AMR urges court to back restructuring despite antitrust suit
By Nick Brown
NEW YORK (Reuters) - American Airlines and its creditors' committee on Friday urged a bankruptcy judge to approve the airline's restructuring plan despite an antitrust challenge from the Department of Justice.
In court papers filed in U.S. Bankruptcy Court in Manhattan, American's bankrupt parent, AMR Corp AAMRQ.PK, said failing to approve the restructuring would add "a destabilizing factor" to its proposal to merge with US Airways Group LCC.N and pay back creditors.
AMR's creditors' committee, in a separate filing, said refusal by Judge Sean Lane to give the plan his blessing could threaten creditor support for the plan, which includes AMR's unions and most of its creditors.
"While the DOJ enforcement action has unsettled creditor and stockholder expectations, deferring entry of the confirmation order ... would only exacerbate this uncertainty," the committee said.
The U.S. government also filed a brief on Friday, but did not, as might have been expected, urge Lane to not approve the restructuring plan. Instead the government, through U.S. Attorney Preet Bharara, said it took "no position as to whether" Lane should confirm the plan, but cited the "attendant risk that a confirmed plan may not be able to become effective for a considerable time, if at all."
AMR and US Airways agreed to merge in February in an $11 billion deal that would end AMR's bankruptcy and create the world's largest airline. Experts had expected the deal to enjoy a smooth ride through the regulatory process.
But on August 13, two days before the restructuring plan was to gain final court approval, the DOJ sought to block it, filing a lawsuit in Washington, D.C., alleging a stifling of competition that would harm consumers though higher fares.
Judge Lane, overseeing AMR's bankruptcy in New York, held off confirming the plan in the face of the DOJ's lawsuit, giving the parties until Friday to brief him on the best course of action. Continued...