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 to consolidate the individual petitions into the one bankruptcy petition to streamline proceedings.

Critically, the interim orders permitted Western Global to proceed with plans to obtain USD75 million in senior secured post-petition financing via the DIP facility. "Approval of the interim relief requested in the motion is necessary to avoid immediate and irreparable harm to the debtors and their estates pending the final hearing," the interim orders read. "The DIP facility is the best source of debtor financing available to the debtors at this time."

Annexes to the interim orders show the DIP lenders include DKB Partners LLC; Osterweis Capital Management LLC; Polar Multi-Strategy Master Fund; Owl Creek Credit Opportunities Master Fund LP; and Concise Capital Management LP. Notably, James (Jim) Neff, the Founder and CEO of Western Global Airlines, is also the President of DKB Partners LLC and signed the DIP facility agreement on behalf of that entity. The funds are to be used for everyday corporate or working capital needs per the agreed budget; to pay the fees and expenses of the DIP agent and lenders, including the establishment (3%) and exit (2%) fees; legal costs; and certain other loan obligations. The DIP lenders, of which DKB Partners LLC is the lead agent, are charging Western Global Airlines an interest rate of 9% p.a. for the loan facility.

Speaking more generally about the Chapter 11 petition and his strategy to keep Western Global Airlines flying, Neff said earlier this week that "my number one priority is preserving the long-term viability and value of Western Global Airlines and protecting our employees. All my objectives regarding the company align with this overriding goal. The plan we have outlined [...] reflects my continued dedication to and belief in Western Global Airlines, along with the overwhelming support of our key financial stakeholders. I am confident that this plan will tremendously strengthen our financial position and ensure a better future for Western Global Airlines."

A total of 11 creditors are owed more than USD1 million each by the carrier, including: