American Airlines' bankrupt parent received court permission yesterday 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, Reuters reported yesterday. Bankruptcy Judge Sean Lane yesterday approved an outline of AMR Corp's plan at a court hearing. The basis of the plan is a merger with US Airways, which was agreed to in February after hard-fought negotiations and initial resistance from AMR. Current AMR shareholders will get a 3.5 percent stake in the new airline, a rare example of a bankruptcy in which shareholders do not walk away empty-handed. The company has projected the value of the stake approaching the $400 million range. 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. U.S. TrusteeTracy Hope Davis 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. Judge Lane approved the plan outline over the objection, saying that Davis failed to show the plan was "patently unconfirmable." Still, AMR agreed to update the document with more information about the Horton deal.
