American Airlines Exits Chapter 11 Bankruptcy, With Conditions

It looks as though the Justice Department’s antitrust challenge wasn’t enough to stop American Airlines from exiting bankruptcy. As Linda Loyd reports for the Philadelphia Inquirer, the judge has allowed the exit to happen, provided that the Justice Department ultimately approves the American Airlines-US Airways Group merger.

It just so happens that this merger will result in the biggest airline in the world, according to the judge, leading to the Justice Department’s antitrust lawsuit, which complicated an already-complicated bankruptcy proceeding. As we wrote in August, one of the bankruptcy lawyers involved in the case had said: “Don’t allow the bankruptcy issues, which are complicated enough of their own, to be held hostage to very late-filed antitrust issues.”

With the judge’s recent decision, the bankruptcy issues – whether or not to allow American Airlines to exit bankruptcy – weren’t held hostage. But if the Justice Department wins its antitrust challenge, the case will go back to the bankruptcy judge.

Loyd quotes the judge: “No merger will occur unless and until there is regulatory approval.” This quote underscores the fact that bankruptcy law does not necessarily trump antitrust law. There are limits to what you can do in a Chapter 11 plan for reorganization, at least when it comes to giant mergers.

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American Airlines Exits Chapter 11 Bankruptcy, With Conditions