October 31, 2014

Avantair forced into Chapter 7 bankruptcy

Avantair airplaneAvantair locked its doors to employees June 26 and ceased all operations. Now, less than two months later, executives have also been locked out, this time by the courts.

Florida bankruptcy courts have allowed creditors to file Chapter 7 bankruptcy against the airline. Judge Catherine McEwen appointed a bankruptcy trustee to oversee the case and has granted the trustee’s motion to prohibit all access to the premises and cancel all access cards to the airline. The trustee filed the motion due to an inspection in which it was noted that offices and other areas had been emptied.

Avantair had until Aug. 6 to respond to the filing of bankruptcy but have asked for and been granted a week’s reprieve by Judge McEwen. A hearing, which was scheduled for Aug. 9, was also postponed until Aug. 16.

In filing for the reprieve, Avantair said it “has aggressively pursued and continues to aggressively pursue sources of financing and negotiations with potential plan sponsors. Although the company has not yet been able to reach a deal, these negotiations continue on a daily basis. Accordingly, the company is in need of additional time.”

Avantair continued, saying “[Avantair] is not operating and, if it is unable to develop a viable alternative to liquidation in the next week, it will likely consent to the Chapter 7 filing.”

In mid-July, Avantair announced its plans to move forward and resume flights in early August with a new name, “NewCo.” The plan never went forward due to owner resistance.

The plan would have required owners to pay a one-time fee of $25,000 that the company stated was necessary for repairs, as well as a 40 percent increase of management fees to be paid monthly. Owners have remained adamant that they will not provide the airline with any more funds and are seeking to get their airplanes back from the airline.