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April 27, 2020 – The Debtors filed a Chapter 11 Plan of Liquidation and a related Disclosure Statement [Docket Nos. 112 and 113, respectively]. They further filed a motion requesting Court approval of (i) the Disclosure Statement (ii) Plan solicitation and voting procedures and (iii) a proposed timetable culminating in a June 22nd Plan confirmation hearing [Docket No. 114].
Notwithstanding the implications of a liquidation Plan that would see the Debtors assets sold, these Debtors have not entirely given up on saving their airline.
In an active social media campaign, the Debtors are appealing for the help of Alaskans to raise their plight with state and federal officials (including President Trump) and seeking to place pressure on lawmakers as to what they view as inequitable aspects of COVID-19 stimulus funding (ie the "CARES Act") and the treatment of smaller airlines. The Debtors' website is now emblazoned with "RAVN is vital to Alaska…Click here to help save RYAN" and a letter for customers to post to the White House which reads:
"Dear Mr. President, We need action this week from the Treasury Department in order to give Ravn a viable chance of survival and serving so many of these remote and roadless communities in Alaska. The Available Seat Miles (ASM) formula announced by the Treasury Department helps the major carriers, but does not help a smaller carrier like Ravn. We need help now from the White House to save Alaska's regional carriers."
An Alaskan news source is reporting that: "RavnAir Alaska is asking its friends and customers to use social media to alert the White House about the federal loans needed by smaller airlines to get material CARES Act assistance.
In an April 24 email to customers and friends, RavnAir Alaska President and CEO Dave Pflieger said that a key part of their needed funds is support from the CARES (Coronavirus Aid, Relief and Economic Security) Act.
RavnAir has learned that while eligible for payroll grant assistance, the carrier will not be eligible for loans because the Treasury Department is using an available Seat Mile formula for loan allocations that does not allow smaller airlines to get material CARES Act assistance. This formula favors large well-capitalized airlines and leaves very little for small regional carriers like Ravn, Pflieger said. 'The formula would provide only $5.2 million of the $75 million we requested,' he said. 'In short, it will mean the end of our company as we know it'.”
The Debtors' Disclosure Statement [Docket No. 113] provides, “In these Chapter 11 Cases, the Plan contemplates a liquidation of each of the Debtors and is therefore referred to as a ‘plan of liquidation.’ The Debtors’ assets largely consist of aircraft and related assets, Cash, and the Liquidation Trust Actions under the Plan. The Liquidation Trust Actions include, but are not limited to, causes of action, claims, remedies, or rights that may be brought by or on behalf of the Debtors or the Estates under chapter 5 of the Bankruptcy Code and related statutes or common law, as well as any other claims, rights, or causes of action held by the Debtors’ Estates. The estimated recoveries to creditors set forth in this Disclosure Statement do not take into account potential proceeds of the Liquidation Trust Actions because they are unpredictable and highly contingent. Among other things, although the Debtors believe that such litigation claims may exist, the ability to collect any judgment on those claims remains unknown at this time.
The Plan provides for the creation of a Liquidation Trust, as well as the appointment of a Liquidation Trustee, who will administer and liquidate all remaining property of the Debtors and their Estates, subject to the supervision and oversight of the Liquidation Trust Supervisory Board and the Liquidation Trustee, respectively, all as described more fully in Section IV.F of this Disclosure Statement. The Plan also provides for Distributions to be made to certain Holders of Administrative Claims, Professional Fee Claims, Priority Tax Claims, DIP Claims, Prepetition Secured Creditor Claims, Other Secured Claims, Priority Claims, and General Unsecured Claims, and for the funding of the Liquidation Trust. The Plan also provides for substantive consolidation as of the Effective Date of the Debtors into Ravn Air Group, Inc. Finally, the Plan provides for the cancellation of all Equity Interests in the Debtors, the dissolution and wind up of the affairs of the Debtors, and the administration of any remaining assets of the Debtors’ Estates by the Liquidation Trustee.”
Material Terms of the Plan:
- All Allowed Administrative Claims, Allowed Professional Fee Claims, Allowed Priority Tax Claims, Allowed Other Secured Claims, and Allowed Priority Claims will be paid or otherwise satisfied in full as required by the Bankruptcy Code, unless otherwise agreed to by the Holders of such Claims and the Liquidation Trustee.
- Holders of Allowed DIP Claims will receive Class A Liquidation Trust Interests in full satisfaction of their Claims against the Debtors and their estates.
- Holders of Allowed Post-petition Secured Claims will receive Class B Liquidation Trust Interests in full satisfaction of their Claims against the Debtors and their estates.
- Holders of Allowed Subordinated Claims, if any, shall not be entitled to, and shall not receive or retain any property or interest in property under the Plan on account of such Allowed Subordinated Claims.
- All Equity Interests in the Debtors shall be deemed void, cancelled, and of no further force and effect. On and after the Effective Date, Holders of Equity Interests shall not be entitled to, and shall not receive or retain any property or interest in property under the Plan on account of such Equity Interests.
- In accordance with Section 5.06 of the Plan, subject to the rights of Allowed Other Secured Claims and the reservations set forth in such Section 5.06, the Debtors will be substantively consolidated into Ravn Air Group, Inc.
- Any Intercompany Claims that could be asserted by one Debtor against another Debtor will be extinguished immediately before the Effective Date with no separate recovery on account of any such Claims, and any Intercompany Liens that could be asserted by one Debtor regarding any Estate Assets owned by another Debtor will be deemed released and discharged on the Effective Date; provided, however, that solely with respect to any Secured Claim of a non-debtor as to which the associated Lien would be junior to any Intercompany Lien, so as to retain the relative priority and seniority of such Intercompany Claim and associated Intercompany Lien, the otherwise released Intercompany Claim and associated Intercompany Lien will be preserved for the benefit of, and may be asserted by the Liquidation Trust.
- The Liquidation Trust will be created to (a) sell, liquidate, transfer, or otherwise dispose of the Liquidation Trust Assets, (b) most effectively and efficiently pursue the Liquidation Trust Actions for the collective benefit of all the Liquidation Trust Beneficiaries, and (c) pay Distributions, in accordance with the Plan.
The following is a summary of classes, claims, voting rights and expected recoveries (defined terms are as defined in the Plan and/or Disclosure Statement):
- Class 1 (“Prepetition Secured Creditor Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan. The estimated recover is [_]%.
- Class 2 (“Other Secured Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan. The estimated recover is 100%.
- Class 3 (“Priority Claims”) is impaired and entitled to vote on the Plan. The estimated recover is 100%. Holder of the Claim shall receive, in full satisfaction, settlement, and release of and in exchange for such Allowed Priority Claim, either (a) Cash equal to the unpaid portion of such Allowed Priority Claim or (b) such other less favorable treatment from the Liquidation Trust to which such Holder and the Liquidation Trust shall have agreed upon in writing.
- Class 4 (“General Unsecured Claims”) is impaired and entitled to vote on the Plan. The estimated recover is [_]%. Holder of the Claim shall receive, in full satisfaction, settlement, and release of and in exchange for such Allowed General Unsecured Claim, its Pro Rata share of the Creditors’ Fund.
- Class 5 (“Subordinated Claims”) is impaired and deemed to reject. The estimated recover is 0%.
- Class 6 (“Equity Interests”) is impaired and deemed to reject. The estimated recover is 0%.
Proposed Key Dates:
- Voting Deadline: 7 calendar days before the Confirmation Hearing date
- Confirmation Objection Deadline: 7 calendar days prior to the Confirmation Hearing date
- Confirmation Hearing: June 22, 2020
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