Ravn Files Plan To Liquidate As Bankruptcy Proceeds
Ravn Air Group has proposed a plan in bankruptcy court to sell all of its assets, including airplanes, to go toward paying off the company’s debts.
The liquidation plan issued on April 27 still needs to be approved in court, but it is a signal that Ravn, once Alaska’s largest rural airline, is ready to call it quits. Ravn stopped all flights and grounded its fleet earlier this month.
With 72 planes and about 1,300 employees, Ravn served 115 Alaska communities and had been the only regular passenger airline to more than 20 of them. Then the coronavirus pandemic hit Alaska, with the first known case reported in mid-March. That forced the state to restrict nearly all travel between Alaska communities.
According to court filings, more than half of Ravn’s revenue came from passenger service, and the travel restrictions and requests from communities to limit flights led to an 80- to 90-percent reduction in Ravn’s passenger revenue. After severe cuts to service and two rounds of layoffs in March, reducing Ravn’s staff to about 40 employees, the company announced on April 5 it was halting all operations and filed for bankruptcy the same day.
According to the initial bankruptcy documents, Ravn was $90 million in debt and seeking a loan to meet its unpaid payroll obligations and support itself through the bankruptcy proceedings. In court documents filed on April 27 related to the liquidation plan, Ravn says the loan required a plan that would either pay off the company’s debts in full or otherwise satisfy its lenders.
Still apparently unable to pay off its debts, Ravn says in the April 27 filings that its lenders had advised the company that “in the absence of substantial CARES Act funding or other commitments that materially improved (Ravn’s) recovery prospects,” the lenders would accept a plan to liquidate Ravn’s assets. In the filings, Ravn says that none of the company’s applications for loans and grants under the CARES Act were approved, as of April 27.
According to Ravn’s proposed plan, its planes and other assets would go into what’s called a “liquidation trust” overseen by a court-appointed trustee. That trustee and their representatives would be responsible for selling off the assets and figuring out how the proceeds would ultimately be paid to the various entities Ravn owes money. If approved, the plan would also dissolve Ravn Air Group and automatically terminate its existing directors, officers, and managers on an as-yet undetermined date.
A hearing in the bankruptcy case is set for April 29 in federal bankruptcy court in the District of Delaware, where Ravn is incorporated.