Bankruptcy filings by airlines have begun to spread to the ancillary sectors of the industry, forcing major service providers to reorganize their businesses, restructure debt, and in some cases, sell their businesses.
When airlines file for bankruptcy, they affect not only the lives of employees and customers but also the viability of related businesses.
One business affected by airline bankruptcies is Avenger Flight Group LLC, which has filed for bankruptcy protection, despite a high demand for new pilot training.
Global leader in commercial aviation flight training Avenger Flight Group LLC filed for Chapter 11 bankruptcy protection, facing a high debt load, general industry headwinds, and bankruptcies of some of its major customers.
The Fort Lauderdale, Fla.-based airline pilot training company and 20 affiliates filed their petition on Feb. 12 in the U.S. Bankruptcy Court for the District of Delaware, listing $100 million to $500 million in assets and liabilities that include more than $273 million owed on its prepetition secured term loan facility.
Avenger will seek to sell its assets to its prepetition secured lender, acting as a stalking-horse bidder, in a Section 363 bankruptcy auction for a credit bid of $125 million, according to the bidding procedures.
“I believe that the bid procedures provide an appropriate framework for the debtors and their advisors to review, analyze, and compare bids for the assets and to engage with bidders on an arm’s length basis to work to improve the quality of their bids for the benefit of all parties of interest,” Avenger Chief Restructuring Officer Lawrence Perkins said in a bankruptcy declaration, Verita reported.
Qualified bidders, except the stalking horse, must submit a good-faith deposit of $12.5 million, or 10% of the stalking horse bid, to participate in the auction.
The prepetition lender has also agreed to provide up to $14.5 million in debtor-in-possession financing to finance the bankruptcy case and sale process, and roll up $29 million in prepetition debt, court papers said.
The debtor’s largest unsecured creditors include Allegiant Air LLC, owed over $7.7 million; Spirit Airlines Inc., owed over $4.5 million; Pedro Sors, owed over $2.5 million on an unsecured note; and landlord Prologis, owed over $990,000 in unpaid rent, according to the petition.
Avenger, founded in 2012, operates 11 training centers in four countries, which include 50 full-flight simulators. The company owns 23 simulators, leases 12, houses and maintains 11, and has servicing agreements on four others.
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