Creditors want AEXJet to liquidate
November 7, 2007
BASALT ” The two largest creditors of Aspen Executive Air filed a motion Monday asking the court to convert the airline’s bankruptcy from Chapter 11 to Chapter 7, meaning the Basalt-based airline would sell off all assets instead of reorganize its debts.
But John Gallaher, the CEO of Aspen Executive Air ” better known as AEXJet ” said Tuesday that he is confident the motion won’t be approved.
“We don’t think [the motion] is going to go through,” Gallaher said while he was at Denver International Airport en route to Delaware, where a hearing is scheduled Wednesday in U.S. Bankruptcy Court.
The motion comes after AEXJet filed for bankruptcy protection Sept. 14, and court papers filed last month state that the airline is $66.9 million in debt, including $30 million to two aircraft leasing companies ” JLT Aircraft Holding Co. and Walker Aircraft.
The two Minnesota firms filed the motion arguing that because AEXJet “is apparently unable to pay its operating expenses, JLT and Walker believe that (AEXJet’s) continued presence in chapter 11 will only result in further losses to the bankruptcy estate.”
JLT and Walker also contend that AEXJet’s pending merger with Arkansas-based Pinnacle Airlines would increase AEXJet’s debt, and, in turn, “negatively impact creditors by decreasing their chances for recovery.”
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A key player in the discussions between AEXJet and Pinnacle is John Calamos, who would become the controlling shareholder of Pinnacle if the deal goes through. Calamos also owns 50 percent of Calim Private Equity LLC and 6.25 percent of Calim Venture Partners II, both of which are equity security holders in AEXJet.
In their motion proposing AEXJet convert from Chapter 11 to Chapter 7, JLT and Walker contend that AEXJet’s “sole purpose in Chapter 11 is to incur additional debt to its insiders (Calamos) without any showing of how this additional debt will benefit the debtor’s creditors in any way.”
Gallaher said AEXJet’s letter of intent with Pinnacle should be formalized this week. He said AEXJet plans to seek approval of the court for the merger, and was not sure how a conversion from Chapter 11 to Chapter 7 would affect the deal.
Rick Carroll’s e-mail address is email@example.com