AMR Corp. plans to seek bankruptcy court approval next month for its merger with US Airways Group Inc., a deal backed by creditors holding $1.2 billion in claims.
AMR, the parent of American Airlines, will file documents by the end of next week seeking approval of the agreement and plans to go before U.S Bankruptcy Judge Sean Lane in Manhattan in the second half of March, Stephen Karotkin, an attorney for the company, said today at a hearing.
The transaction “creates the most value and represents the best path forward for American Airlines, its creditors and the stakeholders for both companies,” Jack Butler, an attorney for creditors, told Lane.
The $11 billion merger will create the world’s largest carrier and cap a wave of consolidation that swept up five of the 10 biggest U.S. carriers since 2005. The deal requires Lane’s approval and would be implemented through a bankruptcy reorganization plan for AMR, Karotkin said. The carrier has the support of creditors holding $1.2 billion in unsecured claims, he said.
At today’s hearing, Lane extended American’s exclusive right to file a bankruptcy plan to April 15, preventing competing plans from being considered by the court. AMR, based in Fort Worth, Texas, filed for bankruptcy in November 2011.
“No one has negotiated a plan of reorganization yet,” Butler said. “The creditors’ committee has yet to engage in plan negotiations with the company.”
Under the agreement, Tempe, Arizona-based US Airways would own 28 percent of the combined company, with 72 percent going to AMR, the companies said in a statement.
The case is In re AMR Corp., 11-15463, U.S. Bankruptcy Court, Southern District of New York (Manhattan).