On the evening of April 15, 2013, American Airlines, Inc. and its affiliates (“AMR”) filed their proposed plan of reorganization (the “Plan”) and related disclosure statement (“Disclosure Statement”) with the Bankruptcy Court along with a motion (the “Motion”) requesting the Bankruptcy Court to establish various deadlines and hearing dates leading up to approval and confirmation of the Plan by the Bankruptcy Court (copies of the Plan, Disclosure Statement and Motion are attached hereto). The schedule proposed by AMR is as follows:
- Disclosure Statement Objection Deadline: May 23, 2013 at 4:00 p.m. (Eastern Time)
- Disclosure Statement Hearing: May 30, 2013 at 11:00 a.m. (Eastern Time)
- Solicitation Deadline: June 20, 2013 (date by which the voting materials must be distributed to all creditors and shareholders)
- Voting Deadline: July 29, 2013 (date by which creditors and shareholders must submit ballots to approve or reject the Plan)
- Plan Confirmation Objection Deadline: August 1, 2013 at 4:00 p.m. (Eastern Time)
- Voting Certification Deadline: August 8, 2013
- Deadline to Reply to Plan Objection(s): August 12, 2013 at 4:00 p.m. (Eastern Time)
- Plan Confirmation Hearing: August 15, 2013
The Plan is the document that governs AMR’s proposed restructuring and merger proposal to permit AMR to exit from the chapter 11 bankruptcy cases. Before becoming effective, the Plan must be approved by the Bankruptcy Court after creditors and shareholders have an opportunity to vote to accept or reject it.
Before creditors and shareholders may vote on the Plan and before the Bankruptcy Court can consider approval of the Plan, the Bankruptcy Court must first approve the Disclosure Statement. The Disclosure Statement is intended to provide creditors and shareholders who are entitled to vote on the Plan with information that, among other things, summarizes and describes (i) the Plan, (ii) events leading up the filing of the bankruptcy case, and (iii) events that have taken place during the bankruptcy case. As noted above, AMR has asked the Bankruptcy Court to schedule a hearing on May 30, 2013 to approve the Disclosure Statement.
Once the Bankruptcy Court approves the Disclosure Statement, creditors and shareholders entitled to vote on the Plan will be sent voting ballots and the Bankruptcy Court will then hold a hearing to consider approving the Plan. As noted, AMR is asking the Bankruptcy Court to schedule a hearing on August 15, 2013 to consider approval of the Plan. Upon approval of the Plan, and the satisfaction of other conditions-such as securing necessary government approvals and US Airways’ shareholder approval of the merger between AMR and US Airways Group, Inc.- the Plan will become effective. It is anticipated that the Plan will become effective sometime in the fall/last calendar quarter of 2013.
Generally, with respect to the claims of the TWU, on behalf of the AMR transport workers represented by the TWU, consistent with the terms of the collective bargain agreements entered into during the bankruptcy proceedings between the TWU and AMR, the Plan provides that the TWU will receive 4.8% of the stock of the reorganized American that is allocated for all general unsecured creditors of AMR. Based on information contained in the Disclosure Statement, and subject to various assumptions, it appears that AMR estimates that the 4.8% equity stake could have a value of between $300 million and $350 million. Again, it is important to note that this estimate of value is subject to various assumptions and risk factors.
Also, consistent with the terms of the collective bargaining agreements entered into between TWU and American Eagle during the bankruptcy proceedings, the Plan provides that the (i) $6.105 million general unsecured claim that was granted to the TWU, on behalf of TWU Dispatchers and (ii) the $5.905 million general unsecured claim that was granted to the TWU on behalf of TWU Fleet Service Clerks, M&R, and Ground School Instructors will receive shares of stock in reorganized American that AMR estimates (subject to various assumptions) will have a value equal to the amount of those claims. Again, it is important to note that the estimate of value is subject to various assumptions and risk factors.
The Plan also provides that all collective bargaining agreements entered into with the TWU and other unions during the bankruptcy cases will continue to exist in accordance with their terms.
We will continue to update you as the Plan confirmation process continues.
DEBTORS’ JOINT CHAPTER 11 PLAN
PROPOSED DISCLOSURE STATEMENT FOR DEBTORS’ JOINT CHAPTER 11 PLAN
MOTION TO APPROVE DISCLOSURE STATEMENT
Lowenstein Sandler LLP
Sharon L. Levine
Paul Kizel
S. Jason Teele
Tania Ingman