Official: AMR Bankrupt

[Frank Szabo]

Stupid question:
Is it a given that AMR is bankrupt? By simply filing for bankruptcy, can it be denied for whatever reason?

No.

USC (US Code) doesn't say a thing about "qualifiers" - a healthy company could file for reorganization.

 

[FWAAA]

Stupid question:
Is it a given that AMR is bankrupt? By simply filing for bankruptcy, can it be denied for whatever reason?

Frank's right. § 109 of the bankruptcy code does not contain any qualifiers for Ch 11 reorganization.

As an aside, can anyone argue with a straight face that a company with $24 billion of assets (including its borrowed cash balance of $4 billion) and $29 billion of debts, liabilities and other obligations is not bankrupt? Yes, I realize that Rock Salomon, the FA behind wewantourmoneyback.net is arguing that AA isn't really bankrupt, but he's just one fringe opinion.

 

[Buck]

Frank's right. § 109 of the bankruptcy code does not contain any qualifiers for Ch 11 reorganization.

As an aside, can anyone argue with a straight face that a company with $24 billion of assets (including its borrowed cash balance of $4 billion) and $29 billion of debts, liabilities and other obligations is not bankrupt? Yes, I realize that Rock Salomon, the FA behind wewantourmoneyback.net is arguing that AA isn't really bankrupt, but he's just one fringe opinion.

I object!!!​

Sorry if this is a repeat

 

[Buck]

American Gets Into Fighting Shape In Bankruptcy

TREFIS Team Analysis

Ok Eric and anybody else, the TREFIS data.......

 

[BoeingBoy]

First, it's their stock price forecast ($6.19/share) made before the bankruptcy filing - that's where the $2.1 billion market cap comes from (forecast price x # of shares outstanding). They just break the market cap down by the 4 major sources of revenue. Still, it's only one opinion of what the stock would do based on pre-bankruptcy analysis.

Jim

 

[Flying low]

Although we are facing very negative proceedings to our personal lives as a result of the Chapter 11 filing, there will be some entertaining reading from the attorneys.

Example:

Response to Lessor Objection of Motion to Reject Aircraft Leases of 24 aircraft at Roswell

"Paint them White"!
Too Funny

I sort of read that it's the "owners" of the jets that want them painted white, worn parts replaced and put them in airworthy condition.

 

[Buck]

I sort of read that it's the "owners" of the jets that want them painted white, worn parts replaced and put them in airworthy condition.

I think it is in original or as leased condition. I believe this is all accomplished on paper in the courts, although you could paint the aircraft. Can you imagine all of the Service Bullitens etc.. that have been performed?

 

[BoeingBoy]

I don't know what the leases/EETC documents actually say but I'd be surprised if the planes didn't have to be in airworthy condition. It probably goes without saying that an airplane being used is kept in airworthy condition (or restored to airworthy condition after a failure of some component). However, for any stored aircraft that aren't in airworthy condition AA will most likely have to return them to airworthy status. However, that doesn't necessarily mean replacing all "worn" parts with yellow tagged ones, painting the aircraft, replacing seats/etc.

Jim

 

[Flying low]

I don't know what the leases/EETC documents actually say but I'd be surprised if the planes didn't have to be in airworthy condition. It probably goes without saying that an airplane being used is kept in airworthy condition (or restored to airworthy condition after a failure of some component). However, for any stored aircraft that aren't in airworthy condition AA will most likely have to return them to airworthy status. However, that doesn't necessarily mean replacing all "worn" parts with yellow tagged ones, painting the aircraft, replacing seats/etc.

Jim

Pages 4&5 from the link Informer posted:
6. None of the Objections disputes the primary issue presented by the Motion:
whether the rejections are in the best interests of the Debtors’ estates. Instead, the Objecting
Parties argue that the words “surrender and return” in section 1110(c) of the Bankruptcy Code
impose on the Debtors a “comprehensive” obligation to comply with each and every “return

2 A comparison with the originally proposed form of order is annexed as Exhibit “B”.
3 The Debtors reserve their right to seek retroactive Effective Dates with respect to later motions. A bankruptcy
court has the authority to assign a retroactive rejection date when the balance of the equities favors such a
solution. BP Energy Co. v. Bethlehem Steel Corp., 2002 WL 31548723, at *3 (S.D.N.Y. Nov. 5, 2002). A
court may “abandon mechanical solutions in favor of the pliant reins of fairness,” see id., and take appropriate
action “to enforce or implement court orders or rules, or to prevent an abuse of process,” 11 U.S.C. § 105(a).
In In re Amber’s Stores, Inc., 193 B.R. 819, 827 (Bankr. N.D. Tex. 1996), the debtor similarly filed a motion to
reject a lease on the petition date. Under circumstances where the debtor received no benefit from such lease
and sought to reject it, the bankruptcy court refused to penalize the debtor for “the time lag between filing a
motion and the entry of an order by the court.” Id. The bankruptcy court approved the rejection under section
365(a) of the Bankruptcy Code and, based on the equities of the case, found it effective as of the date of the
notice of rejection. Id; see also BP Energy Co., at *6 (retroactive rejection where contract unfavorable in
market). See also In re At Home Corp., 392 F.3d at 1074–75 (court was “convinced that the opposition to this
relief is motivated by the landlord’s interest in running the administrative rent…. [rather than by] a concern to
get this indisputable right to start re-letting the premises as quickly as possible.”); In re Jamesway, 179 B.R.
33, 38 (Bankr. S.D.N.Y. 1995).

condition” in the applicable Leases or, alternatively, in conformity with “common market return
conditions”. For example, one or another of the Objecting Parties insists that the Debtors:
• Put the aircraft in airworthy condition.
• Replace all worn parts.
• Provide records and documents not required by the applicable Lease and deliver those
records and documents in a form and to a location specified by the Objecting Party.
• Obtain a current FAA certificate of airworthiness for the aircraft.
• Clean the aircraft by airline standards.
• Paint the aircraft white and remove all exterior markings.

 

[FWAAA]

I believe that the court permitted AA to reject the leases on the 24 aircraft without performing much (if any) of the maintenance requested by the owners. Here is the Order:

http://www.amrcaseinfo.com/pdflib/454_15463.pdf

ORDERED that if any of the Excess Leased Equipment happen to be nonserviceable, the Debtors are under no obligation to repair such Excess Leased Equipment to make them serviceable, subject, however, to the reservation of rights provisions below regarding the assertion of administrative priority claims and/or general unsecured claims for damages and maintenance condition status; and it is further . . .

Lessors can file a claim if they want to fight over unperformed maintenance.

 

[Buck]

I don't know what the leases/EETC documents actually say but I'd be surprised if the planes didn't have to be in airworthy condition. It probably goes without saying that an airplane being used is kept in airworthy condition (or restored to airworthy condition after a failure of some component). However, for any stored aircraft that aren't in airworthy condition AA will most likely have to return them to airworthy status. However, that doesn't necessarily mean replacing all "worn" parts with yellow tagged ones, painting the aircraft, replacing seats/etc.

Jim

Yes, if the company cannot afford the requirements, then what? I realize that affording the lease and things like paint are different, I just belive that the company and the lessor can come to an agreement at court.

 

[Buck]

Section 436(d)(2) of the Internal Revenue Code prohibits a defined benefit plan from paying an amount greater than the amount of a single life annuity benefit during any period in which the plan sponsor is a debtor in Chapter 11, unless the plan is 100 percent funded. The Plans are not 100 percent funded; therefore the Level Income, Installment Option and Lump Sum Option will not be available distribution forms if you have a benefit commencement date on or after the date of the Chapter 11 filing (November 29, 2011).


Does this IRS section have any relevancy to a pension in any state i.e. Frozen or Teminated or at the PBGC?

 

[FWAAA]

That section has no relevancy to any pensions other than the pilots' accelerated payment options. Basically, no more lump sum option for the pilots.

 

[Buck]

That section has no relevancy to any pensions other than the pilots' accelerated payment options. Basically, no more lump sum option for the pilots.

Not exactly, I received this as part of my pension required communication. I am not a pilot.

 

[BoeingBoy]

Receiving it and having it apply are two different things. Does your pension have any benefit payment options other than an annuity?

Jim