American Airlines and the unsecured creditors’ committee in its Chapter 11 case jointly asked the bankruptcy court overseeing the proceedings to again extend the exclusive period during which only the company can file a reorganization plan, this time an additional 42 days, to March 11, 2013, saying it would use the additional time “to develop and build consensus for a feasible Chapter 11 plan.”
American and the panel also want to extend the corresponding period to solicit acceptances to a reorganization plan, though May 10, 2013.
The company’s current exclusivity period is set to expire on Jan. 27. Last July, the company won an exclusivity extension through Dec. 28, but in October, significantly before that deadline, American and the creditors’ committee filed a joint motion, and ultimately were granted, an extension of the exclusivity period to its current Jan. 27 deadline.
The company said at the time it required the additional exclusivity because it had spent a considerable amount of time during its Chapter 11 on issues other than developing a reorganization plan, citing its resolution of labor issues with some 55,000 unionized employees.
As reported, the company has concluded new labor pacts with two of its unions, and recently reached a final, tentative agreement with its pilots unions, the Allied Pilots Association, that is currently before the members for a vote that is expected to be concluded by Dec. 7.
In requesting the extension, the company and the committee cited, among other factors, the size and complexity of the case, again citing the significant time spent on labor issues. And as with prior exclusivity requests, the company and the panel cited their “collaborative, cooperative, [and] viable working relationship.”
According to the Nov. 30 filing, “American is continuing the process of refining its business plan with the [creditors’ committee],” and American and the panel “are pursuing their collaborative review of strategic alternatives that might be beneficial to American’s economic stakeholders and the enterprise,” which is typically a legal filings’ euphemism for a potential merger. More specifically, the motion said that American has “exchanged confidential information pursuant to a nondisclosure agreement with US Airways Group as part of the strategic alternative evaluations.”
US Airways has publicly sought a merger with American, and is considered to be American’s most likely partner should it decide to go that route to emerge from Chapter 11.
The motion also said American was working with the PBGC “regarding the freezing of American’s defined benefit pension programs.”
A hearing is scheduled for Dec. 19.
If granted, this would be American’s fourth exclusivity extension. The company filed for Chapter 11 on Nov. 29, 2011. Under the Bankruptcy Code, the maximum amount of time for which a company can maintain the exclusive right to file a reorganization plan is 18 months, with 20 months the maximum exclusivity period for soliciting acceptances to a plan. For American, those deadlines would fall on May 29 and July 29, respectively. – Alan Zimmerman