Superior Air Charter LLC

April 28, 2020

Dallas-based Superior Air Charter LLC d/b/a JetSuite Air, a charter air carrier to BSDs who roll as BSDs tend to roll, filed for chapter 11 bankruptcy in the District of Delaware. Ironically, while it serviced ballers, the debtor was never a baller itself. Founded in 2009, the debtor, despite a history of over 111,000 across a fleet of eighteen planes (down to ten today*), a “nearly” impeccable safety record (🤔), and a good reputation, was “never able to operate profitably.” Demand simply never hit a level where the business could break even, a problem aggravated by the debtor’s inability to penetrate the fat-cat bankers on the East Coast — something the debtor blames on the “unreliability” of acquired aircraft. 😬

Enter COVID-19. Similar to many of the bankruptcy filings we’ve seen to date, the worldwide pandemic and corresponding shutdown proved to be the gentle push of an otherwise teetering business over the goal line into bankruptcy. Per the debtor:

Thus, the Debtor could ill afford the economic destruction that the worldwide Coronavirus (COVID-19) pandemic would come to cause across a spectrum of industries. In short, it decimated the Debtor’s operations, with potential customers no longer able or willing to seek out the Debtor’s services. Indeed, the aviation industry has been particularly hard hit in light of travel restrictions put in place across all of the states that the Debtor has traditionally served. The Debtor’s cash flows dropped by essentially 100% almost immediately after the restrictions went into place. Because the duration of the COVID-19 crisis is indeterminate, the Debtor expects demand to remain very weak for many months to come. These conditions naturally exacerbated the Debtor’s liquidity issues, and by mid-April 2020, it became apparent the Debtor had little choice but to ground its fleet and furlough most employees and crewmembers.

The debtor has no funded secured debt and approximately $16mm of unsecured debt in the form of promissory notes; it estimates approximately $75mm of general unsecured debt exclusive of breakage costs associated with rejected contracts/leases. A good percentage of that general unsecured debt relates to “suitekey customers” who purchased the ability to fly private within the debtor’s service region. Someone from Netflix Inc. ($NFLX) is listed as the largest unsecured creditor.

The debtor did attempt to tap the relief provided by the US government via the CARES Act but “found the applicable sources of funding under the CARES Act to be expressly prohibited for companies that have sought Chapter 11 protection.” In lieu of a government-provided lifeline, the debtor does have a commitment for $3.6mm of DIP financing from its pre-petition unsecured creditor, JetSuiteX Inc., and seeks to use the chapter 11 process to, more likely than not, wind-down operations and maximize value for its creditors.

*Two aircraft lessors served notices of default on the debtor prior to the petition date and retook possession of aircraft per the terms of the governing leases. The debtor also sold six planes in August 2019. Hence the reduction of the fleet from 18 to 10.

• Jurisdiction: D. of Delaware (Judge Sontchi)

• Capital Structure: No funded secured debt (just aircraft financing). $16.2mm unsecured promissory notes (JetSuiteX Inc.)

• Professionals:

  • Legal: Bayard PA (Evan Miller, Daniel Brogan, Sophie Macon)

  • Independent Manager: Jonathan Solursh

  • Financial Advisor/CRO: Gavin/Solmonese (Edward Gavin, Jeremy VanEtten)

  • Claims Agent: Stretto (*click on the link above for free docket access)

• Other Parties in Interest:

  • DIP Lender ($3.6mm): JetSuite X Inc.

    • Legal: Vedder Price PC (Michael Edelman, Jeremiah Vandermark) & Potter Anderson Corroon LLP (Jeremy Ryan, Aaron Stulman)