Aspen Executive Air wins court OK to borrow $2 million, avoids shutdown
November 21, 2007
PHILADELPHIA ” Aspen Executive Air Inc. has won court approval to borrow $2 million in a move that will allow the troubled charter-jet company to keep flying for a few more weeks.
Judge Mary F. Walrath of the U.S. Bankruptcy Court in Wilmington, Del., on Tuesday gave temporary approval to Aspen Executive Air Inc. to borrow the money to keep its luxury planes flying through Dec. 18.
Had that approval been denied, “we’d be closing the doors” and shutting down, CEO John Gallaher said at a court hearing.
Aspen Executive Air, which is controlled by billionaire money manager John P. Calamos Sr., caters to an exclusive clientele that spends holidays in the Aspen, Colo., ski-resort area.
Walrath approved the loan reluctantly, saying she was troubled by allegations from the U.S. Trustee monitoring the case that the company may have transferred millions of dollars to another company just before it filed for bankruptcy protection in September.
“Any court looking at this will say that the entire case stinks,” Walrath said.
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Walrath warned that she would grant the U.S. Trustee’s request to convert the company’s Chapter 11 case into a Chapter 7 liquidation if the company doesn’t obtain a good price for its business at an auction next month.
Bidding at the Dec. 14 auction could start as low as $750,000, attorneys for the company’s creditors said Tuesday. The opening bid will come from a group that includes Calamos and his investment fund, Calim Venture Partners III. The fund is a majority shareholder of Aspen Executive Air. Calamos and Calim also are providing the $2 million loan to the company.
Major creditors initially called for the case to be converted to a Chapter 7 liquidation. But David Buchbinder, an attorney with the U.S. Trustee’s office, said Tuesday that the company reached out-of-court deals with JLT Aircraft LLC and Walker Aircraft LLC to drop their demands to throw the Chapter 11 case out of court.
Walker is getting $2 million for its part of the settlement, and other members of the creditors committee who negotiated separately will get new contracts with Aspen Executive’s new owners, Buchbinder said.
“They have made a deal for themselves and they appear to have ignored the rest of the creditor body,” he said.
Ray Schrock, an attorney for Calamos, said his client was just “trying to do the right thing,” and that what appeared to be illicit dealings were a legitimate effort to save Aspen Executive, taking care of customers and employees.