Trustee Objects to $20 Million Payout to American Airlines Executive

Trustee Objects to $20 Million Payout to American Airlines Executive

American Airlines Executive, Tom Horton to Receive Severance Package?

The bankruptcy of American Airlines has culminated in a multi billion-dollar merger between the distressed carrier and US Airways. While the bankruptcy story may have a happy ending for many workers impacted by the proceedings, there are still several loose ends to tie up, and the trustee assigned to the case is objecting to a proposed $19.9 million payout to the company’s top executive.

Trustee Tracy Hope Davis filed a court document demanding the American Airlines explain the severance package it plans to pay American Airlines executive, CEO Tom Horton, who will lose his current position as CEO once the planned merger is finalized. The company recently changed its policy to extend severance to Horton only after he loses his current position. Davis said the company is legally required to explain the change and its legality under the Bankruptcy Code.

Davis also noted wrote that bankruptcy law bars bonuses and severances “without factual and circumstantial justification.”

However, the company said the objection has “no merit,” and argued that it is not required to explain its payment policies because the newly reorganized company will issue the severance package, not the current American Airlines company. Bankruptcy Judge Sean Lane is expected to rule on the matter on March 27.