American Airlines’ $388M Bankruptcy Price Tag Approved

American Airlines’ $388M Bankruptcy Price Tag Approved

U.S. Bankruptcy Judge Sean Lane signed off on American Airlines’ nearly $400 million bill for bankruptcy on July 1, according to The Wall Street Journal. The figure, which was recommended by a fee examiner, includes $16.3 million in expenses and $371.7 million in fees to 47 different firms.

American Airlines filed for protection under Chapter 11 of the bankruptcy law in November of 2011, and didn’t exit until 23 months later, when it merged with US Airways Group Inc. to create the world’s largest airline, the Journal explained. The Justice Department opposed the merger at first, but then later approved it. American Airlines also managed to use its bankruptcy proceedings to negotiate serious concessions from its labor unions, resulting in a $1 billion reduction in annual labor costs.

“People should be compensated for hard work on challenging issues, but at the same time, everyone needs to be mindful of the expense and the cost to the estate,” Lane said at the hearing, according to the news source. “I think it’s important to understand the complexity of this case. I think there are people who start to look at fee numbers in bankruptcy and take the wrong message.”

The largest fee – $74.5 million – went to Weil, Gotshal & Manges, American Airlines’ lead bankruptcy law firm, according to the Associated Press. The next biggest recipients were Debevoise & Plimpton, $53.7 million; Deloitte Financial Advisory Services, $32.6 million; Rothschild Inc., $29.5 million; Skadden, Arps, Slate, Meagher & Flom, $27.8 million; and Paul Hastings, $26.2 million. Six other firms would receive at least $7 million under the examiner’s recommendations, and expenses for all firms would be paid, totalling $16.3 million.

To find out more about American Airlines and their fall into bankruptcy, mergers with US-Airways, and other events of this airline, check out my series of posts regarding American Airlines bankruptcy.

If you have any questions about this post or would like to discuss your company’s creditors’ rights and bankruptcy matters , please contact me, Joel R. Glucksman at ScarinciHollenbeck.com.