Articles Detail

July 30, 2012

As you may recall, AMR filed a complaint asking the Bankruptcy Court to declare that none of AMR’s current retirees (both union and non-union) have a vested right to retiree medical benefits.  Under ERISA, the health and welfare benefits the debtors provide to current 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) does not reserve for its right to modify or terminate those benefits. In order to vest benefits, the benefit plan 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 seeks 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.  If the relief requested is granted than the debtors would have no obligation to go through a section 1114 process - although it remains to be seen whether the filing of this action is intended to provide the debtors with leverage in connection with the 1114 committee.

AMR asked the court to allow it to file for summary judgment without first allowing for discovery, arguing that the only issues raised in this complaint are legal and not factual. The section 1114 committee responded that fact discovery is appropriate and should be permitted here. (A copy of the July 30, 2012 1114 committee letter is attached - perhaps attach a link). The pre-motion conference on AMR’s summary judgment motion in respect of AMR Corp. v. Committee of Retired Employees, Adv. Pro. No. 12-07144 is currently scheduled to take place on Tuesday, July 31 at 10:30 a.m. (Eastern).

Lowenstein Sandler PC
Sharon L. Levine