Ravn, Alaska’s Largest Rural Airline, Files Liquidation Plan As Bankruptcy Mounts – Eye on the Arctic
Ravn Air Group proposed to the bankruptcy court a plan to sell all of its assets, including planes, in order to pay off the company’s debts.
Monday’s liquidation plan has yet to be approved by the court, but it’s a signal that Ravn, once the largest rural airline in Alaska, is ready to shut it down.
Ravn stopped all flights and grounded his fleet earlier this month.
With 72 planes and approximately 1,300 employees, Ravn served 115 Alaskan communities and had been the only regular passenger airline for more than 20 of them.
Then the coronavirus pandemic hit Alaska, with the first known case being reported in mid-March. This forced the state to restrict almost all movement between communities in Alaska.
According to court documents, more than half of Ravn’s revenue came from passenger service, and travel restrictions and community demands to limit flights have resulted in an 80-90% reduction in Ravn passenger revenue. .
After severe service cuts and two rounds of layoffs in March, reducing Ravn’s staff to around 40 employees, the company announced on April 5 that it was stopping all operations and filing for bankruptcy on the same day.
According to the initial bankruptcy documents, Ravn had $ 90 million in debt and apply for a loan to meet and support unpaid salary obligations throughout the bankruptcy process.
In Monday’s court records over the liquidation plan, Ravn said the loan required a plan that would either pay off the company’s debts in full or satisfy its lenders.
Still apparently unable to repay his debts, Ravn said in documents filed Monday that his lenders had informed the company that “in the absence of substantial funding from the CARES Act or other commitments that significantly improve the prospects for (Ravn’s) recovery ”, the lenders would agree to a plan to liquidate Ravn’s assets.
In the filings, Ravn said none of the company’s applications for loans and grants under the CARES Act were approved on Monday.
Under Ravn’s proposed plan, his planes and other assets would be placed in what’s called a “liquidation trust” overseen by a court-appointed trustee. This trustee and their representatives would be responsible for selling the assets and determining how the proceeds would ultimately flow to the various entities that Ravn owes money.
If approved, the plan would also dissolve Ravn Air Group and automatically terminate its existing directors, officers and managers at an as yet undetermined date.
A hearing in the bankruptcy case is scheduled for Wednesday in federal bankruptcy court for the District of Delaware, where Ravn is incorporated.
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Arctic: Summary of COVID-19 responses in the Arctic, Eye on the Arctic
Greenland: COVID-19: Scientific expedition to arctic postpones flight campaign after trainee tests positive for virus, Eye on the Arctic
Norway: Norwegian tourism in the wilderness in the Arctic is particularly affected by the coronavirus, The Independent Barents Observer
Russia: Risking death for arctic gas? Construction site in northern Russia becomes hotbed of COVID-19, The Independent Barents Observer
United States: Arctic Borough withdraws from deal with bankrupt Alaska airline, reaffirms right to seize assets in emergency, Alaska Public Media