AMR Corporation (American Airlines) (Dallas/Fort Worth) has received an approval from the bankruptcy court judge, Sean Lane, to send its reorganization and merger plan to the unsecured creditors according to this report by Reuters. This reorganization is unique in that the creditors will receive a 3.5 percent share in the new company under the proposal. Usually creditors do not receive any value after a Chapter 11 reorganization. Secured creditors will be paid in full.
On June 7, 2013 AMR issued this statement:
AMR Corporation, the parent company of American Airlines, Inc., announced that the U.S. Bankruptcy Court for the Southern District of New York entered the order approving the Disclosure Statement filed in connection with the company’s proposed Plan of Reorganization (the Plan). The Court also authorized American to begin soliciting votes on the Plan of Reorganization from creditors and stockholders. Solicitation packages will be distributed by June 20 and the voting deadline is July 29. The hearing before the Court to consider confirmation of the Plan is scheduled for August 15, 2013.
The Plan is supported by the Official Committee of Unsecured Creditors. Holders of approximately $1.6 billion of prepetition unsecured claims also have committed to vote to accept the Plan.
“This is a significant step forward in our efforts to complete the most successful restructuring in aviation history,” said Tom Horton, AMR’s chairman, president and CEO. “We’re in the home stretch of our restructuring and thanks to the hard work of our team, we are positioned to emerge a highly competitive, leading global airline focused on delivering the very best for our customers, our people, and our investors.”
The proposed Plan is to become effective concurrently with the consummation of a merger with US Airways. The proposed merger is expected to maximize recoveries for all of the company’s economic stakeholders and the proposed Plan provides a recovery of 3.5% of the common stock (on an as-converted basis) of the combined company for holders of existing AMR equity securities, with the potential for such holders to receive additional shares.
Under the terms of the Merger Agreement with US Airways, stockholders of US Airways will receive one share of common stock of the combined company for each share of US Airways common stock then held. The aggregate number of shares of common stock of the combined company issuable to holders of US Airways equity instruments (including stockholders, holders of convertible notes, optionees, and holders of restricted stock units) will represent 28% of the diluted equity ownership of the combined company. The remaining 72% of the diluted equity ownership of the combined company will be issued under the Plan to AMR’s stakeholders, AMR’s labor unions, and certain employees of AMR.
Read the full report from Reuters: CLICK HERE
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