AMR Files Bankruptcy Exit Plan

by San Antonio Attorney

AMR Corporation filed a bankruptcy exit plan on Monday, taking its proposed merger with US Airways Group a step closer to reality.

The parent company of American Airlines filed a reorganization plan, which specifies some executive payment and details measures for shareholders and creditors, an essential move before AMR and US Airways can come together to make the world’s biggest airline. The plan needs both creditor and court approval.

It includes paying a severance package worth $19.9 million to AMR’s outbound chief executive Tom Horton.

U.S. Bankruptcy Judge Sean Lane refused to confirm the same severance proposition before, saying that it was not allowed under federal bankruptcy law, although it could be included in the airline’s reorganization plan, which makes it subject to the approval of creditors.

Unsecured creditors would get preferred stock shares, while secured creditors would receive full payments.

Shareholders would get 3.5% equity stake, which means that equity holders would receive some recovery. The creditors committee has estimated that the value of the stake could be around $350 million to $400 million.

The CEO of the new company would be William Douglas Parker, the Chief Executive and Chairman of the Board of US Airways. He would get $19.5 million in the event that he loses the job in the merger, according to a court filing on Monday.

In 2012, Parker earned around $5.5 million, from $3.8 million in 2011. Although his base salary did not change at $550,000, his bonus increased almost five times as US Airways achieved its financial targets.

AMR filed for Chapter 11 reorganization bankruptcy in November 29, 2011 after its competitors all went through restructurings in the past decade.

The creditors’ committee pressured AMR into the merger, while US Airways aggressively pursued the airline by negotiating to its unions, making a tentative deal with the employees before any serious talks took place between the airline companies.

The bankruptcy judge approved the merger last month.

 

Bankruptcy can help you achieve a better financial future. However, most people find the legal process quite daunting.  Consult a San Antonio Bankruptcy attorney to help you file for bankruptcy.

 

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