Sponsor Message:
Civil Aviation Forum
My Starred Topics | Profile | New Topic | Forum Index | Help | Search 
NW Stiffs Arizona Hotels For $1M  
User currently offlineAzstar From United States of America, joined May 2005, 621 posts, RR: 0
Posted (8 years 8 months 19 hours ago) and read 6021 times:

According to the Arizona Daily Star NW stiffed three Tucson Hotels for $1M when it trained replacement mechanics this summer. According to one hotel, a check was deposited in its bank account, then later it was recalled by NW because bankruptcy laws allow companies to reclaim funds within 90 days. It may not be illegal, but this is certainly immoral.

29 replies: All unread, showing first 25:
 
User currently offlineRoseFlyer From United States of America, joined Feb 2004, 9661 posts, RR: 52
Reply 1, posted (8 years 8 months 18 hours ago) and read 5940 times:

While unfortunate, this is a risk that you face when you deal with companies that have bad credit. Some hotels might be desparate enough to offer hotel rooms without prepayment to Northwest Airlines, but if the company was headed to bankruptcy, then without prepayment, it would be possible to not ever receive payment. A check is not prepayment unless it is certified as a cashiers check where the funds cannot be recalled. These hotels were being less than careful and lost out big.

NW management probably knew when the company would be filing for bankruptcy, so they cancelled payments and such on various accounts, which plunged Meseba into bankruptcy. It is sly, but legal. But you never know what will happen when dealing with a company with poor credit. This is the whole reason why credit is monitored to begin with.



If you have never designed an airplane part before, let the real designers do the work!
User currently offlineBennett123 From United Kingdom, joined Aug 2004, 7635 posts, RR: 3
Reply 2, posted (8 years 8 months 17 hours ago) and read 5828 times:

A clear warning that if you deal with NW, cash only.

User currently offlineIndy From United States of America, joined Jan 2005, 4568 posts, RR: 18
Reply 3, posted (8 years 8 months 17 hours ago) and read 5808 times:

The point you are missing is that is doesn't matter if you prepay. NW paid the hotel. They were able to get the money back because of bankruptcy. I don't believe it matters how the payment was made. Doesn't matter if it is check or cash. In a bankruptcy the company just has to submit proof that they paid you for a service and you could be forced to return the money. I have seen this happen in a company I used to work for. It is absolute nonsense. But this is unfortunately how the bankruptcy world is.


Indy = Indianapolis and not Independence Air
User currently offlineRoseFlyer From United States of America, joined Feb 2004, 9661 posts, RR: 52
Reply 4, posted (8 years 8 months 16 hours ago) and read 5735 times:

Quoting Indy (Reply 4):
Doesn't matter if it is check or cash. In a bankruptcy the company just has to submit proof that they paid you for a service and you could be forced to return the money.

I am not a bankruptcy lawyer or extremely knowledgeable on bankruptcy laws, but this doesn't make sense. Is it really true? Can a company just take back money that they paid for services that they received? I thought that it worked that if a company prepaid for a contracted service that they later refuse in bankruptcy that they can get money back. I didn't know that a company can get a refund on services that it received.

I don't know how this works, but in real life if you subscribe to cable or something in a year long contract and pay up front but then file for bankruptcy and cancel your service, then you get the money back for the services that you have not received. Am I correct on this?



If you have never designed an airplane part before, let the real designers do the work!
User currently offlineIndy From United States of America, joined Jan 2005, 4568 posts, RR: 18
Reply 5, posted (8 years 8 months 16 hours ago) and read 5731 times:

At one time I worked for a staffing firm. We had a contract with a company to fill a position for a cetain amount of money. We filled the position. They paid for the person. I'm guessing 45 days goes by and they file for bankruptcy. Next thing you know we get an order to refund the money they paid for the placement of the worker. Its absolute garbage that it works out this way.


Indy = Indianapolis and not Independence Air
User currently offlineIsitsafenow From United States of America, joined Feb 2004, 4984 posts, RR: 23
Reply 6, posted (8 years 8 months 14 hours ago) and read 5608 times:

Listen to experienace...My company(I do own one) was owed a couple of grand by another company we do business with and have for a decade. We received the check, deposited it and a week later got a message back from our bank that when the check got back to the issuing bank, was rejected for payment during the time frame because the company filed chapter 11. So, we never got the two grand deposited in our account. Its a pisser, yes but thats the way bankruptcy works.
I believe the intent was there by NW to pay the bill but one hand did not know what the other was doing.....in the process of filing. Accounts payable for a big billion dollar plus company is very complex.
safe

[Edited 2006-02-04 20:50:16]


If two people agree on EVERYTHING, then one isn't necessary.
User currently offlineTango-Bravo From United States of America, joined Jun 2001, 3805 posts, RR: 29
Reply 7, posted (8 years 8 months 14 hours ago) and read 5579 times:

Quoting Azstar (Thread starter):
According to the Arizona Daily Star NW stiffed three Tucson Hotels for $1M when it trained replacement mechanics this summer

Isn't this what U.S. airline bankruptcy is all about?

Anyone know whether UA, US and DL were/are deadbeats to anything like the extent we have seen from NW -- who have even gone so far as stiffing their own regional partners for services already provided?


User currently offlineAlphascan From United States of America, joined Nov 2003, 937 posts, RR: 13
Reply 8, posted (8 years 8 months 13 hours ago) and read 5508 times:

Quoting Uadc8contrail (Reply 2):
Wait till jetdeltamsy gets ahold of this....oh wait...it doesnt involve united so its ok!!!!!

When UA went into Chapter 11 there were similar horror stories. Some so bad that some UA vendors went under themselves after the court made them give back money already paid.



"To he who only has a hammer in his toolbelt, every problem looks like a nail."
User currently offlineCgnnrw From Germany, joined May 2005, 1157 posts, RR: 2
Reply 9, posted (8 years 8 months 10 hours ago) and read 5373 times:

Sounds very fishy to me. I wouldn't put it past NW to have done it on purpose. Now I have two questions:

1) what if NW had paid the hotels in cash up front? The hotels provided the service and then NW files for bankruptcy. Would the hotels have to have to refund the cash and if they refuse?

2)when NW leaves bankruptcy could the hotels go back and demand their money?

I don't understand how some here seem to blame the hotels for their misfortune. Imagine the negative publicity they would have had if they refused to deal with NW.

Makes one think twice about the "benefits" of Chapter 11 airlines.



A330 man.
User currently offlineIsitsafenow From United States of America, joined Feb 2004, 4984 posts, RR: 23
Reply 10, posted (8 years 8 months 9 hours ago) and read 5093 times:

Quoting Cgnnrw (Reply 10):

Answer to 1...unless an agreement was worked out between NW and the hotel in advance, the answer is no. Why would the hotel demand cash up front if NW was NOT in chapter 11 prior to the file date?

If they refuse, you deal with bankruptcy court, not NW, IF NW was then in bankruptcy.

Answer to 2...no, but you can file an unsecured claim in court like the whole free world on the NW payable list...you might get 10cents on a dollar. That means you may get 10 percent of what is owed you...so say the courts, UNLESS you argue and win a higher percentage. Remember, your lawyer is going to get a bigger cut IF you argue for more and win, so don't bother. Take the 10percent and run...when and if you get it.
safe



If two people agree on EVERYTHING, then one isn't necessary.
User currently offlineAirRyan From United States of America, joined Mar 2005, 2532 posts, RR: 5
Reply 11, posted (8 years 8 months 9 hours ago) and read 4994 times:

I've heard a lot of bad NW stories over the past 6 months and quite frankly I am really getting sick of the constant negative news about NW - they are buring bridges and tarnishing what is otherwise a great 86 year old company.

But here is another NW "hypothetical" for you all to debate: A person interviews at NW on the day they went into Ch 11, accepts the job a few days later and than is compensated about $5k to relocate from 5 states away. Three weeks after that new NW "at-will" employee begins working (and one week after they commit to a 12 month lease) they are told they have to accept a 5% pay and benefits cut. The relocation contract says that if the employee leaves for any reason voluntarily or is terminated with cause within 18 months they have to pay that relocation back.

Regardless as to whether it may or may not be legal, how does a company such as NW expect that just because it filed for Ch11 it can owed money but that it doesn't have to owe money back in return? Something very wrong with that system - UA should never have been allowed to shed $17B in debt for Q4 2005 as they did, they should only have been allowed to be liquidated and ever so slightly, I'm beginning to think that may be NW's best move.


User currently offlineDerik737 From United States of America, joined Dec 2004, 333 posts, RR: 3
Reply 12, posted (8 years 8 months 8 hours ago) and read 4642 times:

NWA also stiffed the company that provided tools for the replacement mechanics.

Dance with the Devil and you'll get burned!


User currently offlineIndy From United States of America, joined Jan 2005, 4568 posts, RR: 18
Reply 13, posted (8 years 8 months 8 hours ago) and read 4593 times:

Why do people act shocked? This is bankruptcy. When you file bankruptcy you stiff alot of people. This isn't limited to hotels. This is why you file bankruptcy. The idea is to reduce the amount of money you owe so you can exit bankruptcy protection with the ability to pay your remaining debts and new ones you pick up. This isn't unique to the airline industry or even commercial bankruptcies. Stiffing people is what bankruptcies do.


Indy = Indianapolis and not Independence Air
User currently offlineKiwiinOz From New Zealand, joined Oct 2005, 2165 posts, RR: 5
Reply 14, posted (8 years 8 months 8 hours ago) and read 4550 times:

Quoting Indy (Reply 4):
The point you are missing is that is doesn't matter if you prepay. NW paid the hotel. They were able to get the money back because of bankruptcy. I don't believe it matters how the payment was made. Doesn't matter if it is check or cash. In a bankruptcy the company just has to submit proof that they paid you for a service and you could be forced to return the money. I have seen this happen in a company I used to work for. It is absolute nonsense. But this is unfortunately how the bankruptcy world is.



Quoting Indy (Reply 14):
Why do people act shocked? This is bankruptcy. When you file bankruptcy you stiff alot of people. This isn't limited to hotels. This is why you file bankruptcy. The idea is to reduce the amount of money you owe so you can exit bankruptcy protection with the ability to pay your remaining debts and new ones you pick up. This isn't unique to the airline industry or even commercial bankruptcies. Stiffing people is what bankruptcies do.

Stiffed is an understatement, and this sort of law merely spreads the risk of bankruptcy to other suppliers. I guess the only way to manage your risk as a supplier is to not deal with companies at all that are struggling. Does this law extend to wages as well? ie can a company reclaim wages from employees? Makes about as much sense!


User currently offlineAirRyan From United States of America, joined Mar 2005, 2532 posts, RR: 5
Reply 15, posted (8 years 8 months 7 hours ago) and read 4423 times:

Quoting KiwiinOz (Reply 15):
Does this law extend to wages as well? ie can a company reclaim wages from employees?

That is essentially exactly what they are currently doing via the pay and benefit cuts.


User currently offlineKiwiinOz From New Zealand, joined Oct 2005, 2165 posts, RR: 5
Reply 16, posted (8 years 8 months 7 hours ago) and read 4342 times:

Quoting AirRyan (Reply 16):
That is essentially exactly what they are currently doing via the pay and benefit cuts.

Negotiating with unions to reduce wages to try and ride out a rough patch is OK, and maybe an essential part of a company managing to survive. But what about reclaiming money from the creditors, (employees) for services, (labour) already supplied?


User currently offlineAfconcorde1 From France, joined Jan 2006, 139 posts, RR: 0
Reply 17, posted (8 years 8 months 6 hours ago) and read 4199 times:

Quoting Azstar (Thread starter):
According to the Arizona Daily Star NW stiffed three Tucson Hotels for $1M when it trained replacement mechanics this summer. According to one hotel, a check was deposited in its bank account, then later it was recalled by NW because bankruptcy laws allow companies to reclaim funds within 90 days. It may not be illegal, but this is certainly immoral.

Having worked for a company that went into Chapter 11, I must say that we had a lot of issues with my company doing the same thing to its customers. All I can say is that not only is this very much immoral, but it should be illegal.

Jeremy - AFConcorde1



Je pense, donc je vole Concorde!
User currently offlineSunking737 From United States of America, joined Feb 2005, 2046 posts, RR: 8
Reply 18, posted (8 years 8 months 1 hour ago) and read 3402 times:

We were joking around at MSP when we heard that NW was putting guys up in hotels in TUS that they would be lucky to get paid at all.

Wow we were right............



Just an MSPAVGEEK
User currently offlineRedneckslim From Congo (Brazzaville), joined Sep 2005, 97 posts, RR: 0
Reply 19, posted (8 years 7 months 4 weeks 1 day 19 hours ago) and read 2759 times:

Thrilled that I recently screwed NWA out of thousands on a contract, then went c7 myself! Bwahahahaha! karma baby!

User currently offlineSCCutler From United States of America, joined Jan 2000, 5531 posts, RR: 28
Reply 20, posted (8 years 7 months 4 weeks 1 day 19 hours ago) and read 2728 times:

The hotels should have done a better credit review.

To touch on a couple of points referenced above:

1. It is possible for the bankrupt estate to recover what are called "preference payments," essentially any payment made by the bankrupt during the 90 days preceding the filing and which does not fall into one of the allowed exceptions... which leads to...

2. The hotels could, had they recognized the possibility and made appropriate demand, have insisted upon COD terms (contemporaneous exchange of value for compensation), and they would not have had to repay.

Bad deal.

Bad choice by the hotel owners.

Bad karma, because they were training strike breakers.

History repeats itself.



...three miles from BRONS, clear for the ILS one five approach...
User currently offlineAlphascan From United States of America, joined Nov 2003, 937 posts, RR: 13
Reply 21, posted (8 years 7 months 4 weeks 1 day 16 hours ago) and read 2655 times:

Quoting Azstar (Thread starter):
then later it was recalled by NW



Quoting RoseFlyer (Reply 1):
NW management probably knew when the company would be filing for bankruptcy, so they cancelled payments



Quoting RoseFlyer (Reply 5):
Can a company just take back money that they paid for services that they received?



Quoting Cgnnrw (Reply 10):
Sounds very fishy to me. I wouldn't put it past NW to have done it on purpose



Quoting AirRyan (Reply 12):
they are buring bridges and tarnishing what is otherwise a great 86 year old company.



Quoting Derik737 (Reply 13):
NWA also stiffed the company that provided tools for the replacement mechanics.

The point you are all not comprehending is that the company DOES NOT have the right to reclaim funds. The court does. So personalizing the practice to the company or it's managers is off base. If you have an inner need to blame someone, blame the legislators who have not changed this decades old practice of law...the Democrats who wrote and passed it and the Republicans who have not changed it.



"To he who only has a hammer in his toolbelt, every problem looks like a nail."
User currently offlineSchipholjfk From United States of America, joined Jan 2005, 579 posts, RR: 6
Reply 22, posted (8 years 7 months 4 weeks 1 day 13 hours ago) and read 2576 times:

Quoting Alphascan (Reply 22):
The point you are all not comprehending is that the company DOES NOT have the right to reclaim funds. The court does. So personalizing the practice to the company or it's managers is off base. If you have an inner need to blame someone, blame the legislators who have not changed this decades old practice of law...the Democrats who wrote and passed it and the Republicans who have not changed it.

But legislators have NO problems chaging bankruptcy laws when it comes to individuals. It's all so corrupt (just look at the Jack Abramoff case down in DC)... the whole freaking system is corrupt and tilted towards big corporations. It's all about the almight $$$.



The fun of flying... love it !!!
User currently offlineRoseFlyer From United States of America, joined Feb 2004, 9661 posts, RR: 52
Reply 23, posted (8 years 7 months 4 weeks 1 day 13 hours ago) and read 2551 times:

Quoting Alphascan (Reply 22):
the company DOES NOT have the right to reclaim funds. The court does.

You make a correct point, but there is no reason to be so rude about it. People on airliners.net are here to share ideas and learn, so don't make direct insults that are not called for please.

Quoting Schipholjfk (Reply 23):
But legislators have NO problems chaging bankruptcy laws when it comes to individuals. It's all so corrupt (just look at the Jack Abramoff case down in DC)... the whole freaking system is corrupt and tilted towards big corporations. It's all about the almight $$$.

I agree to a point. The government has to favour businesses to some degree. Bankruptcy hurts lenders which can have effects on those that do have good credit. However bankruptcy can completely change around a company. Look at one of the biggest turn arounds in recent history. Kmart went from the verge of liquidation to profitability in just a year and then merged with Sears to form a large profitable company. That is so much better than if Kmart liquidated and left thousands unemployed only to see Sears slowly expand to fill the gap. Instead a new more efficient company was created and benefits everyone.

Bankruptcy can be good and bad. Those that lend funds are in trouble when companies fail. If Northwest liquidated, then plenty of companies that work with NW would lose out. But now there is a reorganization with the possibility of return to profitability. These hotels were creditors and lost out. At least the cities of Minneapolis, Detroit and Memphis don't have thousands of people now unemployed and searching for jobs in parts of the country that don't have high growth and excess jobs to be had.



If you have never designed an airplane part before, let the real designers do the work!
User currently offlineAirRyan From United States of America, joined Mar 2005, 2532 posts, RR: 5
Reply 24, posted (8 years 7 months 4 weeks 1 day 12 hours ago) and read 2515 times:

Quoting Alphascan (Reply 22):
The point you are all not comprehending is that the company DOES NOT have the right to reclaim funds. The court does. So personalizing the practice to the company or it's managers is off base. If you have an inner need to blame someone, blame the legislators who have not changed this decades old practice of law...the Democrats who wrote and passed it and the Republicans who have not changed it.

Semantics - end result is still the same.


25 57AZ : Of course, the hotels that lost out could easily bite NW back by refusing their business in the future whether it be flight crew lodging or accomodati
26 RoseFlyer : Does this really work. I would think that there are so many hotels out there that a few refusing to deal with Northwest won't have that large of an e
27 PSA727 : I am in the hotel industry, and I have to do Accounts Receivable. It surprises me that once a check has been deposited into a bank account, the design
28 Pope : I think that part of the story is missing. A preference payment as described above is able to be recaptured by the bankruptcy trustee. Payments in the
29 Goaliemn : The court can order it back. They usually won't take it all back, but they can. Now that they're in bankruptcy, they can't default on contracts made
Top Of Page
Forum Index

This topic is archived and can not be replied to any more.

Printer friendly format

Similar topics:More similar topics...
NW 333 In Sea For 24 Hours? posted Sun Nov 20 2005 18:13:10 by Alexinwa
NW Predicting A 1.7 Billion Loss For 05 posted Wed Oct 19 2005 05:30:33 by Jetjack74
NW Mechanics Authorize Call For Strike posted Tue Jul 19 2005 22:10:21 by DAYflyer
NW DC-10 Diverts For Suspected Cargo Fire.. posted Tue Sep 7 2004 21:52:55 by Radelow
Best Las Vegas Hotels For Spotting? posted Thu Dec 18 2003 08:53:18 by Haavig
A Hassle For NW At MEM; Bedlam For FedEx? posted Wed Jul 23 2003 05:37:38 by JohnJ
What Does NW/DL/CO Mean For Everyone Else? posted Thu Apr 3 2003 18:43:09 by Trvlr
Best Hotels For Spotting? posted Wed Sep 4 2002 03:53:10 by Clickhappy
LHR Airport Hotels For Spotting posted Mon Sep 2 2002 13:46:46 by A388
NW Cabin Lights Off For Whole Flight? posted Sun Jul 7 2002 22:50:46 by Airlinelover