UAL Leaves AT&T, Boeing and Banks on the Hook

UAL's ( UAL) bankruptcy is the largest in the history of commercial aviation, so it should come as no surprise that the ripple effects will be felt far outside the industry itself. But a close examination of UAL's bankruptcy documents reveal how broad those effects will be, with financial companies, state governments and even the caterers left in the lurch.

In its Chapter 11 filing to the U.S. Bankruptcy Court for the Northern District of Illinois, UAL gave a consolidated list of the 20 creditors holding the largest unsecured claims. Because unsecured claims are not backed by collateral, such as aircraft loans or mortgages on property, the chance that these creditors will be paid in full is extremely unlikely. Smart investors should check the list of creditors closely to see if their investment will take a hit from UAL exposure.

In fact, smart investors would be wise to sell their shares in UAL completely. Under bankruptcy, creditors agree to receive less than they're owed in exchange for an equity stake in the new company. As a result, the old stock gets canceled and current equityholders will end up with nothing. In part because of short-sellers covering and in part because some small investors don't quite understand how bankruptcy means the little folks get nothing, UAL shares rose 18% on Monday.

The specifics of the bankruptcy settlement will be decided by a judge, but debtholders, bond owners and suppliers will get far less than they're owed. According to court documents, UAL is $21.5 billion in debt, and some companies -- such as Bank of New York ( BK) -- could face billion-dollar writedowns.

Here's a look at who's on the hook:


Creditor Nature of Claim Amount
Bank of New York Holds a variety of bonds and debentures. $1.641 billion
Bank One Trust (ONE) Bondholder 963.8 million
Wells Fargo (WFC) Bondholder 379.7 million
The state of Indiana Various contracts 162 million**
Bank of New York, Midwest Trust Co. Bondholder 161.7 million
U.S. Bank Trust Bondholder 132 million
Airbus Aircraft maintenance, parts, and services 47.6 million
Bank of New York, Western Trust Co. Bondholder 33.2 million
HSBC Bank (HBC) Bondholder 32.4 million
Gate Gourmet Catering 14.4 million
Galileo International, unit of Cendant (CD) Reservation system fees, network fees 13.0 million
Denver Airport Revenue Fund Airport rent and fees 12.7 million
San Francisco Airports Commission Airport rents and fees 7.6 million
Atlantic Coast Airlines (ACAI) Partner, United Express 4.6 million
Pratt & Whitney, unit of United Technologies (UTX) Aircraft maintenance, parts, and services 4 million
LSG Sky Chefs Catering 3.5 million
Argenbright, unit of Securicor Security and airport services 3.4 million
AT&T (T) Utilities 3.1 million
Metropolitan Washington Airport Authority Airport rents and fees 2.8 million
Boeing (BA) Aircraft maintenance, parts, and services 2.4 million*
Grand total $3.624 billion
* -- disputed claim
** -- contingent claim
Source: U.S. Bankruptcy Court for the Northern District of Illinois

As originally published, this story contained an error. Please see Corrections and Clarifications.

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