Debevoise & Plimpton

Second Circuit affirms bankruptcy court ruling authorising American Airlines to repay $1.3bn debt without make-whole

On 12 September 2013, the US Court of Appeals for the Second Circuit held that American Airlines, Inc. (American) had the right to repay $1.3bn (£808m) in debt (Notes) without payment of a make-whole amount. 

The Second Circuit dismissed all of the arguments raised by US Bank Trust National Association (US Bank), the trustee for the Noteholders, on appeal, and affirmed the decision of Judge Sean Lane of the Bankruptcy Court for the Southern District of New York in all respects. The Second Circuit’s ruling is grounded in a straightforward contractual interpretation of the specific indentures at issue and reaffirms the importance of properly documenting the parties’ intentions at the time of drafting.

On 29 November 2011, AMR Corp and a number of its subsidiaries, including American, filed voluntary petitions for relief under chapter 11 of the Bankruptcy Code. At the time of the filing, American was party to three separate aircraft financing transactions, each of which was secured by a different pool of aircraft…

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