Bankruptcy exit plan approved for Texas-based American Airlines

| Sep 16, 2013 | Bankruptcy |

No two bankruptcy cases are the same. Some may be relatively simple to deal with. Others may be complicated by additional litigation that can delay the process. The source of these challenges might be creditors that have filed suit to collect on what they claim is owed to them.

Avoiding such challenge can depend on timing. If the personal bankruptcy petition is filed before creditors take legal action, an automatic stay goes into effect that prevents them from hounding you by phone or putting on pressure through threats of wage garnishment, foreclosure or property repossession. This is the legal system’s way of making sure you have the window of opportunity you need to get out of debt and reclaim your financial footing.

The case of the bankruptcy action involving Fort Worth-based American Airlines Inc. offers an example from a business perspective of how complicated things can get. 

As readers may know, American is looking to merge with US Airways as part of plans to exit Chapter 11 bankruptcy. The merger would create the largest commercial air carrier in the world.

The two companies agreed to the action in February, but U.S. antitrust regulators have sought to block it, saying that it would hurt consumers. The result is that there have been two legal fights going on in separate courts.

Legal experts note that it’s not uncommon for bankruptcy courts to defer making decisions when there are antitrust questions in play, but that has not happened here.

Instead, the judge noted that the merger has broad support from American creditors, the boards and unions of both companies, US Airways stockholders and European regulators. Concerned that the consensus could erode if the merger plan is held up, he gave it the go-ahead.

Some observers say the bankruptcy court’s ruling is a good one for American. They say it clears the way for the airline to devote itself to defeating the anti-competition claims from regulators. 

Source: DallasNews.com, “Bankruptcy judge OKs American’s reorganization plan,” Sheryl Jean, Sept. 13, 2013