A bankruptcy judge will decide tomorrow whether to approve the purchase of Peninsula Airways assets for $12.3 million.
The company that owns Ravn Air Group was the top bidder for Peninsula Airway’s assets at an auction Wednesday. The regional air carrier that primarily serves the Bristol Bay and the Aleutian-Pribilof region has been undergoing bankruptcy proceedings since August 2017. A federal judge ordered PenAir to sell off its assets as a part of its bankruptcy proceedings.
“We had two bidders,” said Michael Markham, the attorney for the trustee overseeing the sale. “The prevailing bidder was J.F. Lehman & Company, who’s the owner of Ravn Air Group. Their bid was $12.3 million in cash as well as some other considerations, some contract assumptions, including covering liabilities under the company health plan.”
The buyer would also pick up the primary aircraft leases from PenAir.
The Seybert family has owned PenAir since 1955. For many years, it has been a primary, and often only, service between Anchorage and Bristol Bay. Currently, it is the only connection between Anchorage and Unalaska as well as most Aleutian and Pribilof Island communities.
The cash from the sale will be put toward paying the companies debts. However, it is unlikely that all creditors will be paid.
“The first debts that will get paid are the secured debts,” explained Markham. “Those will get paid first off the top. Then after that the post-bankruptcy debts have a higher priority than the pre-bankruptcy debts. So the balance of the money will likely be exhausted paying post-bankruptcy debts, but we don’t have a definite accounting of all those, so I don’t want to completely foreclose any chance of money making it to the pre-bankruptcy creditors. But it’s likely that we’ll get close to paying the post-bankruptcy creditors in full.”
Markham estimated that PenAir owes a little more that $5 million in secured debts, between $6 and $10 million in post-bankruptcy debt and “several million” of pre-bankruptcy debt.
He added simply, “There’s definitely not enough money with the $12.3 million to go around.”
Friday afternoon the purchase will go before a bankruptcy judge in Anchorage. If the judge approves the sale, the bidder could close the deal within four to six weeks.
This sale is not a merger. Markham stressed that PenAir will continue to operate under that name and separately from current Ravn operations. In the immediate future, he said, he does not anticipate changes to service for Bristol Bay or the other communities PenAir serves.
Contact the author at email@example.com or 907-842-5281.