A judge on Thursday said AMR Corp. (AAMRQ) can pay the legal and professional fees incurred by a group of hedge funds negotiating to provide financing for the American Airlines parent in the event it doesn't merge with another airline upon exiting bankruptcy.
Judge Sean H. Lane of the U.S. Bankruptcy Court in Manhattan gave AMR the right to pay the fees of the bondholder group and many other parties in AMR's case, but was careful to tell the company that it's expected to keep other financing options open.
"It's not to the exclusion of any other parties," Judge Lane said of the negotiations. Weil, Gotshal & Manges LLP's Harvey Miller, AMR's lead bankruptcy lawyer, confirmed that the talks aren't exclusive.
Last month, AMR requested to pay the fees and disclosed it is in talks with the hedge funds about financing that would help the company exit bankruptcy. The investors, who hold about $900 million in several types of AMR bonds, are negotiating exit financing in the $1 billion to $2 billion range, sources familiar with the talks said last month. The bondholders would also backstop the offering, sources said. Getting fees paid by the estate is common for parties in bankruptcy, as long as they make a "substantial contribution" in the case.- Bob Cox