Opinion ID: 149094
Heading Depth: 3
Heading Rank: 3

Heading: Meaning of Pay SLV or an Amount Determined by Reference Thereto

Text: Northwestern's agreements, which provide that Delta is excused from paying anything under the TIA where it pays [SLV] ... or an amount determined by reference thereto, present a closer questionbut only marginally soas such language arguably contemplates circumstances in which payment of an amount other than SLV will satisfy Delta's obligation to the Owner Participant. Delta argues that, pursuant to this language, it owes nothing to Northwestern, because in each case it paid the Indenture Trustee either (1) a percentage of SLV net of the proceeds of the sale of the aircraft, or (2) a percentage of the stipulated lease rejection damages calculated under the Bingham Term Sheet using a formula that started from SLV. Delta argues that in each case it thus literally paid an amount determined by reference [to SLV]. In context and in light of the purpose of the agreements, we think it likely that the phrase an amount determined by reference thereto was intended to indicate that Delta could discharge its obligation under the TIAs by payment of the amount of SLV, reduced in accordance with certain Lease-sanctioned offsets, such as those for fair market value, sale proceeds, insurance revenues, and government receipts, in a manner that would result in realization of the full value of SLV. However, we need not definitively resolve the meaning of the phrase; we need only decide, as above, that, as among the various possible meanings of an ambiguous contract term, the parties could not have intended that payment of any percentage of SLV would discharge Delta's obligations under the TIAs. By ruling that partial payment of the Lease claims, in however small an amount, satisfied the exclusion, the bankruptcy court effectively nullified the TIAs by stripping them of their ability to protect the Owner Participant in the event of Delta's default. The problem with the interpretation urged by Delta is even clearer if one considers its consequences in a non-bankruptcy context. The tax benefits secured by the TIAs were crucial to the Owner Participants' agreement to enter into the leveraged leases. It cannot possibly be that the parties understood that those benefits could be eliminated as the result of any Delta payment to the Indenture Trustee, so long as it was determined by reference to SLV, notwithstanding that such payment would in no way benefit the Owner Participant. Delta and the Indenture Trustee could not, consistent with the parties' contractual intent, discharge Delta's obligations to the Owner Participants under the TIAs by agreeing to cancel its SLV liabilities for ten cents on the dollar, of which no portion would go to the Owner Participants. Absent an understanding that the agreements would operate differently in bankruptcy, or a specific statute authorizing different treatment in bankruptcy, see Travelers Cas. & Sur. Co. of Am. v. Pac. Gas & Elec. Co., 549 U.S. 443, 448, 127 S.Ct. 1199, 167 L.Ed.2d 178 (2007), they cannot do so here.