AMR Corporation (PINK:AAMRQ) Horton’s severance temporarily grounded
Northern, WI 03/28/2013 (avauncer) - AMR Corporation (PINK:AAMRQ) (Current:$4.02, Up by 1.51%) had filed for bankruptcy and under this appeal has also filed a restructuring plan that includes a merger with the US Airways Group, Inc (NYSE:LCC) (Current: $16.65, Up by 0.85%). The bankruptcy plan is still pending approval. Judge Sean Lane the U.S bankruptcy judge in Manhattan has stalled the approval and has asked American Airlines why Tom Horton, the company Chief Executive Officer’s severance pay should be approved. The $19.9 million severance that Horton is slated to receive has come under the scrutiny of the government bankruptcy watchdog.
Bankruptcy approval first
The Fort Worth, Texas-based American is asking Lane to approve its merger with
US Airways Group, Inc (NYSE:LCC). The merger will be considered complete only when AMR Corporation (PINK:AAMRQ)’s bankruptcy plan is approved and that should take around six months said an attorney for the company, Stephen Karotkin. Horton will be the Chairman of the newly formed company and Doug Parker will be the Chief Executive Officer. American is requesting that 50 percent of Horton’s severance be given in stock of the combined company and the other 50 percent will be cash.
At the court hearing Lane asked why the severance pay issue cannot be postponed to the time when AMR Corporation (PINK:AAMRQ)applies for approval of the reorganization plan. In effect the severance pay issue is holding up the merger plan of the two companies. Bankruptcy proceedings are monitored by the U.S Trustee and they have said that Horton’s severance is a straight violation of bankruptcy laws. American on the other hand says that the severance is entirely dependant on the finalization and closure of the merger and that the combined company will be paying them and not just AMR Corporation (PINK:AAMRQ)