!






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