US’s Western Global Airlines in creditor talks - report

Founders of US's Western Global under legal scrutiny

The US Department of Labor (DOL) has objected to the Delaware Bankruptcy Court issuing a final order granting Western Global Airlines (KD, Fort Myers Southwest Florida) (WGA) USD75 million in priority post-petition debtor-in-possession (DIP) financing whilst charges are still being pursued against founder and CEO James (Jim) Neff and family members about prohibited financial transactions relating to the company's employee stock ownership plan (ESOP).

In the objection, to be heard on September 7, 2023, the DOL argues the court should deny the requested relief for post-petition senior secure super-priority financing - granted in an interim order on August 8. The reason being that it would prevent the DOL from "pursuing any claims against Neff or any other knowing participant in any prohibited transaction relating to the ESOP's purchase of WGA's stock".

This relates to a class action suit in the US District Court of Delaware filed on February 28, 2022, combining two cases alleging the ESOP's fiduciaries and company's owners violated the Employee Retirement Income Security Act (ERISA) by selling 370,00 shares or 37.5%...

No arbitration in US's Western Global employee stock row

Pilots of Western Global Airlines (KD, Fort Myers Southwest Florida) can proceed in court with their challenge to the company's employee stock ownership plan (ESOP) after a US appeal court denied a motion to send the dispute to arbitration, reports Bloomberg Law.

Judge David J. Porter of the US Court of Appeals for the Third Circuit on August 15 granted the pilots' request for summary affirmance, allowing the case [Burnett et al. v. Prudent Fiduciary Services LLC et al., Case No. 23-1527] to stay in court without hearing oral arguments or receiving a full briefing. According to the court docket seen by ch-aviation, he denied motions for extensions of time to file briefs and motions for a temporary stay of proceedings.

The counsel for the pilots had requested the court, in ruling, consider a writ of certiorari filed on August 4 on the case, "Henry v. Wilmington Trust NA," in which the Third Circuit Appeal Court on June 30, 2023, declined to force arbitration in a similar employee stock ownership plan.

The backstory to the...

US Court grants Western Global Airlines access to funding

The US Bankruptcy Court in the District of Delaware has issued interim orders concerning the Western Global Airlines (KD, Fort Myers Southwest Florida) insolvency application. The August 8 orders authorise debtors to obtain post-petition senior secure super-priority financing, allow their limited use of cash collateral, grant liens and provide claims with super-priority administrative expense status, and provide protection to the prepetition lender.

The cargo airline filed for Chapter 11 protection on August 7, owing creditors over USD470 million. The airline will continue to operate under debtors in possession provisions. The interim orders said Western Global has an "immediate and critical need" to obtain post-petition financing under its delayed draw term loan (DIP) facility and to use its cash collateral, among other things, to fund the carrier's ongoing operations. The orders also noted that debtors did not have sufficient working capital or financial resources of their own to fund everyday operations.

In addition to Western Global Airlines, a total of 18 subsidiary entities (the debtors) are included in the Chapter 11 petition. The court also agreed...

US's Western Global Airlines files for Chapter 11

Western Global Airlines (KD, Fort Myers Southwest Florida) has filed for voluntary protection under Chapter 11 of the US Bankruptcy Code after reaching an agreement with key financial stakeholders, including existing bondholders, to support a restructuring plan to stabilize the business and keep the cargo carrier flying.

Western Global Airline filed its Chapter 11 petition in the United States Bankruptcy Court for the District of Delaware on August 7, with a first-day hearing set for August 8. The case number is 23-11093. Notes attached to the filing seen by ch-aviation reveal Western Global Airlines owes its top 30 creditors USD471,381,543.51, with the largest creditor being the US Bank National Association who hold USD419,136,111.11 in unsecured notes. The next biggest creditors are Lufthansa Technik and GE Engine Services Distribution LLC, who are owed USD10,448,248.85 and USD7,448,165.84, respectively.

A total of 19 debtor entities are associated with the bankruptcy filing. Along with the last four digits of their federal tax identification number, they are: Western Global Airlines, Inc. (9265); Keldann Air LLC (6103); Jimsunn Air LLC...