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October 19, 2012

Hedge funds says AMR is not being "sufficiently transparent" in restructuring process

Two hedge funds that hold some of AMR Corp.'s debt say the parent company of American Airlines is not being "sufficiently transparent" as it restructures in the bankruptcy process.

In a letter sent to AMR chief executive Tom Horton on Thursday, Appaloosa Management and Marathon Asset Management say AMR is providing confidential information to a creditor group, excluding other creditors from the reorganization. The letter was first reported in the Wall Street Journal.

"Allowing a limited group of creditors to influence the debtors’ restructuring process without input from a broader representation of creditors is not only inappropriate, but also risks the loss of value of the debtors’ estates for all of their constituents as a whole," Bloomberg News reported, adding that the letter said The structure of AMR’s reorganization “can only be achieved through a transparent process that engages all major stakeholders, not just parties that have agreed to support an alternative that may be preferred by” the company’s management.

AMR currently has a non-disclosure agreement with US Airways, which wants to merge with American. The Fort Worth company also recently asked U.S. Bankruptcy Judge Sean Lane for a one month extension to file a restructuring plan with the court. A hearing is scheduled for Oct. 30.

UPDATE: American spokesman Mike Trevino issued this statement, "Our objective, through strategic review of all alternatives is appropriately focused solely on creating maximum value for all stakeholders."

-Andrea Ahles


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So... AMR should violate its non-disclosure agreements to make the hedge fund robber barons happy?

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