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Aircraft Parts, aviation, Distribution

AMR Bankrupcty: What Do You Need To Know as a Parts Vendor?

After months of warnings, it should have come as no surprise to anyone that yesterday, American Airlines parent company, AMR, filed for bankruptcy protection under Chapter 11 of the bankruptcy code.

This is a restructuring, so it is expected that AMR will emerge form the restructuring. Most aircraft parts are sold to airlines on credit, so many MARPA members may have concerns about their receivables owed by AMR.

It is normal during restructuring for post-filing transactions to receive a preference in the payment scheme. So if you sell AMR an aircraft component the day after the bankruptcy, then you are much more likely to get paid 100% of the transaction price than if you had sold the same part the day before the bankruptcy petition was filed.  If the restructuring is converted to a liquidation, then liquidity problems could make the preference meaningless.

Existing creditors may receive only a percentage of the amounts owed them or they may receive all of their outstanding receivables from AMR depending on the nature of the debt and the negotiations with the bankruptcy trustee. The bankruptcy trustee has the power to terminate contracts that are not favorable to AMR, and it has the power to make deals with irreplaceable vendors who demand payment of prior receivables in exchange for continued service. If you have a very large receivable outstanding with AMR, or if you have an ongoing relationship with AMR, then you should seriously consider hiring bankruptcy counsel with experience in negotiating post-filing remedies.

Ongoing case information will be posted to the AMR restructuring website.

Supplier and vendor inquiries are being routed through the Trading Partners Response Center (TPRC). You can call that response center at (866) 736-9011 (toll-free from the United States) or (703) 286-2757 (international toll).

For questions pertaining to the administration of this Chapter 11 case, you can contact AMR’s bankruptcy claims administrator, GCG, at:

AMR Corporation, et al.
c/o GCG
P.O. Box 9852
Dublin, Ohio 43107-5752
Toll-Free: (888) 285-9438
International Toll: (440) 389-7498
Email: amrcaseinfo@gcginc.com
Website: http://www.gcginc.com/

These contacts represent the best interests of the AMR estate, so if you have serious legal questions, or need to discuss strategies for defending your right to get paid, then you should seek the counsel of a qualified bankruptcy attorney.

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About Jason Dickstein

Mr. Dickstein is the President of the Washington Aviation Group, a Washington, DC-based aviation law firm. He represents several aviation trade associations, including the Aviation Suppliers Association, the Aircraft Electronics Association, the Aircraft Fleet Recycling Association and the Modification and Replacement Parts Association.

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