American Airlines' creditors have approved the company's reorganization plan, according to court filings in the bankruptcy case Friday.
The Official Committee of Unsecured Creditors and the Ad Hoc Committee of AMR Corp. Creditors filed motions stating their approval with the U.S. Bankruptcy Court for the Southern District of New York, clearing a major hurdle that AMR needs to emerge from the 18-month-old bankruptcy.
The reorganization plan hinges on a proposed $11 billion merger with Tempe, Ariz.-based US Airways to create the largest airline in the world with nearly 100,000 employees, including about 6,500 in Tulsa.
"The Creditors' committee believes that the plan provides the best outcome for general unsecured creditors and, therefore, recommends that (AMR Corp.) general unsecured creditors entitled to vote on the Plan vote in favor of the plan," one of the filings states.
At a hearing set for Tuesday, Judge Sean Lane is expected to decide whether the court will officially "disclose" the plan to creditors. That would allow AMR to begin soliciting creditors officially to endorse the reorganization plan.
Since the plan was released April 15 and has been available to the public, the creditor groups gave their approval early.
Creditors would still need to vote on the plan officially, but the filings Friday show that the key debt holders are ready to approve the deal.
The reorganization and merger would pay creditors about $7.58 billion in shares of the newly merged company, American Airlines Group. The plan gives 72 percent of the new company to American Airlines groups, including creditors, labor groups and shareholders. The remainder goes to US Airways shareholders, who also must vote on the deal.
With debt holders endorsing the deal, the last major barrier in the case is an objection from U.S. Trustee Tracy Hope Davis, who said a proposed $20 million severance for AMR Corp. Chairman and CEO Tom Horton violates U.S. bankruptcy law. The law forbids excessively large payouts to executives during bankruptcy proceedings.
Judge Lane ruled with the trustee on the issue in a March 27 hearing, but the creditors groups said Horton should still get his pay.
"The U.S. Trustee apparently intends to prosecute this objection irrespective of any of the facts and circumstances that exist in this unique chapter 11 case," the filing from the unsecured creditors group states.
Horton is slated to step down as CEO when the merger closes and give the position to US Airways CEO Doug Parker. Horton would remain the chairman for one year.
Kyle Arnold 918-581-8380
kyle.arnold@tulsaworld.com
Original Print Headline: AA creditors OK company plan
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