Bankruptcy Judge OKs TWA Auction

A federal bankruptcy court judge approved American Airlines’ $200-million emergency financing plan for Trans World Airlines Inc. and cleared the way for an auction of the nation’s longest-flying airline.

U.S. District Judge Sue L. Robinson rejected objections by Continental and Northwest, which both wanted parts of TWA, and by former TWA owner Carl Icahn, who some observers blame for TWA’s financial trouble.

Under the approved procedures, American’s $500-million buyout plan--including the assumption of up to $3 billion in debt--would be the starting point. Other bidders would have to offer at least $75 million more--$10 million plus a $65-million breakup fee that would be paid to American by TWA if the deal is not completed.