The Deal: AMR Confirmation Moves to Sept. 12
Judge Sean Lane of the U.S. Bankruptcy Court for the Southern District of New York in Manhattan on Thursday heard arguments in favor of the plan from counsel to the debtor, unsecured creditors and certain unions before deciding to adjourn the hearing to Sept. 12 to allow the parties to continue preparing for the DOJ suit. The plan is based on an $11 billion merger of AMR and US Airways Group
Lane previously ordered parties in the case to submit briefs in support or against confirmation by Aug. 23.
"The brief satisfies that
"Moving the hearing would needlessly introduce an unwarranted element of uncertainty ... that is neither necessary nor productive to these cases," he added.
"You have the opportunity to quell that uncertainty," Karotkin told the judge.
The April 15 plan would pay secured creditors, administrative claims, priority tax claims and priority claims in full in cash.
Unsecured creditors would receive a pro rata share of new mandatorily convertible preferred stock, while US Airways shareholders would receive 28% of the diluted equity interests in the new company. The remaining 72% would be distributed to unsecured creditors, labor unions, certain employees and holders of AMR equity interests.
Lane approved the disclosure statement for the plan on June 4, and at least 88% of each class of creditors to cast votes on the plan accepted it.
The DoJ, however, filed a lawsuit against the merger on Aug. 13, casting uncertainty on the confirmation proceedings.
The Justice Department filed its own notice on Aug. 23 asserting that despite the suit it does not object to confirmation.
"The United States takes no position as to whether the debtors' plan should be confirmed now, notwithstanding the pendency of the antitrust suit and the attendant risk that a confirmed plan may not be able to become effective for a considerable time, if at all," the DOJ said in court papers.