AMR bankruptcy: Rates for proposed consultants range to $1,365 per hour
Jan. 24-- AMR Corp., the parent of American Airlines, proposes to hire nine advisers and consultants at rates ranging to $1,365 per hour to assist in the company's bankruptcy restructuring, court documents show.
The consultants include tax advisers, labor consultants, auditors, special aircraft counsel, employee benefits advisers and management consultants, court filings say.
AMR filed its Chapter 11 bankruptcy reorganization petition in U.S. Bankruptcy Court for the Southern District of New York on Nov. 29.
The filing listed assets of $22.87 billion and liabilities of $30.08 billion.
AMR's applications to hire the advisers and consultants reveal the complexity and worldwide reach of its businesses as well as the enormous cost of the Chapter 11 bankruptcy restructuring.
The company, for instance, has asked U.S. Bankruptcy Judge Sean Lane for authority to hire KPMG LLP as its tax consultant, at hourly rates from $200 to $590, and for tax compliance services, at rates from $146 to $1,365 per hour.
KPMG's tax consulting services will include determining the tax basis of AMR's assets; analyzing the tax implications of AMR's various reorganization scenarios; analysis of potential bad debt; analysis of the tax impact of any potential dispositions of assets in bankruptcy for U.S. federal and state income tax purposes; and analysis of tax implications of any potential merger and/or acquisitions with third parties, among more than a dozen other services, court documents show.
Tax compliance services provided to AMR include preparation of host country and, if required, home country individual income tax returns; preparation of state and local, provincial, communal and cantonal tax returns; preparation of U.S. estimated tax vouchers; and assistance with routine correspondence with the tax authorities including the review of tax assessments.
AMR's application to employ McKinsey Recovery & Transformation Services U.S. LLC, McKinsey & Co. Inc. United States and McKinsey & Company Inc. Japan reveals that a company with global operations may consider multiple bankruptcy strategies depending on the location of its businesses.
AMR proposes to hire the McKinsey firms to evaluate AMR's business plan, including financial projections.
The Fort Worth-based carrier proposes to pay the McKinsey companies from $100 to $985 per hour, depending on the level of expertise.
"McKinsey and its affiliates are a management consulting firm whose members have extensive experience in improving the operational performance of financially troubled companies," AMR says in its application to employ. "McKinsey and its affiliates have considerable experience working with airlines, airports and other parties in the aviation industry.
"In the last five years, McKinsey and its affiliates worldwide have completed approximately 400 engagements and 600 consultant years serving aviation-related clients, including scheduled air transportation providers, and various airport authorities/operators and aviation authorities. This experience has given McKinsey and its affiliates a unique understanding of industry trends and of key strategic operational success factors."
Sidney K. Swinson, an attorney who teaches bankruptcy law at the University of Tulsa, said AMR's applications to employ the consultants reveal the complexity and high public profile of the case.
"In New York and Delaware, the (bankruptcy) courts are much more liberal about allowing a company to employ professionals because these cases are so huge," Swinson said. "The hourly rates are the price you pay for having the case in New York.
"If that's the going rate for attorneys in New York City, they are among the finest lawyers in the country."
AMR Corp.'s proposed bankruptcy consultants and compensation rates
Debevoise & Plimpton LLP, special aircraft counsel: $2.1 million retainer; hourly rates from $175 to $1,075.
Deloitte Financial Advisory Services LLP, vendor services: hourly rates ranging from $150 to $700.
Ernst & Young LLP, auditor and tax adviser: $182,000 per month for AMR work; $100,000 per month for American Eagle Airlines work.
GCG Inc., administrative agent: hourly rates from $45 to $295.
Groom Law Group, special employee benefits counsel: hourly rates from $190 to $875, less 10 percent discount.
KPMG LLP, tax compliance and tax consultants: hourly rates from $200 to $590 for tax consulting; $146 to $1,365 for tax compliance.
McKinsey Recovery and Transformation Services U.S. LLC, McKinsey & Co. Inc. United States, and McKinsey & Co. Inc. Japan, management consultants: hourly rates from $100 to $985.
Morgan Lewis & Bockius LLP, special counsel: hourly rates from $128 to $900.
Paul Hastings LLP, special labor counsel: hourly rates from $315 to $900.
Source: U.S. Bankruptcy Court, Southern District of New York
D.R. Stewart 918-581-8451
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