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Judge Rejects AMR CEO Severance Payout

A federal judge has rejected a $20 million severance package to Tim Horton, the chief executive of Americans Airlines parent AMR Corp. (AAMRQ), ruling the payment violated bankruptcy law's restrictions on payments to corporate insiders.Judge Sean Lane of the U.S. Bankruptcy Court in New York Thursday rejected the severance payment to Mr. Horton, who is set to step down from his top spot when American merges with US Airways Group Inc. (LCC) later this year, on the grounds that the Bankruptcy Code restricts payments to corporate insiders--top officers and directors--during a corporate restructuring.The severance payment had drawn opposition from U.S. Trustee Tracy Hope Davis, the government's bankruptcy watchdog, who questioned the severance payment to Mr. Horton.Bankruptcy-law changes that took effect in October 2005 were meant to curtail a company's ability to pay bonuses to senior executives while shortchanging rank-and-file workers. The changes were in response to perceived abuses of...

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