There was no settlement afoot when U.S. District Judge Jed Rakoff put off a hearing on an effort by the trustee for Bernard L. Madoff Investment Securities LLC to block a $410 million settlement between New York Attorney General Eric Schneiderman and feeder fund manager J. Ezra Merkin. Bloomberg Law's Lee Pacchia and Bloomberg News bankruptcy columnist Bill Rochelle discuss this case and the merger between AMR Corp. and US Airways Group Inc. Click here to watch.
American Airlines' merger with US Airways Group Inc. was approved by U.S. Bankruptcy Judge Sean Lane, Bloomberg News reported yesterday. Fort Worth, Texas-based American and US Airways, based in Tempe, Ariz., announced the merger in February. US Airways began its pursuit of a deal in January 2012, less than two months after American parent AMR Corp. filed for bankruptcy. The merger with US Airways will create the world’s largest carrier and will be completed through a bankruptcy reorganization plan for American. That plan requires creditor support and separate approval from Judge Lane. The court hearing to approve the bankruptcy plan should occur in about six months, said Stephen Karotkin, an attorney for American. Read more: http://www.bloomberg.com/news/print/2013-03-27/amr-s-merger-with-us-air…
In related news, Bankruptcy Judge Sean Lane said that it would be "inappropriate" to approve a $20 million exit package for the outgoing chief executive of American Airlines parent AMR Corp., calling it his only "hang-up" as he cleared the way for a merger with US Airways LCC Group Inc., the Wall Street Journal reported today. Judge Lane yesterday granted American's request to send the merger plan to the airline's creditors for a vote. AMR CEO Tom Horton, though, will have to wait for approval of the $19.9 million severance negotiated as part of the merger agreement. Once the merger is approved by creditors and antitrust regulators, Horton will become nonexecutive board chairman of the new company, called American Airlines Group Inc., until spring 2014. U.S. Trustee Tracy Hope Davis objected to Horton's severance package, calling it in court papers an "end run around" a federal law that limits retention bonuses and other payments to executives running firms under chapter 11 protection. Read more. (Subscription required.) http://online.wsj.com/article/SB100014241278873235010045783868540946967…
Executives for American Airlines and US Airways yesterday defended their planned merger against claims from consumer advocates who said that it could lead to higher fares, fewer regional routes and decreased competition, the Wall Street Journal reported today. The Senate Judiciary Committee hearing came a month after AMR Corp. and US Airways announced they would combine, a deal expected to create the world's largest airline and $1 billion in cost savings, with an expected market value of about $11 billion. The deal, which would bring AMR out of the bankruptcy case it filed in 2011, would be called American Airlines Group Inc. and is subject to bankruptcy court and regulatory approval. The Senate panel questioned airlines executives about fare increases, route cancellations to small- and midsize markets and how expanding globally would affect domestic flights. Douglas Parker, who is slated to be chief executive of the combined company, and Thomas Horton, CEO of AMR, told senators that routes wouldn't be disrupted, competition would be stronger, not eliminated, and it would allow them to expand globally.
The U.S. Trustee Tracy Hope Davis has objected to American Airlines CEO Tom Horton's $19.8 million severance payment, arguing that the company has not explained why such a large sum is permissible under federal bankruptcy rules, the Fort Worth Star-Telegram reported yesterday. Horton's compensation is addressed as part of the company's merger agreement with US Airways, which calls for Horton to become chairman of the combined company until its first shareholders meeting, expected in mid-2014. US Airways CEO Doug Parker will be chief executive of the combined carrier. Bankruptcy Judge Sean Lane is scheduled to rule on the merger and Horton's severance package at a March 27 hearing. In the filing made on Friday, Davis said that "a severance payment of close to $20 million defeats Congress' intent" when it put restrictions on such compensation. Those rules, Davis argues, limit payments to current employees to not more than 10 times the average of similar payments to nonmanagement employees, except in special circumstances.
Southern Air Holdings Inc., an air-cargo company that transported troops into Afghanistan, won court permission to exit bankruptcy under the control of a group of lenders led by Canadian Imperial Bank of Commerce, Bloomberg News reported yesterday. Bankruptcy Judge Christopher Sontchi approved the company's reorganization plan yesterday, less than six months after seeking court protection from creditors. Its former owner, Oak Hill Capital Partners LP, will retain 17.5 percent of the company and appoint one person to the new, five-member board, Southern Air attorney Brian Rosen of Weil Gotshal & Manges LLP said after the hearing.
American Airlines parent AMR Corp., which is planning to merge with US Airways Group, has asked a judge for another extension of its exclusive period to file a plan to exit bankruptcy, Reuters reported yesterday. The carrier and its unsecured creditors' committee asked the U.S. Bankruptcy Court yesterday to extend the time during which creditors cannot pursue their own restructuring plans for the airline to May 29. Currently, American has until April 15 to file its reorganization plan. American and US Airways announced their plan to combine last month in an $11 billion deal that would form the world's biggest airline.
Someone who bought stock in American Airlines last year already made a killing. Stock that could have been bought in November for less than 40 cents a share is now trading above $4, for reasons explained on the video with Bloomberg Law's Lee Pacchia and Bloomberg News bankruptcy columnist Bill Rochelle. Click here to watch.
Executives of American Airlines and US Airways told lawmakers yesterday that combining their companies will benefit consumers by creating a tougher competitor for industry giants United and Delta, Businessweek.com reported. Although an American-US Airways merger would create the world's largest airline, the new American would still have less than 25 percent of the U.S. market, the executives said. The executives made the comments at a hearing of the House Judiciary Subcommittee on Regulatory Reform, Commercial and Antitrust Law Subcommittee yesterday. American, owned by AMR Corp., and US Airways Group Inc. announced on Feb. 14 that they planned to merge in a deal valued at $11 billion in stock. The new airline would be called American but will be run by US Airways' CEO Doug Parker.
US Airways Group Inc. and American Airlines, which announced earlier this month that they would merge to form the world's biggest air carrier, named executives yesterday to lead their integration team, Reuters reported yesterday. Scott Kirby, president of US Airways, and Bev Goulet, chief restructuring officer at AMR Corp.'s American, will develop plans so the airlines can start melding as soon as the $11 billion merger closes, expected in the third quarter, the chief executives of the carriers said in a staff memo. A merged American-US Airways would have revenue of more than $38 billion based on 2012 figures, ahead of current No. 1 United Continental Holdings Inc., the product of a 2010 merger. US Airways began its pursuit of a merger not long after American filed for chapter 11 protection in late November 2011.
American Airlines says that Travelport Ltd. should not be allowed to delay a fast-approaching antitrust trial in which "billions of dollars" are potentially on the line, Dow Jones Daily Bankruptcy Review reported on Friday. Travelport, whose technology allows travel agents to search for and compare airfares, wants to bring new allegations against American but says that the airline's bankruptcy is preventing it from doing so. American, through its parent AMR Corp., says that the problem is not with its bankruptcy but instead with Travelport's attempt to fight back with claims that it should have brought months ago.
