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Seasoned bankruptcy experts were not surprised that Northwest Airlines Corp., headquartered in Eagan, Minn., followed Atlanta-based Delta Air Lines Inc. and filed its Chapter 11 petition in New York in a nod to practicality. For Atlanta, the snub will probably smart the most, since energy giant Mirant Corp., which is based there, instead decided to file its bankruptcy petition with the U.S. Bankruptcy Court for the Northern District of Texas in Fort Worth in July 2003. To debtor counsel and creditor attorneys, however, both carriers filing with the U.S. Bankruptcy Court for the Southern District of New York in Manhattan seems completely natural, given its judges’ experience in handling multibillion-dollar cases. They point out that one advantage the Manhattan court has over other venues is a bevy of debtor and creditor counsel already based in New York. Since both Delta and Northwest owe millions to New York banks and investment firms, it simply makes good sense to file in the Big Apple, said one lawyer who usually represents major creditors. “This is where all the money is, this is where all the attorneys are going to be,” he said. “This is the right place for it.” Enron Corp. came under severe criticism from shareholders and employees for filing for bankruptcy in Manhattan in December 2001 instead of hometown Houston. TV images of picketing grandmothers outside its headquarters still leave a vivid imprint. But even Winn-Dixie Stores Inc., the Jacksonville, Fla., grocery store operator, admitted in court papers that the main reason it filed for Chapter 11 in Manhattan on Feb. 21 was because its creditors demanded it. It was only when it feared delays in its case after a dispute erupted between creditors that Winn-Dixie asked in April for a transfer to the Jacksonville bankruptcy court. Other attorneys point to the sophistication of New York bankruptcy judges, who have already handled some of the country’s largest bankruptcies such as Enron, Adelphia Communications Corp. and WorldCom Inc., now as MCI Inc. They also give Delaware’s bankruptcy judges high marks for their acumen. A major restructuring adviser who asked to remained unnamed noted that the WorldCom case could easily have been filed in Jackson, Miss., where the telecom was based. “But would you file a multibillion case like that in Jackson, Miss.”? he asked. “Jackson’s never seen a case like that. New York has.” There is also a financial incentive for bankrupt companies to file in New York. Because their creditor banks and investment firms are often already there, flying lawyers and expert witnesses to far-flung venues costs hundreds of thousands of dollars in airline tickets, hotel rooms and meals. All of those expenses are billed to the debtor’s estate — meaning there’s less money for the company and its creditors. Some lawyers believe that the true advantage debtors have in New York is a favorable courtroom culture. “Debtors can count on the judges in New York,” said a second attorney familiar with representing creditors. Many debtor counsel believe that New York judges know what’s acceptable for debtor-in-possession financing and that they’re better at understanding the first-day order process. “New York typically runs by the book,” said another attorney. “You get some curve balls, but you will get more in Chicago. These are mega-megabankruptcies, so you kind of want to know who the key players are and how they’re likely going to play.” Chicago did land a megabankruptcy of its own. UAL Corp., the parent of United Air Lines Inc. that’s based in nearby Elk Grove, Ill., filed for Chapter 11 with the U.S. Bankruptcy Court for the Northern District of Illinois on Dec. 9, 2002. UAL has taken a public relations hit because its pilots, flight attendants and mechanics have shown up outside the Chicago court on occasion to protest the airline’s continuing push for labor givebacks. Copyright �2005 TDD, LLC. All rights reserved.

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