A cash collateral hearing in the U.S. Bankruptcy Court is allowing Era Aviation three weeks of operation on its reserves.
The hearing came as a result of Era Aviation Inc. and its investor company, Era Aviation Investment Group LLC, filing Chapter 11 reorganization in U.S. Bankruptcy Court in Anchorage Dec. 28.
Era Aviation was allowed by the bankruptcy court to use $1.1 million of its lender CapitalSource Finance's cash collateral.
The court is allowing the airline to use the money for its operations until the end of January, according to court records. CapitalSource Finance's attorneys opposed the court action.
Bankruptcy court filings show that Era Aviation owes CapitalSource approximately $12.2 million. U.S. Bankruptcy Judge Donald MacDonald IV, however, denied CapitalSource's claim for immediate payment.
"Given CapitalSource's claim of $12.2 million, its interest in the debtor's existing assets is adequately protected," MacDonald said in a written decision. "It has a substantial equity cushion."
Era's assets were listed as $14.8 million with an additional $5.1 million in cash, accounts receivable and certificates.
The Chapter 11 filing came as a result of a dispute with CapitalSource over whether "certain technical financial benchmarks were met." Era president and chief executive officer Paul Landis refused to discuss or explain the nature of the financial benchmarks when asked to elaborate.
Seacor Holdings, which is also listed as a disputed creditor for $1.9 million in the court filings, formerly owned Era Aviation.
Era Aviation is currently leasing its offices and receiving ramp services from Era FBO LLC, which is owned by Seacor. Era FBO owns the facility at Era's South Airpark location at Ted Stevens Anchorage International Airport.
Seacor Holdings sold Era Aviation's fixed-wing operation to Era Aviation Investment Group LLC in July 2005.
Additional hearings are scheduled for Jan. 27 in the U.S. Bankruptcy Court in Anchorage.
Rob Stapleton can be reached at rob.stapleton@alaskajournal.com.
