Clearwater Fla.-based Avantair’s assets will be sold off and the company liquidated after it failed to meet a deadline last week to contest an involuntary Chapter 7 filing in the Florida Middle District U.S. Bankruptcy Court in Tampa.
Judge Catherine McEwen signed an order on Friday converting the case to full Chapter 7 status and gave former fractional provider Avantair until this Friday to provide the court with a list of creditors, co-debtors and unexpired leases. The court has also given Avantair’s creditors until Dec. 18 to file a claim.
Avantair 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.
Troubled airline Avantair, expects to resume flights in early August, pending new financing. On Wednesday, July 17, the airline announced it’s “go-forward” plan for continuing operations. The go-forward plan included a change in name to “NewCo.”
The plan states that all current debt will be wiped out going forward, but does not state how that will be done. NewCo also plans to downsize employees to a “core group” and will get rid of over half of their current fleet of 56 airplanes and resume operation with just 25 planes.
NewCo hopes to retain at least 300 of their current 620 shareholders to remain operational. Those who intend to stay will be required to pay a one-time fee of $25,000 that will be deposited into a “catch-up maintenance fund” which will be used to fund necessary repairs that will make the fleet airworthy. Shareholders will also be expected to pay 40 percent more a month in management fees for a total of $15,846.
For the “go-forward” plan to work, Avantair needs to garner $4.5 million in funding to finance their restructuring process and permit NewCo to have working capital.
Piaggio Aero, the manufacturer of Avantair aircrafts, has pledged to provide a $1 million investment and another $1 million in credit facility parts.
Before furloughs, Avantair employed 500 people and operated out of St. Pere-Clearwater International Airport in Clearwater, Fla. Upon furloughing employees, the company owed its employees wages from June 8 until June 26. It is unclear as to whether those wages were ever paid to employees. Avantair dropped employee healthcare, dental and vision plans for the workforce effective July 1.
Avantair pilots voted for SMART representation in February of this year, just a few months before Avantair shut down operations. The new local did not yet have an agreed-upon contract in effect when Avantair furloughed all employees June 26.
In their final approach for union representation, the pilots of Avantair, Inc., successfully touched down on the SMART Transportation Division runway.
The Feb. 14 vote brought 224 Avantair pilots under the SMART umbrella. Among the pilots who participated in the representation election, 77 percent voted in favor of SMART.
“Our ability to represent transportation employees was one of the key factors in their choice of UTU/SMART,” said SMART Transportation Division Director of Organizing Rich Ross. “They had specific questions and wanted answers about union representation and we were able to accommodate their needs. Now we have to get down to business to get them a contract.”
“These pilots fly everywhere and anywhere at any time of the day. We set up a lot of conferences calls at all hours of the day in this campaign,” Ross said. “Some of these guys are working 80 hours a week.”
“I once again extend my sincere appreciation to International organizers James “Mike” Lewis and Calvin Studivant, and to International staff member Cara McGinty,” Ross said.
“I also want to thank the pilots’ group that initially approached us. They were the key to making this a successful campaign.”
Avantair is an aircraft fractional ownership company, headquartered at Clearwater, Florida, U.S.A.
With fractional jets, some customers may buy a share of a plane rather than an entire plane. Their fee is pro-rated and the cost of an aircraft is spread among a number of investors. They then have access to a plane for a specified number of hours or days per year on short notice.
Clearwater Fla.-based Avantair’s assets will be sold off and the company liquidated after it failed to meet a deadline last week to contest an involuntary Chapter 7 filing in the Florida Middle District U.S. Bankruptcy Court in Tampa.