Ravn Air Group filed a plan last week in bankruptcy court to sell off its assets in order to pay off its debts. According to court filings, Ravn owes roughly $91 million to lenders after borrowing money in 2015.
While it awaits word on a variety of applications for federal relief loans and grants, the company may be forced to liquidate its assets and shut down for good.
Ravn announced on April 5 it was ceasing all operations, grounding all 72 of its planes, laying off its 1,300 staff and filing for bankruptcy. At the time, the company said it had experienced a loss of 90% of passenger revenue at all three of its airlines — RavnAir Alaska, PenAir and RavnAir Connect — due to ongoing travel restrictions as a result of the coronavirus outbreak. Ravn Air Group is now going through bankruptcy proceedings in a Delaware court.
According to court filings, on April 3, Ravn submitted applications for a number of grants under the federal CARES Act. The company has also requested further funding from its various lenders.
According to an April 24 email sent out to the public by RavnAir Alaska President and CEO Dave Pflieger, the company has requested at least $75 million in federal relief. Ravn has not provided further details regarding which federal grants the company applied for or the amounts requested. When asked for more information, a spokesperson wrote in an email, “If Ravn were to receive the amount it originally believed it was qualified for, it changes the landscape for the carrier. RavnAir Group will continue to pursue CARES Act grants, and loans.”
Pflieger, in his email, asked members of the public to use their social media accounts to urge President Donald Trump and other officials to ensure assistance is available to Ravn. One of the example messages Pflieger suggested sending to Trump via Twitter read, in capital letters, “Without federal assistance, Ravn and its three airlines will be liquidated and rural Alaskans will go without vital food, medicine, and essential air service.”
According to a representative from U.S. Sen. Dan Sullivan’s office, Ravn’s applications are still under consideration, while details on how support will be provided are finalized.
“As member of the Commerce Committee, which has jurisdiction over aviation — as well as being from a state that has more pilots per capita than any other state in the country — Senator Sullivan and his team have worked relentlessly with senior Treasury Department officials so that Ravn, and our other Alaskan air carriers, could have the opportunity to take advantage of the assistance being offered as part of the CARES Act,” wrote Sullivan aide Mike Anderson in an email. “It is Senator Sullivan’s hope that Ravn is determined eligible for the support it seeks to continue to operate in Alaska.
“If Ravn does not receive the loan, Senator Sullivan and his team stand ready to assist our aviation community and the communities that have depended on service from Ravn,” he wrote.
In the meantime, court filings show that the lenders to which Ravn owes money are arguing over how the company’s bankruptcy proceeds.
Ravn’s proposed bankruptcy plan would see some of its assets, including planes, go into a liquidation trust, which would be overseen by a court-appointed trustee who would be responsible for selling the assets. Money raised from the sales would be paid to Ravn’s various lenders. The plan would also dissolve Ravn Air Group and terminate the company’s directors and managers.
Court documents show that some of Ravn’s lenders are accusing another set of lenders of attempting to rush the bankruptcy proceedings into liquidation because it would financially benefit them. A court document filed April 24 alleges that some of Ravn’s creditors “chose to ignore the fact that the debtors could have continued operating and providing critical services to many communities in this dire time of need and instead took advantage of the predicament to enhance their investment and priority position through the Chapter 11 process at the expense of other creditors.”
A hearing during which the liquidation plan will be approved or denied is due to be held on May 27.