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From WSJ...
American Airlines Retirees Move to Protect $1.37 Billion in Claims
Retirees say they fear a recent proposal from AMR Corp . may let the parent of American Airlines shrug off some $1.37 billion in retiree claims that the bankruptcy court has yet to evaluate.
For the past year, union and non-union retirees have been locked in a battle with AMR over the $1.37 billion in health and welfare benefits they say they're owed, which AMR disputes.
Now, the retirees say a recent AMR request could make the year-long battle moot by essentially deeming their claims worthless. In court papers filed Thursday, they asked the U.S. Bankruptcy Court in Manhattan to make sure that doesn't happen.
"This court should not allow the debtors to short-circuit the procedures set forth in the Bankruptcy Code," the retirees' attorneys wrote.
The retirees are taking aim at a proposal by AMR to set aside $331 million to cover certain claims that are determined eligible for payment after checks have already started going out to other creditors.
AMR faces more than 13,300 claims from creditors seeking more than $290 billion, all of which must be sifted through to weed out those that are valid from those that aren't. It's a time-consuming process, and one that very likely won't be completed by the time AMR goes to court next month for approval of its creditor-payment plan.
The retirees say that because the $331 million AMR wants to keep in reserve is far less than their $1.37 billion claim, let alone other disputed claims, it appears that AMR is "implicitly" and "improperly" asking the court to deem their claims worthless.
The retirees say they should be allowed to continue defending their claims, which AMR challenged in a lawsuit it filed last July.
AMR has said that, regardless of the outcome of the litigation, the retiree claims aren't eligible to share in the claims reserve. It said if it prevails in the lawsuit, then it would have no liability for the claims.
The bankruptcy court will consider the company's proposed claims reserve at a hearing next Thursday.
AMR, which recently announced its best-ever second quarter, sought Chapter 11 protection in November 2011. It is proposing to exit bankruptcy via a merger with US Airways Group Inc . under a plan that would hand a majority of the stock in the combined airline to its unsecured creditors, labor unions and shareholders.
Write to Jacqueline Palank at [email protected].
From WSJ...
American Airlines Retirees Move to Protect $1.37 Billion in Claims
Retirees say they fear a recent proposal from AMR Corp . may let the parent of American Airlines shrug off some $1.37 billion in retiree claims that the bankruptcy court has yet to evaluate.
For the past year, union and non-union retirees have been locked in a battle with AMR over the $1.37 billion in health and welfare benefits they say they're owed, which AMR disputes.
Now, the retirees say a recent AMR request could make the year-long battle moot by essentially deeming their claims worthless. In court papers filed Thursday, they asked the U.S. Bankruptcy Court in Manhattan to make sure that doesn't happen.
"This court should not allow the debtors to short-circuit the procedures set forth in the Bankruptcy Code," the retirees' attorneys wrote.
The retirees are taking aim at a proposal by AMR to set aside $331 million to cover certain claims that are determined eligible for payment after checks have already started going out to other creditors.
AMR faces more than 13,300 claims from creditors seeking more than $290 billion, all of which must be sifted through to weed out those that are valid from those that aren't. It's a time-consuming process, and one that very likely won't be completed by the time AMR goes to court next month for approval of its creditor-payment plan.
The retirees say that because the $331 million AMR wants to keep in reserve is far less than their $1.37 billion claim, let alone other disputed claims, it appears that AMR is "implicitly" and "improperly" asking the court to deem their claims worthless.
The retirees say they should be allowed to continue defending their claims, which AMR challenged in a lawsuit it filed last July.
AMR has said that, regardless of the outcome of the litigation, the retiree claims aren't eligible to share in the claims reserve. It said if it prevails in the lawsuit, then it would have no liability for the claims.
The bankruptcy court will consider the company's proposed claims reserve at a hearing next Thursday.
AMR, which recently announced its best-ever second quarter, sought Chapter 11 protection in November 2011. It is proposing to exit bankruptcy via a merger with US Airways Group Inc . under a plan that would hand a majority of the stock in the combined airline to its unsecured creditors, labor unions and shareholders.
Write to Jacqueline Palank at [email protected].
