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Despite stalled growth in China, Brazil and Russia, a wave of newly middle-class travelers from the BRICs and beyond will start visiting international destinations in the coming decades — dwarfing the numbers we’ve seen thus far.
Since American’s reorganization plan is contingent on the merger, the judge is seemingly being prudent by expressing doubts about approving a plan that in reality may have to be drastically rewritten.
The request suggested Judge Sean Lane would hold off on approving AMR’s plan at a hearing in U.S. bankruptcy court in New York on Thursday.
Lane said he had “lingering doubts” as to whether it was appropriate to confirm the plan. He told AMR, its creditors and other parties in the bankruptcy to submit briefs on the issue.
AMR, the parent company of American Airlines, has been in bankruptcy since 2011 and worked out an $11 billion merger with US Airways as part of its plan to exit Chapter 11.
The antitrust issue will likely take months to resolve. If the Justice Department ultimately succeeds in blocking the merger, it would put AMR’s restructuring back at square one, requiring it to forge new strategies for paying back creditors.
Experts have said stockholders, who would receive a 3.5 percent stake in the new American entity under the merger, would likely be wiped out under any plan that excludes a merger.
Lane had already scheduled a hearing to approve the plan when the Justice Department filed an antitrust lawsuit on Tuesday seeking to block the merger. The lawsuit said the merger would reduce competition and increase fares.
AMR and US Airways have vowed to fight the lawsuit, and AMR argued on Thursday that Lane can still approve the bankruptcy plan because it is contingent on antitrust approval. “Until that lawsuit is resolved, it is an impediment to the closing of the transaction,” said Stephen Karotkin, an attorney for AMR.
But Lane said he needed the parties to help determine the most prudent action in the context of his authority as a bankruptcy judge.
“I need people to provide me with some authority, one way or the other,” Lane said. “That’s what I’m really interested in.”
Lane said he had strongly considered canceling Thursday’s hearing but decided to give parties an open forum to discuss the antitrust challenge.
Absent the antitrust challenge, Thursday’s hearing would have been the final step in AMR’s exiting bankruptcy and implementing its merger.
The bankruptcy plan has the support of nearly all of AMR’s key creditors, and Lane had already signed off on the merger and an initial outline of the restructuring plan that incorporates it.
Daniel Wall, an attorney for US Airways, urged Lane not to defer to the antitrust case, saying the Justice Department’s timing, just two days before the final hearing, was “audacity.”
“Don’t allow the bankruptcy issues, which are complicated enough on their own, to be held hostage to very late-filed antitrust issues,” Wall said.
(Reporting by Nick Brown). Copyright (2013) Thomson Reuters. Click for restrictions.