Files Bankruptcy Protection Under Chapter 11
By Mike Mitchell
November 29, 2011 - American Airlines, Inc. announced
that its parent company, AMR Corporation, and certain
United States-based subsidiaries today voluntarily filed
for bankruptcy under Chapter 11 of the Bankruptcy Code.
American took this action in order to achieve a cost and debt structure that is competitive in the airline industry so that it can continue its operations. American expects to continue normal business operations throughout the reorganization process, and the business will continue to be operated by the Company's management.
States Chapter 11 reorganization process enables a company to
maintain normal business operations while it establishes a
competitive cost and debt structure. This action has no direct
legal impact on any American Airlines operations outside the
bankruptcy is available to every business, whether organized as
a corporation or sole proprietorship, and to individuals,
although it is most prominently used by corporate entities. In
contrast, Chapter 7 governs the process of a liquidation
bankruptcy, while Chapter 13 provides a reorganization process
for the majority of private individuals.
business is unable to service its debt or pay its creditors, the
business or its creditors can file with a federal bankruptcy
court for protection under either Chapter 7 or Chapter 11. In
Chapter 7, the business ceases operations, a trustee sells all
of its assets, and then distributes the proceeds to its
creditors. Any residual amount is returned to the owners of the
company. In Chapter 11, in most instances the debtor remains in
control of its business operations as a debtor in possession,
and is subject to the oversight and jurisdiction of the court.
Corporation And American Airlines announce a leadership
transition. The Board of Directors of AMR Corporation, the
parent of American Airlines, has named Thomas Horton chairman
and chief executive officer of the Company, succeeding Gerard
Arpey, who on Monday informed the Board of his decision to
retire. Horton will also succeed Arpey as chairman and chief
executive officer of American. Horton will continue to serve as
President of AMR and American. "Today, we entered a new
phase in the evolution of this great company with a talented and
experienced new leader, Tom Horton, succeeding Gerard Arpey, who
skillfully led our company through some of its most challenging
times," said Armando M. Codina, lead independent director of
"Today, we entered a new phase in the evolution of this great company with a talented and experienced new leader, Tom Horton, succeeding Gerard Arpey, who skillfully led our company through some of its most challenging times," said Armando M. Codina, lead independent director of AMR.
"Our Board decided that it was necessary to take this step now to restore the Company's profitability, operating flexibility, and financial strength. We are committed to working as quickly and efficiently as possible to appropriately restructure American so that it can emerge from Chapter 11 well-positioned to assure the Company's long term viability and its ability to compete effectively in the marketplace," Horton stated. He further stated "Achieving the competitive cost structure we need remains a key imperative in this process and, as one part of that, we plan to initiate further negotiations with all of our unions to reduce our labor costs to competitive levels."
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