AMR’s Request to Hire Law Firms Questioned by U.S. Trustee

AMR Corp. (AAMRQ)’s request to hire four law firms in addition to main bankruptcy counsel Weil, Gotshal & Manges LLP was questioned by the U.S. Trustee, who is seeking more disclosure about Weil and Debevoise & Plimpton LLP.

AMR, which is reorganizing its American Airlines unit in U.S. Bankruptcy Court in Manhattan, applied to hire Debevoise, Morgan Lewis & Bockius LLP, Groom Law Group Chartered and Paul Hastings LLP (1135L) to advise on labor issues. AMR also wants to hire eight other consultants and financial advisers. The U.S. Trustee, an arm of the Justice Department that oversees bankruptcies, said the company hasn’t shown that it needs them.

“The scope of services set forth in each application is so broad that the potential for duplication with the other firms is apparent,” U.S. Trustee Tracy Hope Davis said in court papers filed today. A hearing on AMR’s request to hire lawyers and advisers is set for Jan. 27.

The applications for Debevoise and Weil failed to disclose enough information to show that they are disinterested parties in the case, Davis said. New York-based Debevoise has done work for AMR since 1948, including on aircraft financing, employee benefits and transactions, the U.S. Trustee said.

Weil has a corporate travel agreement with American Airlines that gives it a discount on certain routes, according to Davis. More information is needed to determine whether Weil has a pre-bankruptcy claim related to the agreement, which may affect its disinterestedness, Davis said.

Hicks Financing

Weil also worked for Thomas O. Hicks and entities he controlled in connection with the financing of the American Airlines Center in Dallas, the U.S. Trustee said. More information is needed about a lease involving a company tied to the sports arena, Center Operating Co., which has an agreement with the Dallas Stars hockey team, Davis said.

Hicks, of Hicks Equity Partners LLC, owned the Stars before they were sold in bankruptcy in November.

AMR, based in Fort Worth, Texas, seeks to hire Bain & Co. and Deloitte Financial Advisory Services LLP as consultants, Ernst & Young LLP as a tax adviser, KPMG LLP for tax compliance, McKinsey Recovery & Transformation Services U.S. LLC as a management consultant, Perella Weinberg Partners LLP as a financial adviser, Rothschild Inc. as a financial adviser and investment banker, and SkyWorks Capital LLC as an aircraft restructuring adviser, according to court papers.

The parent company of American Airlines sought Chapter 11 court protection on Nov. 29, saying it needed to reduce costs to compete with carriers that had used bankruptcy to shed pension and retiree benefit plans and restructure debt.

The case is In re AMR Corp., 11-15463, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Tiffany Kary in New York at tkary@bloomberg.net

To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net

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