Northwest files lawsuit against MAC

By Carol Kennedy

Published on March 29, 2006

In the lawsuit, Northwest claims that a special financing deal the company made for airport space at Minneapolis-St. Paul Airport was a loan and, under bankruptcy laws, the carrier is not responsible for repayment. Defendants contend that the financing was a lease. Under bankruptcy laws leases must still be paid.

Manufacturers and Traders Trust Co. was also named in the suit as the trustee for bond holders. In addition, the airline seeks the return of a $426,041.26 bond payment.

United and Delta Airlines filed similar lawsuits during their bankruptcies. Credit analysts warn that bankrupt airlines attempting to retroactively eliminate debt in this way may be putting all future facility financing in jeopardy.

The operating and terminal-building lease agreement was made between MAC and Northwest in 1999.