This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

AMR Shares Rise 30% in Early Trading

CHARLOTTE, N.C. ( TheStreet) -- Trading in the shares of bankrupt AMR (AAMRQ.PK) were rising 30% Wednesday after the carrier's bankruptcy attorney said they may in fact have value.

Normally, shares in a bankrupt company are cancelled when the company emerges from bankruptcy, enabling the company to raise capital by issuing new shares. The intent of bankruptcy law is to shed obligations and become healthy again.

Shares in AMR, which were delisted from the New York Stock Exchange after it filed for bankruptcy protection in November 2011, have been rising in active trading since they closed at 36 cents on Nov. 16. Shares closed Tuesday at 90 cents. In mid-morning trading on Wednesday, shares were rising 27 cents, or 30%, to $1.17.

The gain past $1 a share "is huge because it's close to an important psychological level," said a spokesman for Miami-based, who asked not to be named. "If it can get through the $1 level, it can go up another 50%" because some institutional traders "have different margin rates" at that level.

The spokesman noted he has recently spoken with two types of AMR shareholders. "One person has been in it for years and has lost a lot of money," he said. "But recent traders are up 50% to 100%."

Both groups were benefiting from the disclosure Tuesday in a regulatory filing of a letter to a U.S. Justice Department attorney from Harvey Miller, the airline's bankruptcy attorney. Miller said AMR has "made remarkable progress in stabilizing their businesses and improving their prospects.

" Depending upon the ultimate strategic alternative adopted and pursued, there exists a reasonable possibility that there may be value for AMR equity holders consistent with the absolute priority rule," he said.

Earlier, Miller opposed a request by an equity holder to allow a committee to represent equity holders. He said then that it was unlikely that equity holders would receive anything for their shares. But now, he said, a possibility exists.

For its part, AMR said in November that its shares would have little or no value when it emerges from bankruptcy. In the filing Tuesday, AMR again cautioned against assuming that the shares will have value. It said that Miller's letter "was not prepared for the purpose of providing the basis for an investment decision."
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
LCC $0.00 0.00%
AAPL $117.81 0.00%
GOOG $750.26 0.00%
FB $105.45 0.00%
TSLA $231.61 0.00%


Chart of I:DJI
DOW 17,798.49 -14.90 -0.08%
S&P 500 2,090.11 +1.24 0.06%
NASDAQ 5,127.5250 +11.3820 0.22%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs