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Puckinflight

An all things aviation blog

I haven’t been following the AMR bankruptcy as much as I could be. Frankly, as with many court cases interest is high at the beginning and as people find out justice in the U.S. legal system comes slowly, interest trails off. That being said, in the U.S. unless there is a compelling interest to restrict information, all documents filed in court are public. The federal court system uses an online filing and docket system called PACER, www.PACER.gov. There for 10 cents per page you can view, download, and marvel at all the litigation documents filed in U.S. Federal Court.

Before we get to the filings in the AA case, I want to mention a few things. I know very little about bankruptcy law and how the system works. What I do know is that the court through the bankruptcy trustee has to approve expenses that the company in Ch.11 accrues. This means that from Boeing down to the contractor that cleans the lavs in Waco Airport, if they want to get paid the trustee has to say it is ok. This means that the American’s vendors and amounts they charge become public record. Let us draw back the curtain and have a look at American is spending money on today.

Tulsa World, a newspaper in Tulsa Oklahoma, has been following American’s bankruptcy filings. As Tulsa is a major maintenance base for AA, it is understandable that the local community is interested. American recently asked the courts permission to pay their legal advisors and other bankruptcy consultants. I am just going to hit the highlights, the full list can be found at the link on the bottom of the page. These expenses were incurred over a four month period and total over 77 million dollars.

Weil Gotshal & Manges LLP, Paul Hastings LLP, and Debevoise & Plimpton LLP accounted for about 36 million dollars in fees, half of that going to Weil. These are high power law firms known as “white shoe” firms in the legal community. Weil and Debevoise are both out of New York, no surprise considering that’s where American filed bankruptcy, and Paul Hastings is I believe based out of Los Angeles. Included on the list are consultant companies, aviation consultants, other law firms, and bankruptcy administrators.

77 million dollars is a lot of money even for high power representation. American is not going to have to do much to take out the champ, United Airlines. United after spending three years in bankruptcy, waiting for a government bailout, incurred fees of 335 million dollars over the course of the bankruptcy. http://usatoday30.usatoday.com/travel/news/2006-03-10-ual-bankruptcy-fees_x.htm. Right now, if spending levels stay the same American is on track to spend about 231 million dollars on fees a year. This is basically double what United spent eight years ago.

Well whatever happens with the AA bankruptcy one thing is certain, the lawyers are getting paid.

http://www.tulsaworld.com/business/article.aspx?subjectid=585&articleid=20121010_45_A1_CUTLIN286867&allcom=1&r=7724

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