Delaware Chapter 11: Superior Air Charter, LLC
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All Documents Can Be Accessed by Clicking the Case Title Immediately Above
INTRODUCTION
Link: Petition
On April 28, 2020 (the “Petition Date”), Superior Air Charter, LLC (the “Debtor”) filed a voluntary petition for relief under chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware.
The Debtor is represented by Bayard, P.A. The case has been assigned to the Honorable Christopher S. Sontchi. A hearing on the Debtor’s first day motions was held on April 29, 2020. The response date for the committee questionnaire is May 8, 2020 at 4:00 pm.
ABOUT THE DEBTOR
Link: Affidavit in Support
Founded in 2009 and headquartered in Dallas, Texas, the Debtor operates a charter air carrier which grew from its California base to maintain operations on both coasts, having chartered more than 111,000 flights in its history. The Debtor states that it was known for an impeccable safety record, its good pilots and management, and its overall reliability and service. Prior to the Petition Date, the Debtor maintained a fleet of eighteen planes and employed approximately 100 individuals. As of the filing, the fleet has been limited to ten, and the Debtor has furloughed substantially all of its employees. The Debtor maintains only four employees who are solely dedicated to the Debtor; the Debtor also shares services of four additional employees with a non-debtor affiliate.
The Debtor had experienced initial growth and operational expansion, but was beset by the incredibly tight margins common to the charter airline industry and was never able to operate profitably. Despite maintaining consistent bookings and flights, the Debtor was unable to meet a level of daily flight hours which would allow it to do more than break even on operating costs, leaving aside the burden of its fixed expenses. Compounding these issues were the company’s inability to successfully penetrate the highly competitive East Coast market for private jet travel, due in large part to the unreliability of the planes the Debtor had acquired for that purpose. As a result, the Debtor was unprepared to weather the onset of the COVID-19 pandemic, which decimated its operations. The Debtor’s cash flows dropped by essentially 100% almost immediately after the related restrictions went into place. By mid-April 2020, the Debtor grounded its fleet and furloughed most employees and crewmembers. Through the chapter 11 case, the Debtor aims to conduct a restructuring or wind-down of its estate, and a sale of remaining assets for the benefit of its creditors.
FINANCIAL CONDITION
The Debtor has no outstanding senior secured debt. The Debtor has no pre-petition secured creditors or lenders with a lien on any of its cash collateral. The Debtor’s only pre-petition secured creditor is UT Finance Corporation, to whom it owes approximately $258,000 on the remaining portion of a ten-year term on financed aircraft.
The Debtor is a party to a series of promissory notes with non-debtor affiliate JetSuiteX, Inc. (“JSX”) in the principal sum of $16.2 million. The notes are unsecured, payable upon demand, and bear no interest. The Debtor’s remaining unsecured debt stems from multiple sources, including unpaid trade debt, claims by lease and contract counterparties for unpaid obligations, litigation claims, and customer claims, with a combined notional balance of approximately $50 million. In the aggregate, the Debtor estimates its unsecured debt totals nearly $75 million, which could grow due to claims relating to rejected executory contracts and unexpired leases during the case.
DIP/CASH COLLATERAL MOTION
Links: DIP Motion DIP Budget
The Debtor has negotiated debtor-in-possession financing from JSX and another non-debtor affiliate, Delux Public Charter LLC (“DPC”), in the form of a delayed-draw term-loan senior-secured priming super-priority credit facility in the aggregate amount of $3,600,000, of which $1,400,000 will be made available in the interim. The Debtor has submitted a 13-week cash flow budget.
Related First-Day Motions Can Be Accessed by Clicking on the Links Below
SUMMARY OF FIRST DAY MOTIONS (Excel chart)