Spirit Airlines Inc. said Tuesday it still expects shareholders will get wiped out in its bankruptcy as the carrier pushes forward with a restructuring deal that hands control of the airline to its bondholders.

The airline tried its best to avoid bankruptcy and filed Chapter 11 as a last resort after it failed to complete a merger with rival Frontier Group Holdings Inc. and exhausted all other restructuring options, Spirit lawyer Marshall Huebner said during a New York court hearing.

More than a dozen shareholder letters that have been submitted to Judge Sean Lane that criticize Spirit CEO Ted Christie or board members for putting the airline in Chapter 11 and supporting a deal that will cancel their shares for no compensation. A lawyer for the U.S. Justice Department’s bankruptcy watchdog said during Tuesday’s hearing that shareholders have also requested the formation of an official committee during the Chapter 11.

Huebner said although its regrettable Spirit shareholders stand to lose their investment in bankruptcy, company equity is “out of the money.” Spirit shares are trading at about 60 cents on Tuesday.

“The market has fully understood for rather a while that, absent a transaction, Spirit is insolvent and that’s the way it is,” Huebner said.

Shareholders are last in line for repayment in bankruptcy, and Chapter 11 almost always wipes-out equity for no compensation. Efforts to obtain further concessions from creditors, as some retail investors have requested, would merely create new claims against Spirit that would also need to be repaid before shareholders, Huebner said.

Equity committees are rare in Chapter 11, but, if granted, would give shareholders a bigger seat in Spirit’s Chapter 11 case and require the company pay its legal fees.

Spirit on Tuesday won approval to move forward with its restructuring. Lane authorized Spirit to poll bondholders on the terms of its restructuring. Under the restructuring, bondholders would exchange $795 million in debt for the equity in the reorganized airline. The plan is overwhelmingly supported by Spirit bondholders, the company has said.

Lane will consider approving the plan on January 29.

The case is Spirit Airlines Inc., 24-11988, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

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