Five Wall Street investment firms have accused Delta Air Lines Inc. of cheating creditors of its regional subsidiary, Comair Inc., to increase the price it could collect if Comair were sold.
In a lawsuit filed with the U.S. Bankruptcy Court in Manhattan, the firms said Delta deliberately inflated estimates of payments Comair creditors would receive in the airlines' bankruptcy reorganization.
Once the airlines exited bankruptcy, however, Delta reduced the estimate by about 25 percent.
Delta "had a clear intent in providing an overly optimistic view of the recoveries" for Comair creditors, the lawsuit said. Approval of Comair's bankruptcy-reorganization plan was obtained "by fraud," the suit said. It asked a judge to revoke his approval of the plan.
The lawsuit was filed by affiliates of two investment banks -- Bear Stearns Cos. and Societe Generale -- and several hedge funds, including Varde Investment Partners, Cypress Management Master LP and Par-Four Master Fund. The firms say they hold $125 million in bankruptcy claims against Comair.
Anthony Black, a spokesman for Delta in Atlanta, wasn't available for comment Friday.
