© 2015 The Texas Lawbook.
By Mark Curriden
NEW YORK (June 24) – During 20 years in the corporate legal department at American Airlines, Associate General Counsel Kathryn Koorenny handled two cases that threatened the very existence of the Fort Worth-based company.
A decade later, the airline turned to Koorenny again to lead the company through bankruptcy. American Airlines’ Chapter 11 fiing is widely considered one of the most successful corporate reorganizations in U.S. history.
Last week, Koorenny started a new task: general counsel and managing director at New York-based AlixPartners, a billion-dollar global corporate consulting firm best known for crisis management, complex business turnarounds and, of course, its annual chili cook off.
“I figured my work at American was done,” she said in an interview with The Texas Lawbook. “Because of AlixPartners’ roots in restructuring, this position is ideal for me and my career experiences.”
Koorenny, a graduate of the University of Southern California’s Gould School of Law and mother of a 15-year-old daughter, will report directly to CEO Fred Crawford. She leads a corporate legal department of 15 lawyers. The company works with dozens of law firms in the U.S. and across the globe, including a handful in Texas.
AlixPartners, which has offices in Dallas and across four continents, started searching earlier this year for a new general counsel when long-time GC John J. Collins decided to step aside.
“I told them that Kathy has the perfect skillset for AlixPartners,” former American Airlines GC Gary Kennedy said. “There are not a lot of lawyers who have guided a publicly traded company through a major crisis like the 9/11 litigation, gained experience in all areas of international law and led a large and very successful corporate bankruptcy.
“Kathy’s experiences and her ability to stay calm and focused under extreme pressure when facing mammoth tasks like American’s bankruptcy makes her supremely valuable for a company like AlixPartners,” he said.
Koorenny will also lead the consulting firm’s risk management efforts.
“The world is increasingly complex and managing risk is critical,” she said. “Part of my job is to put together training programs to manage risks.
“The world changes everyday and we need to see how we can be best positioned for growth without being exposed to risks,” she continued.
Koorenny said the experience of litigating American’s bankruptcy processes between 2011 and 2013 was extremely painful. She and Kennedy hired Weil, Gotshal & Manges to be its outside bankruptcy counsel. The U.S. Bankruptcy judge appointed Skadden, Arps, Slate, Meagher & Flom to represent the creditors committee.
In the middle of bankruptcy, US Airways successfully put forward a bid to merge with American as part of American’s exit plan.
When the U.S. Department of Justice sued to block the merger, American hired Jones Day to handle its antitrust litigation.
While American Airlines spent, on average, about $500,000 a day in legal fees – an amount that Koorenny and Kennedy described as staggering – the company’s bankruptcy is widely considered a huge success. The team successfully negotiated a settlement with the DOJ and American exited bankruptcy with every creditor being paid 100 percent of the money owed to them.
“All the things I’ve done in my career, starting out as a lawyer at Gibson Dunn and then the amazing work at American, prepared me perfectly for this position at AlixPartners,” she said.
Koorenny said she has gotten to know New York very well because the 9/11 litigation and the bankruptcy case were both litigated in federal courts in New York City.
“I was used to being in New York two or three weeks a month, so it was an easy decision because of that to move here,” she said. “But we will continue to have a presence in Texas. Texas is and will always be home and a part of our life.”
Kennedy and others said that Koorenny was truly masterful as a lawyer in the minutes and days and months following the terrorist attacks of 9/11.
She attended an early morning meeting at American’s corporate headquarters on Sept. 11 when news came through that one of the company’s planes, a flight from Boston to Los Angeles, was off course and headed toward New York City.
Koorenny and others rushed to watch CNN.
“We knew right away that first plane was ours,” Koorenny said in an interview with The Texas Lawbook in 2013. “There was incredible emotion and sadness for all the victims. We lost aircraft carrying our colleagues and passengers. The aircraft, of course, have been replaced, but those we lost will forever be missed.
“But we also knew right away we had jobs to do,” she said.
Legal ethics experts later said that law schools and bar associations should study Koorenny as a role model for lawyers who need to vigorously represent their clients in a time of extreme crisis.
Almost immediately, Koorenny made phone calls to lawyers in New York, but few answered because phone lines were down or busy.
“We knew that things would move fast and we needed expert advice on protecting the interests of the company and acting strategically,” Koorenny said. “We knew we wanted trial lawyers, not just litigators. We knew we needed aviation experience. We also believed that trial lawyers with mass tort experience could be enormously valuable, since we expected that many claims could be asserted against the company.
“The 9/11 terrorist attacks were unprecedented,” Koorenny said. “Not only did our company face the grief and loss of employees, passengers and planes, but our industry was forever changed. If we could not get a limitation on liability for the events of 9/11, our company would lose access to capital markets and have a cloud of economic uncertainty hanging over it for the length of litigation.”
Lawyers say that Koorenny played a significant behind-the-scenes role advising the airline industry in its efforts to convince Congress to pass the Airline Transportation Safety and System Stabilization Act, which was designed to limit the liability of the airlines.
Many legal commentators initially claimed that American and United would be buried in litigation from the families of those who died on the airplanes or on the ground as a result of the crashes. That turned out to be wrong, as the federally financed Victim’s Compensation Fund covered nearly all of those claims.
As Kennedy has stated multiple times, “Kathy’s quiet and amazing work may have saved American Airlines. If I’m AlixPartners, she is exactly the kind of person I want as my general counsel. She will be a great face of the company.”
Of course, it is still unknown if Koorenny will be able to meet a core priority at AlixPartners: to be able to cook a world-class pot of chili. AlixPartners’ Eighth Annual Chili Challenge takes place this year Oct. 9. She said she’s hopes to start working on a vegetarian chili soon.
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