Court Updates

December 22, 2011

The following motions, which were uncontested, have been approved by the Court:

  • Motion Authorizing Debtors to Pay Prepetition Obligations Owed to Foreign Creditors (final order)
  • Motion Authorizing the Debtors To Pay and Honor Prepetition Obligations to Customers and to Otherwise Continue Customer Programs and Practices in the Ordinary Course of Business (final order)
  • Motion Authorizing Payment of Prepetition (i) Claims of Independent Contractors and (ii) Claims Related to Improvement Project (final order)
  • Motion Authorizing But Not Directing, Debtors to (A) Continue Their Insurance Programs, and (B) Pay All Insurance Obligations, (ii) Modifying the Automatic Stay with Respect to Workers Compensation Claims, and (iii) Authorizing and Directing Financial Institutions to Honor and Process Related Checks and Transfers (final order)
  • Motion Approving Assumption of Certain Executory Credit Card and Payment Agreements (final order)
December 22, 2011

Reclamation Demands

Under the Bankruptcy Code, if certain conditions are met, a creditor has the right to reclaim goods delivered to a debtor within 45 days of the debtor’s bankruptcy filing. Goodrich Corporation filed a reclamation demand for goods valued at $2,420,225.03.

Objections to the Procedures Motion

On December 12, 2011, the Debtors filed a motion seeking to establish procedures for approval of certain postpetition aircraft purchases from The Boeing Company (“Boeing”) and certain related sale leaseback or financing transactions (the “Procedures Motion”). According to the Procedures Motion, the Debtors have arrangements to buy 32 aircraft from time to time from Boeing pursuant to prepetition purchase agreements with Boeing. Boeing delivered and American paid for one aircraft (“Aircraft #1”), and Boeing is scheduled to deliver another aircraft on December 13, 2011 (“Aircraft #2”). Boeing’s delivery of additional aircraft through 2012 is scheduled to begin on January 10, 2012. In order to avoid the time and expense of seeking individual orders of the Court with respect to each delivery of aircraft, the Debtors have developed procedures for the purchase of aircraft from Boeing and their entry into related sale leaseback or financing transactions for deliveries through the period ending December 31, 2012. In addition to approving the proposed procedures, the Debtors have requested that the Court ratify the purchases of Aircraft #1 and Aircraft #2.
 

December 20, 2011

Reclamation Demands

Under the Bankruptcy Code, if certain conditions are met, a creditor has the right to reclaim goods delivered to a debtor within 45 days of the debtor’s bankruptcy filing. Numerous creditors have filed reclamation demands with the Bankruptcy Court.

1. Brown Printing Company filed notice that it had served its written demand for reclamation of goods on December 14, 2011.

2. BE Aerospace, Inc. filed a reclamation demand for goods valued at $1,847,702.21.

3. Otto Herman, Inc. filed a reclamation demand for goods consisting of industrial, janitorial, plumbing-electrical and HVAC supplies valued at $358,577.56.

4. Barnes Distribution North America filed notice that it had served its written demand for reclamation of goods on December 15, 2011.

December 19, 2011

Limited Objection of the Airport Group to the Debtors’ Tax Motion

 
The City of Philadelphia, Division of Aviation (the owner/operator of the Philadelphia International Airport); the Allegheny County Airport Authority (owner/operator of the Pittsburgh International Airport); the Wayne County Airport Authority (owner/operator of the Detroit International Airport); the Metropolitan Airports Commission (owner/operator of the Minneapolis-St. Paul International Airport); the City of Atlanta, Department of Aviation (owner/operator of the Hartsfield-Jackson Atlanta International Airport); The City of Cleveland Tucson Airport Authority (owner/operator of the Cleveland International Airport); the Memphis-Shelby County Airport Authority (owner/operator of the Memphis International Airport); the Tucson Airport Authority (owner/operator of the Tucson International Airport) (collectively, the “Airport Group”) filed a limited objection to the Debtors’ Tax Motion. 
December 15, 2011

Dallas/Fort Worth International Airport Board’s Objection to the Debtors’ Request for Entry of a Final Order on the Debtors’ Tax Motion
 
Dallas/Fort Worth International Airport Board (“DFWIAB”) filed an objection to the Debtors’ motion for entry of an order authorizing the Debtors’ to pay prepetition taxes and assessments and authorizing financial institutions to honor and processes related checks and transfers (the “Tax Motion”).  According to the objection, DFWIAB is the operator and manager of the Dallas/Fort Worth Airport (“DFW Airport”) where the Debtors maintain significant operations.

December 13, 2011

Stipulation between American Airlines and Morgan Stanley Capital Group Inc.
 
The Debtors have proposed to enter into a stipulation with Morgan Stanley Capital Group Inc. (“Morgan Stanley”).  According to papers filed with the Court, Morgan Stanley and American Airlines, Inc. (“American”) are parties to a derivatives contract (the “Contract”) that allows American to hedge certain of its jet fuel costs.  The Court has already authorized American to perform under these types of contracts, but Morgan Stanley has alleged that the bankruptcy filing constitutes an event of default under the Contract and, therefore, Morgan Stanley has a right to terminate the Contract.

December 13, 2011

The Court has granted the following motions:

  • Motion of Debtors for Entry of Order Pursuant to 11 U.S.C. §§ 105(a) and 546(c) Establishing and Implementing Exclusive and Global Procedures for Treatment of Reclamation Claims [Docket No. 13]
  • Motion of Debtors for Entry of Order Pursuant to 11 U.S.C. §§ 105(a) and 503(b)(9) Establishing Procedures for the Assertion, Resolution, and Satisfaction of Claims Asserted Pursuant to 11 U.S.C. § 503(b)(9) [Docket No. 14]
  • Motion of Debtors for Entry of Order Pursuant to 11 U.S.C. § 105(a) Establishing Procedures for Treatment of Claims Pursuant to Perishable Agricultural Commodities Act [Docket No. 15]

The Committee consented to the forms of order for all three motions and all objections have been resolved and withdrawn.  The Judge had minor comments regarding the reclamation procedures motion and PACA motion which will be resolved through revised orders to be submitted to the Court this afternoon.

The hearing has been concluded.

December 11, 2011

On the day the Debtors filed their chapter 11 cases, they also filed a motion asking the Bankruptcy Court for permission to assume (i.e. "honor") certain contracts with third parties. The motion seeks to assume hundreds of agreements that fall into the categories listed below.  On Friday, the Debtors added to the list of agreements being assumed, agreements with the International Air Transport Association exhibit.
 
The motion deals with agreements that fall into the following categories:
 

  • "Interline Agreements" - Agreements between the Debtors and other airlines under which they agree to accept each other’s tickets for transportation over the other airlines’ systems; 
  • "Clearinghouse Agreements" - Agreements under which the Debtors settle their mutual payment obligations arising under many of the Interline Agreements with other participants of the Airline Clearing House and the International Air Transport Association Clearing House;
  • "ARC Agreements" - Agreements involving the Airline Reporting Corporation which serves as a clearing house to enable the refund claims of, and commissions owed to, travel agencies to be offset against the funds owed to airlines from travel agencies and corporate travel departments;
  • "Billing and Settlement Plans" - Agreements administered by International Air Transport Association to facilitate sales by foreign travel agents of the Debtors’ transportation services and are the means by which payments for tickets sold by foreign travel agents are settled;
  • "Cargo Agreements" - Agreements under which cargo sales agents sell the Debtors’ cargo services;
  • "Oneworld Agreements" - Agreements which govern the operation of the Oneworld Alliance (a platform for cooperative marketing efforts among some of the largest airlines in the world) and the relationships of the participating carriers; and
  • "Alliance Agreements" - Certain code share agreements, alliance agreements, lounge access agreements, special prorate agreements, joint business agreements, and frequent flyer program agreements with certain airlines and rail companies whereby these airlines and rail companies offer, among other things, transportation of passengers and cargo under American Airlines’ “AA” flight designator code, and under which American Airlines, in certain circumstances, carries passengers under other airlines’ designator code.
December 10, 2011

The Debtors filed a Notice of Presentment of a proposed order establishing certain notice, case management and other administrative procedures (the "Proposed Order").  The Proposed Order provides certain procedures for the general administration of the Debtors' cases, including, among other things, pleading requirements and service requirements.  The Proposed Order also provides procedures with regard to scheduling and authorizes the Debtors to schedule omnibus hearing which dates shall be posted on the Debtors' case website (http://amrcaseinfo.com). 

The Debtors subsequently filed an amended Proposed Order which was amended only to reflect new omnibus hearing dates. The first four omnibus hearings will be held on (i)December 22, 2011 at 10:00 a.m. (ET); (ii)January 27, 2012 at 10:00 a.m. (ET); (iii)February 29, 2012 at 10:00 a.m. (ET); and (iv) March 22, 2012 at 2:00 p.m. (ET). The Debtors will be required to file agenda letters with the Court two days before a scheduled hearing. The Debtors will present the amended Proposed Order to the Court on December 15, 2011 at 12:00 noon (ET). Objections are due by December 15, 2011 at 11:30 a.m. (ET).

Docket Update 12/7/11
December 07, 2011

Goodrich Corporation ("Goodrich") filed a limited objection to the Debtors' motion for entry of an order establishing and implementing exclusive and global procedures for the treatment of reclamation claims (the "Reclamation Procedures Motion") and the Debtors' motion for entry of an order establishing procedures for the assertion, resolution and satisfaction of claims asserted pursuant to section 503(b)(9) of the Bankruptcy Code (the "503(b)(9) Procedures Motion").  Under certain circumstances, reclamation permits a vendor to take back (reclaim) good delivered within up to 45 days before the filing of the bankruptcy cases. Bankruptcy Code section 503(b)(9) grants vendors an administrative expense priority over general unsecured claims for goods delivered within the 20 days prior to the filing of the bankruptcy cases. Goodrich argues that the proposed forms of order submitted with each of the motions may be interpreted and enforced such that any reclamation demand or proof of 503(b)(9) claims would be considered non-conforming, not timely received and/or otherwise flawed and possibly expunged based on the claimant's failure to provide all of the information and/or each such item listed as required therein, regardless of whether the claimant has the  information or documentation available to it.  Goodrich requests that the proposed orders include a clarification that certain required information listed in the Reclamation Procedures Motion and the 503(b)(9) Procedures Motion be required only to the extent already available or known to the reclamation and/or 503(b)(9) claimant.

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