08-11-2022Article dated today 05-24-2013
U.S. Trustee objects to plan of reorganization for AMR and American Airlines | Airline Biz Blog
Quote:
The U.S. Trustee on Friday asked U.S. Bankruptcy Judge Sean Lane to reject the disclosure statement for the American Airlines and AMR plan of reorganization, and the severance package for AMR/AA chairman and CEO Tom Horton was a major reason.
In its filing, the trustee’s office said the statement “cannot be approved because it is based on a Plan that cannot meet the requirements of section 1129(a)(1) and as such, cannot be confirmed.”
“Specifically, the Plan requires impermissible payments to be made for the reimbursement of legal expenses of certain key creditors and to the Debtors’ Chief Executive Officer, which payments are either expressly prohibited by the Bankruptcy Code or permitted only if the requirements of section 503(b) and/or 503(c) have been met. Unless these provisions are removed from the Plan, the Plan is not confirmable and neither the Plan nor the Disclosure Statement may be approved,” it stated.
Judge Lane had previously disallowed Horton’s nearly $20 million exit package when he approved the rest of the proposed merger between AMR and US Airways.
The court holds a hearing June 4 on the disclosure, with Friday as the deadline for registering objections. Lane’s approval of the disclosure statement is needed before AMR/AA can begin soliciting approvals from stakeholders for the bankruptcy exit plan.
The U.S. Trustee on Friday asked U.S. Bankruptcy Judge Sean Lane to reject the disclosure statement for the American Airlines and AMR plan of reorganization, and the severance package for AMR/AA chairman and CEO Tom Horton was a major reason.
In its filing, the trustee’s office said the statement “cannot be approved because it is based on a Plan that cannot meet the requirements of section 1129(a)(1) and as such, cannot be confirmed.”
“Specifically, the Plan requires impermissible payments to be made for the reimbursement of legal expenses of certain key creditors and to the Debtors’ Chief Executive Officer, which payments are either expressly prohibited by the Bankruptcy Code or permitted only if the requirements of section 503(b) and/or 503(c) have been met. Unless these provisions are removed from the Plan, the Plan is not confirmable and neither the Plan nor the Disclosure Statement may be approved,” it stated.
Judge Lane had previously disallowed Horton’s nearly $20 million exit package when he approved the rest of the proposed merger between AMR and US Airways.
The court holds a hearing June 4 on the disclosure, with Friday as the deadline for registering objections. Lane’s approval of the disclosure statement is needed before AMR/AA can begin soliciting approvals from stakeholders for the bankruptcy exit plan.
