Our Contract | Search Our Site | Discussion | Online Forms | Calendar | Aloha Newsfeed
Welcome! E komo mai!
Report on March 21, 2008 Aloha Bankruptcy Hearing
Aloha filed for Chapter 11 bankruptcy protection on Thursday, March 20, for the second time in three years. AFA Aloha Council 54 MEC President Gail Kim-Moe attended the initial bankruptcy hearing on March 21 along with AFA Staff Attorney Jay Trumble and our local counsel Kurt Leong. The following report was compiled from notes taken during the hearing.
Judicial Issues
Judge Robert Faris, who heard the first Aloha bankruptcy case (Aloha I), was originally assigned to the second bankruptcy case (Aloha II). But Judge Faris recused himself – stepped down from the case – for an undisclosed conflict; Judge Lloyd King is now assigned. Notably, Judge King will be on vacation from April 7 - April 25, returning to the bench April 28. Judge King anticipates assigning a mainland judge to cover emergencies during this period.
Opening Remarks of Aloha’s Counsel
Aloha’s attorney opened the hearing with a review of the Company’s status for the court. According to his opening remarks, Aloha’s revenue sources are:
· inter-island service,
· TranPac service,
· contract services,
· cargo services.
The attorney indicated that Aloha’s TransPac, contract, and cargo services have been profitable since the first bankruptcy reorganization. The losses have resulted from heavy inter-island revenue losses the Company attributes to Mesa Air Group aggressive pricing tactics. The Aloha I business plan approved in the earlier case has exceeded all goals with the exception of inter-island service.
Aloha’s attorney also indicated that Yucaipa’s and GMAC’s cash infusion to date exceeds $108M. It was represented in court that no further funds are available at this time and that Aloha cannot continue operations without additional funds.
Aloha currently in negotiations to sell some or all of its assets. Judge King inquired as to whether the reorganization plan anticipated a sale – counsel responded a sale was the “best foreseeable option.”
First Day Orders
The court issued orders granting all the petitioners first-day motions, noteworthy comments and issues from the discussion of those motions include the following:
Suppliers/Vendors
– currently $1.7 million maintenance fee obligations outstanding: Court ordered payment.
– currently $150,000 shipping fee obligations outstanding:
Court ordered payment.
Clearinghouse/Interline Agreements
– Aloha reported a current deposit of $100,000 with a newly negotiated agreement with ACH to increase the deposit to a total of $1 million with payments over the next four weeks. Upon hearing this report the Court then issued an order granting the motion and ordering payment.
Cash collateral position
The Company’s attorneys reviewed for the Court the financial position of the airline pertinent to 10-day period following the bankruptcy filing. As indicated in Court:
· At start of 10-day period: $3.8 million
· Projected losses over 10-day period: $2.2 million
Payroll of $1.68 million due for Tuesday, March 25 payroll; Court issued order authorizing payment.
GMAC and Yucaipa stipulated (agreed) to the Company’s use of capital through March 31.
Official Committee of Unsecured Creditors
The Official Committee of Unsecured Creditors represents the interests of the Creditors during the bankruptcy, with access to in-depth confidential financial and operational data, business plans, and bankruptcy issues. AFA secured a seat on the Creditors Committee during Aloha I, enabling us to have crucial information throughout the proceedings. David Borer, AFA’s General Counsel, submitted a letter directly to the U.S. Trustee applying for a seat on the committee. We expect AFA to be appointed to the Creditors Committee and for the initial meeting of the Committee to take place in the near future.
Future Court Date(s)
Next hearing date: March 31 at 2:00 p.m., with an alternative date of April 1 at 9:00 a.m. in the event the parties stipulate to the later date. Judge King ordered the parties to submit pleadings for March 31 hearing date must be filed no later than 9:00 a.m. March 27.
[ Back to top ]