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January 25, 2012 7:38 PM

Latham Advising US Airways on Possible AMR Bankruptcy Bid

Posted by Brian Baxter

US Airways Group, the fifth-largest airline in the country, has retained Latham & Watkins for a potential merger with the bankrupt parent of American Airlines.

W. Douglas Parker, the CEO of US Airways, told analysts and investors on a conference call Wednesday that his airline had hired Latham, financial adviser Barclays, and restructuring adviser Millstein & Co—founded last year by former U.S. Department of the Treasury restructuring chief and ex–Cleary Gottlieb Steen & Hamilton partner James Millstein—to evaluate a tie-up with AMR.

Latham's selection by US Airways is unsurprising given that the Tempe, Arizona–based airline named former Latham partner Paul Galleberg to become its vice president of legal affairs last year. US Airways had turned to Latham for litigation and finance work even before Galleberg's hiring.

A Latham spokesman confirmed the firm's representation of US Airways, but declined to identify the lead partners working on the matter. Should US Airways and Latham insert themselves into the AMR bankruptcy, they will join an increasingly crowded list of lawyers representing various parties in the case.

When AMR filed for bankruptcy in November, the Fort Worth–based parent company of American Airlines was advised by several firms as it began Chapter 11 proceedings in Manhattan.

Aside from AMR's lead bankruptcy counsel at Weil, Gotshal & Manges, the airline is seeking to employ Debevoise & Plimpton as special aircraft counsel, Haynes and Boone as special conflicts counsel, Morgan, Lewis & Bockius and Paul Hastings as special labor counsel, and the Groom Law Group as special benefits counsel.

Court records show that Weil received $9.9 million from AMR in the year prior to its bankruptcy filing, including a $2.2 million retainer for the firm's work in the company's Chapter 11 case. Debevoise was paid a $2.1 million retainer, the Groom Law Group a $130,000 retainer, and Paul Hastings received advance payments totaling $1 million.

Morgan Lewis stated in court filings that it has not yet received any compensation, and no documents have yet been filed by Haynes and Boone, which is advising AMR on its proposed spin-off of regional carrier American Eagle.

This week the U.S. trustee's office raised objections to AMR's request to bring on the additional legal firepower, Bloomberg reports, noting that the scope of the services provided by the bankrupt airlines' legal advisers could be duplicative.

In December, Skadden, Arps, Slate, Meagher & Flom picked up the role advising AMR's official committee of unsecured creditors, according to our previous reports.

Once the largest airline in the United States, AMR's American Airlines has now slipped to become the nation's third-largest domestic carrier. US Airways, which has flown its way back to profitability, is now one of several suitors circling American Airlines in Chapter 11.

 

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