by Mark Curriden, Senior Legal Affairs Writer
NOVEMBER 29 — AMR Corporation’s filing for Chapter 11 sent bankruptcy lawyers in north Texas scrambling Tuesday to line up clients and could put an estimated $100 million in the coffers of a couple prominent national law firms.
American Airlines’ parent announced it has hired three prominent national law firms: Weil, Gotshal & Manges, which is based in New York but has a significant presence in Dallas and Houston; Paul Hastings, which is headquartered in Los Angeles; and New York-based Debevoise & Plimpton.
Weil will be leading the bankruptcy efforts, according to AMR Chairman and CEO Tom Horton.
“We’ve worked with Weil, Gotshal for many years as corporate counsel,” Horton said at a press conference Tuesday. “That’s a firm that we know well and feel good about.”
While American, which reported nearly $30 billion in debt in its 22-page bankruptcy filing, is feeling the economic squeeze, Weil is likely to be the biggest financial beneficiary.
Bankruptcy experts said Weil’s legal fees are likely to range from $60 million to $100 million before the case is concluded. They said lawyers from the three major law firms are likely to charge AMR from $400 an hour for the youngest associate to $1,000 an hour for the senior partners.
“It’s great work, if you can get it,” a prominent Dallas bankruptcy lawyer told The Texas Lawbook. “A lot of bankruptcy lawyers are extremely envious of Weil right now – me included.”
Leading Weil’s legal team are two long-time New York-based bankruptcy superstars, Stephen Karotkin and Harvey Miller. Both lawyers played leading roles in the 2009 historic bankruptcy filing of General Motors. The American Lawyer named Karotkin its “Dealmaker of the Year” in 2010 for his handling of the GM matter.
Miller represented Continental Airlines in its first bankruptcy and he represented the financial advisors in Delta’s bankruptcy case. Karotkin represented Texaco and Lehman Brothers in their respective bankruptcy filings.
Three Weil lawyers based in Texas are also significantly involved in the matter. Tom Roberts, a partner who splits his time between Weil’s Dallas and New York offices, has served as one of AMR’s legal outside corporate lawyers for several years. Roberts led AMR’s acquisition of Trans World Airlines (TWA) in 2001 and is expected to play a leading role in the AMR restructuring and reorganization.
Weil bankruptcy law partners Alfredo Perez in Houston and Stephen Youngman in Dallas are also significantly involved for AMR. Youngman, a 1985 graduate of SMU Law School, represented Texas-based Pilgrim’s Pride in its Chapter 11 proceedings in 2008.
Meanwhile, several bankruptcy lawyers were bombarded early Tuesday morning with phone calls from creditors, ranging from fuel suppliers to other airlines involved in code-sharing agreements with American Airlines.
“The timing of American’s filing caught everyone off-guard,” says Lou Strubeck, a bankruptcy partner at Fulbright & Jaworski in Dallas. “Normally in these large airline bankruptcies, rumor starts spreading that a Chapter 11 filing is imminent. This one was kept very quiet.”
One lawyer involved in the case said the legal team was sworn to secrecy. The lawyer said they were instructed to keep the matter confidential, even from family members, as they worked on it through the Thanksgiving holiday.
American’s filing apparently was secret even to DFW Airport, which reportedly contacted a handful of law firms Tuesday morning seeking outside counsel.
Bankruptcy lawyers said that a creditors committee is likely to be formed by the end of this week.
The Dallas lawyers bemoaned the fact that AMR chose to file its bankruptcy in New York instead of in Texas, where most of the creditors are based.
At the press conference, Horton said the recommendation to file in New York was made by its outside lawyers.
“We think New York is the right place for this,” Horton said. “They have a very experienced bankruptcy venue up there.”
(Brendan Case, business/economics writer extraordinaire for The Dallas Morning News, contributed to this report)
Mark Curriden is senior legal affairs writer for TexasLawbook.net and is Writer in Residence at SMU Dedman School of Law.