According to this article, Northwest Asks Court to Ground Class Suits Against Execs, Northwest Airlines asked US Bankruptcy Judge Allan L. Gropper to stay three class action suits filed against Northwest executives in federal district courts in Minnesota and New York. The airline, which filed for bankruptcy in the US Bankruptcy Court for the Southern District of New York, is not named in any of the suits.
Former Northwest employees filed two of the suits in Minnesota. They allege violations of the Employee Retirement Income Security Act. The other suit alleges "Northwest directors fraudulently dumped about $30 million of their company stock on unwitting investors in violation of federal securities laws."
Northwest told Judge Gropper, '"If the class actions are not stayed ... Northwest could be obligated to indemnify each defendant for the potentially hundreds of millions of dollars in damages claimed by the plaintiffs.'" This, so the argument goes, would adversely affect "bankruptcy-protected assets" and "'distract' the executives from the reorganization quest." Anyone care to offer an opinion on whether Judge Gropper will issue the stay?
Comment Preview