FLYi gains court approval of settlement with UAL, sale of common stock shares

By Jennifer Lanning Drey

Eugene, Ore., May 11 - FLYi Inc. obtained court approval of an agreement with UAL Corp. that will allow FLYi a $750 million general unsecured claim and received the court's OK to sell the shares of new common stock to be issued to it under UAL's plan of reorganization, according to a Thursday filing with the U.S. Bankruptcy Court for the District of Delaware.

Under the settlement agreement, FLYi will be allowed a $750 million general unsecured claim against UAL for damages arising from rejection of Independence Air agreements with United Airlines, which will entitle it to an initial distribution of 3.27 million shares of new UAL common stock.

All claims, appeals and objections in connection with the alleged rejection damages will be withdrawn.

Since FLYi is in liquidation, the company said it is appropriate to sell the shares to provide it with proceeds to fund its own Chapter 11 case and make a distribution to its creditors under a plan of liquidation.

FLYi, the Dulles, Va.-based parent of Independence Air, filed for bankruptcy on Nov. 7. Its Chapter 11 case number is 05-20011.

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