Reuters: Bankruptcy News: UPDATE 1-AMR gets court OK to send restructuring plan to creditors for a vote

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UPDATE 1-AMR gets court OK to send restructuring plan to creditors for a vote Jun 4th 2013, 17:08 Tue Jun 4, 2013 1:08pm EDT By Nick Brown and Bill Cheung NEW YORK, June 4 (Reuters) - American Airlines' bankrupt parent received court permission on Tuesday to send its restructuring plan to creditors for a vote, bringing its planned $11 billion merger with US Airways Group a step closer to reality. Judge Sean Lane green-lighted an outline of AMR Corp's plan, which involves merging with smaller carrier US Airways Group, at a hearing in U.S. Bankruptcy Court in Manhattan. Creditors will use the outline in deciding whether to support the plan. The key objection to the plan outline had come from the U.S. Trustee Program, the Department of Justice's bankruptcy watchdog, over a roughly $20 million severance package for outgoing AMR Chief Executive Tom Horton. Tracy Hope Davis, the trustee for the New York region, last month argued that the document did not contain enough detail on the negotiations surrounding the severance, and that bankruptcy law bars such payments except when they are generally applicable to all employees. Lane approved the plan outline despite the objection, but AMR agreed to update the plan with more information about the severance package. AMR filed for bankruptcy in 2011, the last major U.S. carrier to go through the process after its competitors underwent restructurings in the last decade. It initially opposed a merger, but agreed to explore one under pressure from its unsecured creditors' committee and unions. US Airways CEO Doug Parker would run the combined airline, but Horton would serve as non-executive chairman until the first annual shareholder meeting, probably in the spring of 2014, after which Parker would become chairman. AMR shareholders would receive a 3.5 percent equity stake in the new company, which would make it one of the few major bankruptcies in which equity holders earn some recovery. An attorney for AMR's creditors committee has said the stake could be valued at between $350 million and $400 million. The case is In re: AMR Corp et al, U.S. Bankruptcy Court, Southern District of New York, No. 11-15463. Link this Share this Digg this Email Reprints

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