AMR Wins Appeal, Judge Approves Bankruptcy Plan


AMR Corporation, the parent company of American Airlines, has won an appeal in a case filed in connection with its 2011 bankruptcy filing. Today’s appeal dealt with a claim that the company should have had to pay a make-whole amount to holders of its notes when it called bonds in early. The company had been trying to put together $1.5 billion in refinancing for its aircraft.

AMR Wins Appeal, Judge Approves Bankruptcy Plan

Judge upholds earlier appeal in favor of AMR

The company originally asked the court to approve the refinancing so that it could get in on the low interest rates. The company was trying to save over $200 million in interest payments and said it would use proceeds to pay back about $1.3 billion in debt which was backed by aircraft through three different series of notes.

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In January the request was approved by the bankruptcy court when the judge overruled an objection which came from a trustee of one of the company’s note holders. The trustee claimed that AMR should pay a make-whole premium when it refinanced. In today’s appeal, the judge upheld the earlier ruling that ARM did not have to pay that premium.

AMR seeks approval for reorganization

Today AMR Corporation again went before the bankruptcy court in an attempt to gain approval for its reorganization plan. The Dallas Morning News reports that the judge did confirm that plan—as long as regulators approve it as well.

Part of that plan depends on the company’s merger with U.S. Airways Group Inc (NYSE:LCC). The Department of Justice has filed a lawsuit in an attempt to block the merger, saying that it reduces competition and will result in higher prices for airfare and less service.

U.S. Airways Group Inc (NYSE:LCC) approved the merger plan with AMR earlier this year, but that merger must still get past regulators and the lawsuit filed by the DoJ.