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Law360 (June 25, 2020, 4:57 PM EDT) -- The Chapter 11 plan of liquidation for regional Alaskan air carrier Ravn Air Group received bankruptcy court approval Thursday in Delaware as the debtor continues soliciting bids from potential purchasers of its assets.
During a confirmation hearing conducted via phone and video conferencing, debtor attorney Tobias Keller of Keller Benvenutti Kim LLP said the company had experienced a reversal of fortunes in recent days that includes a commitment from the U.S. Department of the Treasury for up to $31 million in grants as part of ongoing government relief programs enacted in response to the COVID-19 outbreak.
Under the proposed plan, Ravn Air is marketing its assets for sale, and Keller said the government funding can be used by the debtor and, post-sale, by a going-concern buyer to make payroll obligations. The bid deadline for the sale process passed earlier this week and he said the debtor had received more than 30 bids, including five offers to continue operating the business.
"We are confident there are enough attractive bids in that group that with that sale both the plan and liquidation trust would be sufficiently funded," Keller said. "The bad news is we need to get to work now. We are hoping we'll have a confirmation order by the end of the week and have a lot to do to get through the bids."
An auction, if necessary, will take place before a July 9 sale hearing.
U.S. Bankruptcy Judge Brendan L. Shannon said Thursday he would confirm the plan after hearing that objections by various parties had been resolved prior to the hearing. An objection to the extent of the plan exculpation provisions lodged by the Office of the United States Trustee required some extra consideration, Judge Shannon said, explaining he would issue a ruling by Friday on the parties covered by the provision.
He acknowledged the posture of the case was unusual in that a Chapter 11 sale would normally be approved in advance of or as part of a confirmation hearing.
"I commend the parties on having an awful lot of balls in the air and getting to a plan confirmation today," Judge Shannon said. "Normally this is the finish line, but I'm not even sure it's the end of the first lap."
Ravn filed for bankruptcy after travel restrictions due to the COVID-19 outbreak reduced its passenger load by more than 80% in March and its revenue dried up almost overnight. It owes about $90 million in secured debt held by a group of lenders led by BNP Paribas, which is also providing $12 million in debtor-in-possession financing.
The debtor originally pinned its hopes of reorganization to federal government aid programs created in response to the COVID-19 outbreak, but those funds failed to materialize in the early weeks of the case. However, shortly before confirmation the $31 million in funding under the Coronavirus Aid, Relief, and Economic Security Act were guaranteed by the government.
The carrier's liquidation plan calls for the estate's assets to be transferred to a liquidating trust that will pay priority and administrative claims and unsecured creditors through initial disbursements. Initially, the debtor said it would likely take up to three years for the bulk of the company's assets to be liquidated — including its air fleet — for the benefit of secured creditors, but the number of bids from buyers seeking to acquire the assets and operate them as a going concern shifted Ravn Air's projections.
Ravn operates three air service companies — RavnAir Alaska, PenAir and RavnAir Connect — that provide passenger, charter, freight, mail and mail bypass services throughout Alaska. The company ran more than 400 flights daily and ferried more than 75,000 passengers a year before ceasing operations in April.
The company is a lifeline for some of the most remote settlements in the Northern Hemisphere, providing critical freight and mail services to get food, medicine and clothing into the hands of residents living hundreds of miles north of the Arctic Circle, according to the debtor.
Ravn is represented by Victoria A. Guilfoyle, Stanley B. Tarr and Jose F. Bibiloni of Blank Rome LLP and Tobias S. Keller, Jane Kim and Thomas B. Rupp of Keller Benvenutti Kim LLP.
The lenders are represented by David Neier of Winston & Strawn LLP and William P. Bowden and Gregory A. Taylor of Ashby & Geddes PA.
The case is In re: Ravn Air Group Inc., case number 1:20-bk-10755, in the U.S. Bankruptcy Court for the District of Delaware.
--Editing by Bruce Goldman.
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