It was a rough financial landing, but Spirit Airlines is now flying high as they have announced their exit from Bankruptcy a mere four months after filing for Chapter 11 protection.
Tuesday, the airline announced it has emerged with newly issued shares now held by Spirit’s new owners and plans to re-list its shares on a stock exchange “as soon as reasonably practicable after the Effective Date of Spirit’s Plan of Reorganization,” the company said.
The attorney at controls of the restructuring was Marshall S. Huebner, global co-head of Davis Polk’s restructuring department, an AmLaw No. 20 law firm.
“We had to do what is really kind of a full plan and disclosure statement, which requires a relatively extended timeline that no one’s ever done faster than we have,” Huebner said. “That’s what made this so different.” “This was the fastest mega chapter 11 case ever done that was not a pre-pack.” Huebner said. “That’s one critical aspect that made this case so different.”
Huebner and his team at Davis Polk have successfully manned the helm of the successful Chapter 11 filings of other airlines, including Delta, Frontier and AeroMexico.
“I’ve done a very material amount of airline work for both carriers and their creditors over the last quarter of a century. Having an extremely deep understanding of the industry and what will work and what won’t is part of what sets us apart,” Huebner said of his firm’s restructuring department.
But the Spirit case was another notable achievement for the New York attorney in his almost 35 years in restructuring.
In a statement from Spirit Airlines, the carrier said that it had emerged from its financial restructuring, “completing a consensual, deleveraging transaction that equitizes approximately $795 million of funded debt. With significantly less debt and greater financial flexibility, Spirit emerges as a stronger company better positioned for long-term success.”
As part of the restructuring, the Company has also received a $350 million equity investment from existing investors to support Spirit’s future initiatives.
“We’re pleased to complete our streamlined restructuring and emerge in a stronger financial position to continue our transformation and investments in the guest experience,” said Ted Christie, Spirit Air President and CEO. “Throughout this process, we’ve continued to make meaningful progress enhancing our product offerings, while also focusing on returning to profitability and positioning our airline for long-term success. Today, we’re moving forward with our strategy to redefine low-fare travel with our new, high-value travel options.”
“Figuring out what was going to work best for this situation, with its multiple constituencies, including large groups of both secured and unsecured noteholders, was critical, and we laid the groundwork for the restructuring long before we ever filed,” Huebner said. “To take a multi-billion dollar company from the petition date to a confirmation hearing in 87 days, including having to solicit public securities holders, is simply without precedent.”
Huebner said the firm prides itself on resolving, which is yet better than winning.
“As I often say, the best omnibus hearing is the one that gets canceled because you resolved every single matter,” Huebner said. “That’s among our hallmarks. At the end of our cases we often tally for the court the percentage of hearings that were canceled entirely because they were not needed. To me, the truest mark of success is resolving everything thoughtfully and avoiding the burden, risk and expense of litigating.”
What was the attorney’s proud moment in this case?
“There were two. First, bankruptcies have gotten extraordinarily expensive. Getting this done in under 90 days saved Spirit well over $100 million and a lot of risk, and positions it well for future success,” Huebner said. “We were unrelenting in our focus on speed and efficiency. Second, the US Trustee and the SEC both objected to our form of plan releases. We knew they were wrong on both the facts and the law. The Court’s 47-page opinion entirely in our favor, following almost four hours of intense oral argument, made important law and was a complete vindication. Sometimes, even we can’t settle. Then we litigate—and win.”