NWA Cleared to Pay State Taxes
By Martin J. Moylan, Pioneer Press, St. Paul, Minn.
Apr. 18–A federal judge overseeing Northwest Airlines’ bankruptcy says the carrier may pay its state taxes — if it wants to.
Judge Allan Gropper said the Eagan-based airline can pay up to $55 million in taxes owed to the state of Minnesota and other state, county, and city taxing authorities.
To be precise, the airline was “authorized, but not directed” to pay the taxes last week, according to a court filing signed by Gropper.
The committee representing Northwest’s unsecured creditors gets to review tax payments of more than $50,000. It also can block large payments, forcing the issue back to Gropper for a hearing and decision.
In January, the Minnesota Department of Revenue filed a claim against Northwest for $23.4 million in unpaid sales and equipment taxes.
The state taxes Northwest’s fleet and spare aircraft parts, among other things. Minnesota pegged the value of the airline’s fleet and parts inventory at $6.1 billion last year, according to bankruptcy-court documents.
A Revenue Department spokesperson was not sure what leverage the state has to inspire Northwest to pay its overdue taxes.
Northwest wouldn’t say whether it will pay its taxes.
“The filing was to meet “¦ requirements for the potential of payments to taxing authorities,” the airline said in a statement. “It is in no way an acknowledgement of certain claims made against the company.”
So far, Northwest faces about 1,300 claims by unsecured creditors, including state and local governments. Unsecured claims range from $2.46 sought by United Telephone of the Northwest to $211 million sought by Northwest employees trying to recover the value of stock issued to them for previous contract concessions.
In previous bankruptcy court filings, Northwest has said it could face more than 100,000 claims by creditors.
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Copyright (c) 2006, Pioneer Press, St. Paul, Minn.
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