A judge asked AMR Corp for guidance on whether he should approve its plan to exit bankruptcy, in light of an antitrust challenge to its planned merger with US Airways Group.
The request suggested Judge Sean Lane would hold off on approving AMR’s plan at a hearing in US bankruptcy court in New York.
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 per cent 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.
