Judge Gives Green Light for American Air Exit from Bankruptcy and Merger with US Airways
In a hearing Wednesday morning, a bankruptcy court judge ruled that American Airlines may exit bankruptcy “without delay” and merge with US Airways. The merger will create the world’s largest airline.
U.S. Bankruptcy Judge Sean Lane, who was determined to issue a ruling before the Thanksgiving holiday, delivered a bench decision that was read aloud by the judge to the parties and their lawyers.
The court ruled that the settlement by American and US Airways with the Department of Justice, which had sought to block the merger, did not require American to ask its creditors and shareholders to ratify the modified plan, stating it was “fair and equitable and in the best interests of the estate.”
After the hearing, American Airlines said it will close the deal, merge with US Airways, and exit from bankruptcy on December 9, 2013.
In a hearing on Monday, Lane had heard statements from attorneys for the two airlines as well as American’s unsecured creditors committee, in favor of the merger.
In addition, Judge Lane ruled that the plaintiffs in a private antitrust suit filed earlier this year by a group of airline passengers and travel agents that sought to block the merger did not demonstrate that the merger would irreparably harm them and he denied their request for a temporary restraining order blocking the merger.
He left the door open for the plaintiffs to seek subsequent divestitures from the combined company after the merger has taken place if they are able to prove damages to themselves.
American’s attorneys had argued that the suit lacks sufficient evidence of irreparable harm done to the plaintiffs and cites the potential harm that a delay in the merger would cause the two airlines as well as to its creditors and shareholders.
(Photo: Accura Media Group)