The Debtors’ filed a Sixth Omnibus Motion of Debtors for Entry of Order Pursuant to 11 U.S.C. § 365(a) Authorizing Rejection of Certain Executory Contracts (Docket No. 1338).
According to the motion, over the years, in order to finance the costs of acquisition, construction, equipment, and improvement by American Airlines of certain airport facilities located at the Dallas/Fort Worth International Airport and the Alliance Airport, the Dallas/Fort Worth International Airport Facility Improvement Corporation (“DFWFIC”) and the Alliance Airport Authority, Inc. ( “AAA”), issued certain special facilities revenue bonds. In connection therewith, American Airlines entered into separate Facilities Agreements with DFWFIC and AAA relating to each series of special facilities revenue bonds issued by DFWFIC or AAA, respectively. To date, American Airlines is a party to seven Facilities Agreements with DFWFIC (collectively, the “DFW Facilities Agreements”) and two Facilities Agreements with AAA (collectively, the “AAA Facilities Agreements”).
Pursuant to each Facilities Agreement, American Airlines agreed to make payments sufficient in amounts to pay, when due, the principal of, and interest on, the special facility revenue bonds. Through separate guaranties, AMR Corp. or American Airlines has guaranteed American Airlines’ obligations to DFWFIC and AAA under the applicable Facilities Agreements. The DFWFIC and AAA have each assigned the payments under the Facilities Agreement to a bond trustee. Each Facilities Agreement terminates upon the payment in full of amounts outstanding on the applicable special facilities revenue bond series. Neither the DFWFIC nor AAA have outstanding material (if any) obligations remaining to American Airlines under the Facilities Agreements. Moreover, American Airlines’ rights to lease and use the premises and projects financed with the special facilities revenue bonds are governed by separate lease agreements. Specifically, the Debtors’ right to occupy certain premises located at the Dallas/Fort Worth International Airport (“DFW”) – including those constructed or improved with the proceeds of the special facilities revenue bonds – is governed by a number of different leases concerning various facilities at DFW (collectively, the “DFW Leases”). The Debtors’ right to occupy certain premises at the Alliance Airport (“AFW”) – including those constructed or improved with special facilities revenue bonds – is governed by the Lease Agreement by and between Alliance Airport Authority, Inc. and American Airlines, Inc., dated March 1, 1990 (the “AAA Lease”).1 In addition, the Debtors lease certain equipment financed using proceeds of special facilities revenue bonds pursuant to a separate master equipment lease.
The Debtors believe that the Facilities Agreements are not executory contracts, but, instead, are unsecured obligations of the Debtors. Nonetheless, to the extent the Court determines that the Facilities Agreements constitute executory contracts, the Debtors have filed the instant motion, in an abundance of caution, and seek to reject the Facilities Agreements.
Lowenstein Sandler PC
Sharon L. Levine
S. Jason Teele
Nicole Stefanelli