Court Updates

February 01, 2013

American Airlines and the UCC filed a motion that requests that the Debtors be granted a further extension of the exclusive period to file a plan of reorganization for twenty (20) days to and including April 1, 2013 and to solicit votes on any plan of  reorganization to May 31, 2013, without prejudice to the Debtors’ right to seek additional extensions. The Debtors believe that the reasons to extend include: (i) the Debtors’ cases are large and complex, involving worldwide businesses and many faceted legal and business issues that require substantial time and diligence to resolve; (ii) substantial good faith progress has been made in a collaborative, cooperative, viable working relationship with the UCC; (iii) American and the UCC are pursuing their collaborative review of strategic alternatives that might be beneficial to American’s economic stakeholders and the enterprise; (iv) American needs additional time to negotiate the terms of a chapter 11 plan; (v) American is continuing the process of refining its business plan with the UCC; (vi) American is continuing to work with the UCC and with the committee of retired employees to address and resolve American’s retiree health and life insurance benefits; and (vii) American has been paying post petition obligations as they become due.
 
The motion is scheduled for hearing on February 14, 2013 at 11:00 a.m. (Eastern Time) and the objection deadline is February 7, 2013 at 4:00 p.m. (Eastern Time).
 
Lowenstein Sandler LLP
Sharon L. Levine
S. Jason Teele
Paul Kizel
  rushessay.com review

January 23, 2013

Summary of January 23, 2013 Bankruptcy Court Hearing Regarding Retiree Benefits Issues

The bankruptcy court heard argument at a hearing held on January 23, 2013 at 2:00 p.m., to consider American Airline's ("AA") motion (the "Motion") for summary judgment for a declaration that AA has the unilateral right to modify or terminate "retiree benefits" for all its retirees because the benefits were not legally "vested." It should be noted that the term "Retiree Benefits" does not refer to pension plan payments. It refers to payments by a company for retired employees and their spouses and dependents for medical, surgical, or hospital care benefits, or insurance benefits in the event of sickness, accident, disability or death. 
 

January 09, 2013

On January 9, 2013 at 11:00 AM a hearing was held to resolve several contested and uncontested matters.

The court first heard two motions for relief from the automatic stay filed by U.S. Bank Trust National Association.  The US Bank Trust National Association filed the first motion solely as trustee and security agent under the Indenture and Aircraft Security Agreement and filed the second motion as Loan Trustee and Pass Through Trustee for American Airlines 2009-1 EETC, and as Loan Trustee and Pass Through Trustee for American Airlines 2011-2 EETC.  The motions filed were opposed by Debtor.  The hearing was limited to the question of whether the automatic stay should apply.  Judge Lane reserved on this motion.

December 24, 2012

Attached are copies of the two orders that were entered by Judge Lane authorizing American Eagle Airlines, Inc. and Executive Airlines , Inc. to enter into collective bargaining and related agreements with the TWU represented (A) fleet service clerks, aircraft maintenance and related, and ground school instructors and (B) dispatchers.

View order one
View order two

December 19, 2012

On December 19, 2012, Judge Lane granted the debtors’ motion seeking entry of an order finding that amendment of American Airlines, Inc. Pilot Retirement Benefit Program Fixed Income Plan to eliminate lump sum and installment forms of benefits is necessary to avoid termination of the plan. As previously noted, the Supplement B Pilot Beneficiaries filed an objection to the Debtors’ motion on the grounds that the elimination of the lump sum form of benefit is not necessary to avoid termination of the plan as its retention would not cause a wave of retirement of pilots. The Beneficiaries also argue that elimination of the benefit without negotiation and conferral with the covered pilots would violate the terms of the Supplement B Pilot’s agreement with American. The question of whether American is entitled to perform any action to diminish the pay or benefits of the Supplement B pilots without the pilots’ prior consent is currently on appeal before the District Court for the Southern District of New York and is the subject of a grievance filed by Supplement B Pilot Capt. Larry Scerba, on behalf of himself and all other American pilots hired prior to November 1, 1983. 

December 17, 2012

The debtors file their motion for court to give approval to AMR Eagle Holding Corporation, a subsidiary of AMR Corporation, to enter into new collective bargaining agreements (the “New CBAs”) with the Transport Workers Union of America (the “TWU”) pursuant to the terms of (a) that certain tentative agreement with the TWU Operations Coordinators and Flight Dispatchers (“Dispatchers”), ratified by the Dispatchers on December 17, 2012.
 
This matter is scheduled to be heard on December 21, 2012 at 1:30 PM Eastern, with objections, if any, due on December 19, 2012.

AMR Corporation and American Airlines, Inc.(collectively, the "Debtors" or "American" or the "Company"), filed a Response of Debtors to Objections Motion of Debtors for Entry of Order Pursuant to 11 U.S.C. Section 363(b) and Treas. Reg. Section 1.411(d)-4, Q&A-2(b)(2)(xii) ("Regulation") Finding that Amendment of American Airlines, Inc. Pilot Retirement Benefit Program Fixed Income Plan ("Plan" or "Pilot Plan") to Eliminate Lump Sum and Installment Forms of Benefits ("Lump Sum Option") is Necessary to Avoid a Termination of the Plan. As previously posted, the Debtors seek authority to amend the Plan to eliminate the Lump Sum Option because of the fear that the availability of the Lump Sum Option upon American's emergence from chapter 11 would spark a wave of pilot retirements that would result in an operational crisis for the Company.

December 15, 2012

The debtors file their motion for court to give approval to AMR Eagle Holding Corporation, a subsidiary of AMR Corporation, to enter into new collective bargaining agreements (the “New CBAs”) with the Transport Workers Union of America (the “TWU”) pursuant to the terms of the agreements with the TWU Fleet Service Clerks (the “Fleet Service Clerks”), ratified by the Fleet Service Clerks on August 24, 2012, with the TWU Aircraft Maintenance Technicians, Inspectors, Ground Support Technicians, Aircraft Cleaners and Inventory Control Specialist (the “Aircraft Maintenance and Related”), ratified by the Aircraft Maintenance and Related on October 26, 2012 and with the TWU Ground School Instructors (the “Ground School Instructors”), ratified by the Ground School Instructors on October 19, 2012.
 

December 14, 2012

On December 12, 2012, the Supplement B Pilot Beneficiaries (the “Beneficiaries”) filed an objection (the “Objection”) to the debtors’ motion for entry of an order finding that amendment of American Airlines’ Pilot Retirement Benefit Program Fixed Income Plan to eliminate lump sum and installment forms of benefits is necessary to avoid a termination of the Plan (the “Debtors’ Motion”). The Beneficiaries believe that the Debtors’ Motion should be denied as to the Supplement B Pilots because the elimination of the lump sum and installment forms of benefits for those pilots is not necessary to avoid termination of the Plan. 

December 11, 2012

On December 11, 2012, at 11:00 a.m., the court held the omnibus hearing in the matter of In re AMR, Corp., et al., No. 11-15463. The court heard the motion of Ronald A. Katz Technology Licensing, L.P. (“Katz”) for an Order Deeming its Proof of Claim Timely Filed. Katz filed its motion on November 2, 2012, several months after the July 16, 2012 deadline for filing proofs of claim (the “Bar Date”). Katz asserts a claim based on a patent litigation pending for five years but currently stayed before the United States District Court for the Eastern District of Texas. Katz argues that it should be permitted to file a proof of claim after the Bar Date on the grounds that it did not receive actual notice of the Bar Date, or in the alternative that its failure to timely file its proof of claim was the result of excusable neglect. The debtor opposed the motion on November 29, 2012 and maintain that Katz received actual notice, care of its attorney of record, and that Katz failed to provide sufficient evidence to rebut a presumption that actual notice was received. The court took the matter under advisement and indicated that it would issue an opinion in the near future.

Court Update Dec 10, 2012
December 10, 2012

As you may recall, on July 6, 2012. AMR filed a complaint asking the bankruptcy court to declare that none of AMR’s current retirees (both union or non-union) have a vested right to retiree medical benefits.  AMR asserts that under ERISA, the health and welfare benefits the debtors provide to current retirees (including TWU retirees) are welfare benefits and that these welfare benefits only vest where the debtors as the plan sponsor (1) promises to provide benefits for life and (2) do not reserve the right to modify or terminate those benefits. In order to vest benefits, AMR asserts that the benefit plans must provide in a specific written pledge to continue benefits for the remainder of the participants' lives. The debtors argue that statements merely describing the benefits to be provided and the current cost structure of the plan do not create a vested right to benefits. Therefore, AMR hopes the bankruptcy court will enter an order declaring that (1) the retiree health and welfare benefits the Debtors currently provide to union retirees, the pilot retirees, the TWU retirees, flight attendant retirees may be unilaterally modified by the debtors without an 1114 process. 

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