A US bankruptcy court judge has requested briefs on the impact of the US Department of Justice's (DOJ) challenge to American Airlines' proposed merger with US Airways to the carrier's reorganisation plan.
Judge Sean Lane of the US Bankruptcy Court for the Southern District of New York requested briefs from American and all of the parties involved in its Chapter 11 reorganisation on the impact to the Fort Worth-based carrier's bankruptcy, the "feasibility of the plan and the confirmation requirements", during a hearing to confirm American's reorganisation plan in New York today.
He says that in light of the DOJ's challenge in US District Court he has "lingering doubts" on confirming the plan.
Lane did not specify a timeline for the briefs.
"[The challenge is] not an impediment to this hearing going forward," says Stephen Karotkin, a partner at Weil, Gotshal & Manges representing American in its bankruptcy proceedings, at the hearing. "Until that lawsuit is solved it is an impediment to closing of the transaction."
Lane says that he considered postponing the confirmation hearing upon hearing of the DOJ's challenge on and receiving confirmation that American wanted to proceed with the hearing on 13 August.
Both American and US Airways, as well as the DOJ with attorney generals from six states, have said that they plan to take the case to court with limited allowances for an out-of-court settlement.
"We're litigating this case, period," said Richard Parker, a partner at O'Melveny & Myers working on the case for the airlines, on 14 August.
His rhetoric echoed that of DOJ assistant attorney general in charge of the its antitrust division, Bill Baer, a day earlier when he said: "We think the right solution here is a full-stop injunction."