Thursday, July 26, 2018 1:50:59 AM
Bear in mind the Section 1114 CoRE is claiming $1.367 billion (their estimated Present Value of claims) and that the DCR only has 25 million AAL shares worth just $955 million as of close of market 25-July ($38.19 stock price)
Below is the excerpt I took out from the Bankruptcy Reorg agreement:
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On July 1, 2013, AAL filed a motion to establish a disputed claims reserve. As that motion set forth, a condition to confirmation of the Bankruptcy Reorg Plan was that the claims subject to reserve not exceed $3.2 billion. Because the Retiree Benefit Claims would have made it very difficult, if not impossible, for AAL to meet the claims reserve condition, AAL argued that no reserve was necessary for the Retiree Benefit Claims.
3. To resolve the Retiree Committee’s objection to the reserve motion, AAL and the Retiree Committee agreed to a provision in the Disputed Claims Order that would relieve AAL of the obligation to reserve funds for the Retiree Benefit Claims—thereby eliminating an obstacle to confirmation of the Plan—but that also would require AAL to continue to provide benefits in accordance with Bankruptcy Code §1129(a)(13) “f the Court determines that all or any portion of any benefit claimed in the Retiree Claims [], if modified, would give rise to an Allowed Claim ….” (Bankr. Dkt. 9560 at 8; see also Bankr. Dkt. 9869 at 28.) In short, the “reserve” for the Retiree Benefit Claims was the requirement that AAL continue to pay retiree benefits post-confirmation.
Consistent with this agreement, AAL included a provision in their confirmed Plan that provided:
AAL intends to continue to prosecute the Retiree Adversary Proceeding, and to the extent the Retiree Adversary Proceeding has not been finally resolved by the Effective Date, New AAG shall continue to prosecute the Retiree Adversary Proceeding subsequent to the Effective Date. To the extent that AMR or New AAG, as applicable, are unsuccessful in whole or in part in obtaining the relief requested in the Retiree Adversary Proceeding, any remaining vested benefits shall be treated in accordance with the provisions of section 1129(a)(13) of the Bankruptcy Code. (Plan, §8.4(a).) The Confirmation Order contained similar language: Notwithstanding anything in this Confirmation Order to the contrary, if the Court determines that all or any portion of any benefit claimed in the proofs of claim filed by the Retiree Committee against AMR (Proof of Claim No. 12239) and against American (Proof of Claim No. 12893) (together, the “Retiree Claims”), if modified, would give rise to an Allowed Claim (the “Allowed Retiree Claim”),then AAL shall continue such retiree benefits (as such term is defined in section 1114 of the Bankruptcy Code) under the Plan for the group of affected retired employees covered by the Allowed Retiree Claim in accordance with the provisions of section 1129(a)(13) of the Bankruptcy Code.... (Confirmation Order, ¶15.)
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