Southern Air Ch. 11 Plan Could Shortchange Gov't, US Says

Law360, Wilmington (March 6, 2013, 3:57 PM EST) -- The U.S. government on Wednesday asked a Delaware bankruptcy judge to reject Southern Air Holdings Inc.'s reorganization plan unless the cargo carrier alters the plan so it won't prejudice claims from various government agencies.

In an objection filed with the court, the government took issue with several plan details, including provisions that appear to bar payment of post-petition interest on administrative claims and automatically subordinate late-filed claims, resulting in zero recovery for tardy creditors.

The government also demanded changes to a “supplemental injunction” clause in the...
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