Anchorage, Alaska-based regional airline Era Aviation in late December filed for Chapter 11 bankruptcy protection after its main source of capital decided to restrict its funding in a dispute over cash-flow targets. The lender, Capital Source Financing of Chevy Chase, Md., helped finance the purchase of Era from the Seacor Group last July by IBS Capital, a group of California investors led by retired National Football League star Willie Gault.
Under the terms of the deal, Era’s revenue goes into an account controlled by Capital Source, which claims that Era did not meet its cash-flow targets for last year’s third quarter. Era management characterizes its financial position as strong and insists it hasn’t defaulted on any debt payments. Court documents show that Era owes Capital Source $14.9 million.
“Ours is a unique (and good) situation in that we are mostly current in payments to our vendors,” said Era in a statement. “We have proposals from several prospective lenders who would like to help us in our restructuring, and we will be evaluating those proposals in the course of the restructuring.”
The company added that it planned to pay all unsecured creditors “100 cents on the dollar” and that it anticipates no disruption or reduction in service while it reorganizes. In business since 1948, Era flies a fleet of four de Havilland Dash 8-100s and nine Twin Otters from Bethel to 16 towns and from Anchorage to another five.
The bankruptcy of Era Aviation did not affect the Era Aviation Center FBO or Era Helicopters, which remain under the ownership of Seacor.