✈️ New Chapter 11 Bankruptcy Filing - Superior Air Charter LLC (d/b/a JetSuite Air) ✈️

Superior Air Charter LLC

April 28, 2020

Dallas-based Superior Air Charter LLC d/b/a JetSuite Air, a charter air carrier to BSDs who roll as BSDs tend to roll, filed for chapter 11 bankruptcy in the District of Delaware. Ironically, while it serviced ballers, the debtor was never a baller itself. Founded in 2009, the debtor, despite a history of over 111,000 across a fleet of eighteen planes (down to ten today*), a “nearly” impeccable safety record (🤔), and a good reputation, was “never able to operate profitably.” Demand simply never hit a level where the business could break even, a problem aggravated by the debtor’s inability to penetrate the fat-cat bankers on the East Coast — something the debtor blames on the “unreliability” of acquired aircraft. 😬

Enter COVID-19. Similar to many of the bankruptcy filings we’ve seen to date, the worldwide pandemic and corresponding shutdown proved to be the gentle push of an otherwise teetering business over the goal line into bankruptcy. Per the debtor:

Thus, the Debtor could ill afford the economic destruction that the worldwide Coronavirus (COVID-19) pandemic would come to cause across a spectrum of industries. In short, it decimated the Debtor’s operations, with potential customers no longer able or willing to seek out the Debtor’s services. Indeed, the aviation industry has been particularly hard hit in light of travel restrictions put in place across all of the states that the Debtor has traditionally served. The Debtor’s cash flows dropped by essentially 100% almost immediately after the restrictions went into place. Because the duration of the COVID-19 crisis is indeterminate, the Debtor expects demand to remain very weak for many months to come. These conditions naturally exacerbated the Debtor’s liquidity issues, and by mid-April 2020, it became apparent the Debtor had little choice but to ground its fleet and furlough most employees and crewmembers.

The debtor has no funded secured debt and approximately $16mm of unsecured debt in the form of promissory notes; it estimates approximately $75mm of general unsecured debt exclusive of breakage costs associated with rejected contracts/leases. A good percentage of that general unsecured debt relates to “suitekey customers” who purchased the ability to fly private within the debtor’s service region. Someone from Netflix Inc. ($NFLX) is listed as the largest unsecured creditor.

The debtor did attempt to tap the relief provided by the US government via the CARES Act but “found the applicable sources of funding under the CARES Act to be expressly prohibited for companies that have sought Chapter 11 protection.” In lieu of a government-provided lifeline, the debtor does have a commitment for $3.6mm of DIP financing from its pre-petition unsecured creditor, JetSuiteX Inc., and seeks to use the chapter 11 process to, more likely than not, wind-down operations and maximize value for its creditors.

*Two aircraft lessors served notices of default on the debtor prior to the petition date and retook possession of aircraft per the terms of the governing leases. The debtor also sold six planes in August 2019. Hence the reduction of the fleet from 18 to 10.

  • Jurisdiction: D. of Delaware (Judge Sontchi)

  • Capital Structure: No funded secured debt (just aircraft financing). $16.2mm unsecured promissory notes (JetSuiteX Inc.)

  • Professionals:

    • Legal: Bayard PA (Evan Miller, Daniel Brogan, Sophie Macon)

    • Independent Manager: Jonathan Solursh

    • Financial Advisor/CRO: Gavin/Solmonese (Edward Gavin, Jeremy VanEtten)

    • Claims Agent: Stretto (*click on the link above for free docket access)

  • Other Parties in Interest:

    • DIP Lender ($3.6mm): JetSuite X Inc.

      • Legal: Vedder Price PC (Michael Edelman, Jeremiah Vandermark) & Potter Anderson Corroon LLP (Jeremy Ryan, Aaron Stulman)

New Chapter 11 Bankruptcy Filing - Consolidated Infrastructure Group Inc.

Consolidated Infrastructure Group Inc. 

January 30, 2019

Nebraska-based Consolidated Infrastructure Group Inc. filed for bankruptcy last week in the District of Delaware; it provides underground utility and damage prevention services to players in the underground construction, digging and maintenance space. It serves or served large telecom and utility companies, such as AT&T, Cox Communications, and Comcast. it also currently has contracts with the Northern Indiana Public Service Company, the City of Davenport in Iowa and with ONE Gas Inc

The company has little in the way of assets and liabilities. Relating to the former, the company has the above-noted contracts, a $3mm receivable from AT&T, some intellectual property and interests in insurance policies. Liabilities include two letters of credit, and a small unsecured advance by prepetition equityholder and now-postpetition DIP lender ($3mm), Parallel149, a private equity firm. 

The company has been embroiled in drama since its inception in 2016. It was formed by former employees of USIC LLC, a much-larger competitor, and the two have been locked up in litigation relating to, among other things, breach of contract (non-compete). 

The company filed for bankruptcy to pursue a going concern 363 sale and liquidating plan. It also hopes to recover the AT&T receivable. Finally, it also contends that a sale of the contracts would avoid a public safety crisis in the communities where the company's contracts are located. 

  • Jurisdiction: D. of Delaware (Judge Shannon)

  • Capital Structure: $mm debt     

  • Company Professionals:

    • Legal: Richards Layton & Finger PA (Daniel DeFranceshi, Russell Silberglied, Paul Heath, Zachary Shapiro)

    • Financial Advisor: Gavin/Solmonese LLC

    • Claims Agent: Omni Management Group (*click on company name above for free docket access)

  • Other Parties in Interest:

    • Parallel149

      • Legal: DLA Piper LLP (Richard Chesley, Jade Williams, Jamila Justine Willis, R. Craig Martin, Maris Kandestin)

New Chapter 11 Filing - Aerospace Holdings Inc.

Aerospace Holdings Inc.

  • 3/28/17 Recap: Designer and manufacturer of machined parts, fabricated components and tooling for commercial aerospace and defense markets filed for bankruptcy to effectuate a 363 sale to a strategic competitor, Harlow Aerostructures LLC, which, prepetition, purchased the distressed senior secured debt held by Comerica Bank and Fifth Third Bank. Harlow will provide DIP financing and serve as the stalking horse for the company's assets. This appears to be a story about poor strategic acquisitions, reliance on two big projects that were ultimately cancelled (Lockheed Martin F-22 fighter jet and the Airbus A380) and reductions in military spending (which may or may not be related to the cancellations).
  • Jurisdiction: D. of Delaware 
  • Capital Structure: $38.6mm funded senior secured debt (orig: Comerica Bank), $27.1mm subordinated debt (Brookside Mezzanine Partners), $21.6mm promissory notes    
  • Company Professionals:
    • Legal: Greenberg Traurig LLP (Nancy Mitchell, Matthew Hinker, Sara Hoffman, Dennis Meloro)
    • Financial Advisor: Conway MacKenzie Inc. (Matthew Sedigh, Michael Flynn)
    • Investment Banker: G2 Capital Advisors LLC
    • Claims Agent: BMC Group (*click on company name for docket)
  • Other Parties in Interest:
    • Primary debtholders: Corinthian Capital Group, Brookside Mezzanine Partners, Patriot Capital, Catalus Capital Management
    • Official Committee of Unsecured Creditors
      • Legal: Drinker Biddle & Reath LLC
      • Financial Advisor: Gavin/Solmonese LLC

New Chapter 11 & CCAA Filing - SquareTwo Financial Services Corporation

SquareTwo Financial Services Corporation

  • 3/19/17 Recap: Colorado-based privately held acquirer, manager, and collector of charged-off U.S. and Canadian consumer and commercial accounts-receivable filed a prepackaged plan of reorganization seeking to split the company into an acquired-co and "wind down co", with Resurgent Holdings LLC putting in approximately $264mm of new money in exchange for 100% equity in the acquired co. This is on the heels of a prior recapitalization that provided for the exchange of second lien notes for a 1.5 Lien Term Loan & preferred stock (enter Apollo and KKR here). Under the proposed plan of reorganization, the lenders holding claims under the first lien credit facilities will get paid in full; the holders of claims under the 1.5 Lien Term Loan will get a pro rata share of remaining cash; Resurgent will own the remaining business (with the rest liquidated); and the remaining creditors - including the second lien holdouts and the Pennsylvania Public School Employees' Retirement System (?!?!) - will get a big fat donut. Because who gives a sh*t about public school teachers anyway: what have they ever done for folks who work at Apollo and KKR?
  • Jurisdiction: S.D. of New York
  • Capital Structure: $60mm first lien RCF ($41mm out) & $105mm first lien Term Loan (Cerberus Business Finance LLC), $15mm 1.25 Lien Term Loan (plus $1.3mm interest) & $176.1 mm 1.5 Lien Term Loan (plus $15.4mm interest) (Cortland Capital Market Services LLC), $1.9 mm second lien notes (unexchanged in prior recapitalization)(U.S. Bank National Association)    
  • Company Professionals:
    • Legal: Willkie Farr & Gallagher LLP (Matthew Feldman, Paul Shalhoub, Robin Spigel, Debra McElligott, Gabriel Brunswick) & (Canadian counsel) Thornton Grout Finnigan LLP (D.J. Miller, Leanne Williams, Asim Iqbal, Mitch Grossell)
    • Financial Advisor: AlixPartners LLC (Mark Thorson)
    • Investment Banker(s): Keefe Bruyette & Woods Inc. & Miller Buckfire & Co. (John McKenna)
    • Claims Agent: Prime Clerk LLC (*click on company name for docket)
  • Other Parties in Interest:
    • Prepetition Agent & DIP Agent: Cerberus Business Finance LLC
      • Legal: Schulte Roth & Zabel LLP (Frederic Ragucci, Adam Harris)
    • Ad Hoc Group of 1.25 lien and 1.5 lien Lenders (Apollo Capital Management LP, KKR Credit Advisors LLC)
      • Legal: Paul Weiss Rifkind Wharton & Garrison LLP (Alan Kornberg, Elizabeth McColm, Michael Turkel)
    • Prepetition 1.25 Lien and 1.5 Lien Agent: Cortland Capital Market Services LLC
      • Legal: Holland & Knight LLP (Barbra Parlin, Joshua Spencer)
    • U.S. Bank National Association
      • Legal: Dorsey & Whitney LLP (Eric Lopez Schnabel, Alessandra Glorioso) & (local) Maslon LLP (Clark T. Whitmore)
    • Preferred Stock Holders: Apollo Investment Corporation & KKR Financial CLO 2007-1 Ltd.
    • Majority Common Stock Holders: Norwest Mezzanine Partners II LP & Pennsylvania Public School Employees' Retirement System
    • New Money Investor: Resurgent Holdings LLC
      • Legal: Foley & Lardner LLP (Patricia Lane, Michael Small, Benjamin Rikkers, Jack Haake)
    • Official Committee of Unsecured Creditors
      • Legal: Arent Fox LLP (Robert Hirsh, George Angelich, Jordana Renert)
      • Financial Advisor: Gavin/Solmonese LLC (Ted Gavin)

Updated 5/31/17

New Chapter 11 Filing - United Road Towing Inc.

United Road Towing Inc.

  • 2/6/17 Recap: These bada$$ strapping towing lads fought the law and the law won. Meaning: a $5mm judgment was rendered against the Illinois-based company for purportedly charging excessive fees and now the company has less money, mo' problems. The company filed chapter 11 to obtain cover under the automatic stay (and avoid enforcement of the judgment) and sell the company. No stalking horse bidder, however, is in tow (see what we did there?). First lien lender Wells Fargo is providing a $32.25mm DIP to fund the case.  
  • Jurisdiction: D. of Delaware
  • Capital Structure: $32.3mm first lien credit facility ($13.8mm out - Wells Fargo) & $17mm second lien credit facility ($19.4 claim - Medley Capital)    
  • Company Professionals:
    • Legal: Winston & Strawn LLP (Daniel McGuire, Grace D'Arcy, Carrie Hardman) & (local) Young Conaway Stargatt & Taylor LLP (M. Blake Cleary, Ryan Bartley, Andrew Magaziner)
    • Financial Advisor: Getzler Henrich & Associates LLC
    • Investment Banker: SSG Advisors LLC
    • Claims Agent: Rust Consulting/Omni Bankruptcy LLC (*click on company name for docket)
  • Other Parties in Interest:
    • ABL/DIP Agent: Wells Fargo NA
      • Legal: Riemer & Brownstein LLP (Steven Fox) & (local) Ashby & Geddes (Gregory Taylor)
    • Medley Capital Corporation
      • Legal: Greenberg Traurig LLP (Maria DiConza, Dennis Meloro)
    • Official Committee of Unsecured Creditors
      • Legal: Pachulski Stang Ziehl & Jones LLP
      • Financial Advisor: Gavin/Solmonese LLC

Updated 2/16/17

New Filing - Limitless Mobile LLC

Limitless Mobile LLC

  • 12/5/16 Recap: Pennsylvania-based 3G/4G LTE network provider of mobile phone and home internet services to retail customers in rural areas filed chapter 11 to restructure its debt, winddown its retail operations and attempt to continue its wholesale business pursuant to a $4mm Tower Bridge DIP loan. Basically this thing is an investment cesspool: after a $9+mm loan and $25.2mm grant from the US government and a $30mm equity (and spectrum) infusion from Tower Bridge, the company determined that it had an "extended runway to profitability." Who modeled this for the US Government before doling out the grant?
  • Jurisdiction: D. of Delaware
  • Capital Structure: $9.2mm debt (Rural Utilities Service - United States) & $9mm (Tower Bridge LLM Partners LLC)    
  • Company Professionals:
    • Legal: Dilworth Paxson LLP (Catherine Pappas, Martin Weis, Jesse Silverman, Lawrence McMichael, Erik Coccia)
    • Claims Agent: Rust Omni (*click on company name for docket)
  • Other Parties in Interest:
    • Tower Bridge LLM Partners LLC
      • Legal: Gellert Scali Busenkill & Brown LLC (Ronald Gellert, Evan Rassman)
    • Unsecured Creditors Committee
      • Legal: Saul Ewing LLC (Lucian Murley, Sharon Levine)
      • Financial Advisor: Gavin/Solmonese LLC (Edward Gavin)

Updated 12/29/16