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 (4789); B26344 LLC (2769); B26356 LLC (6221); M48411 LLC (3014); M48412 LLC (4041); M48415 LLC (8455); M48435 LLC (1643); M48512 LLC (5395); M48513 LLC (4817); M48542 LLC (5799); M48543 LLC (0630); M48544 LLC (5332); M48545 LLC (4459); M48546 LLC (6344); M48581 LLC (N/A); Mobility Air, LLC (3651); and NCF680C2 LLC (9966).
Western Global Airlines Inc owns 100% of Keldann Air LLC and Jinsunn Air LLC. In turn, Keldann owns 100% of B26344 LLC B26356 LLC; M48412 LLC; M48435 LLC; M48542 LLC; M48543 LLC; and M48544 LLC, while Jinsunn owns 100% of M48411 LLC; M48415 LLC; M48512 LLC; M48513 LLC; M48545 LLC; M48546 LLC; M48581 LLC; Mobility Air, LLC; and NCF680C2 LLC. These Delaware listed entities almost exclusively serve as financing vehicles for Western Global Airlines.
Western Global Airlines is itself 100% owned by an entity called Western Global Airlines Holdings Inc. A total of seven stakeholders have interests in this entity, including the WGA Trust (6.2%); the Danielle J. Neff Trust (9.4%); the Kelly S. Neff Trust (9.4%); the Carmit P. Neff Revocable Trust (18.3%); the James K. Neff Revocable Trust (19.1%); James K. Neff and Carmit P. Neff, as joint tenants with rights of survivorship (0.002%); and Miguel Paredes (37.5%). Paredes does not hold the stock in a personal capacity, but as the trustee of the Western Global Airlines, Inc. Stock Ownership Trust.
Bondholders, including those holding unsecured notes, along with Western Global Founder and CEO, James (Jim) Neff have committed over USD77 million of debtor-in possession financing that will fund the airline's operations while under Chapter 11 and help shore up its balance sheet when it exits the process. Western Global hopes the restructuring will reduce its debts by USD450 million. The airline will also seek new capital. Western Global will continue operating "as usual" while in Chapter 11.
The Florida-based cargo airline has been the subject of bankruptcy speculation for several months as its financial situation deteriorated amid a global air freight downturn. According to ch-aviation fleets data, 15 of the airline's 20 aircraft are inactive. In early July, ch-aviation reported that Neff had acquired USD115 million of senior secured debt in the distressed airline at USD0.40 in the dollar.
Ahead of the Chapter 11 filing, Western Global had reached a restructuring support agreement (RSA) with its financial stakeholders. Neff says his top priority is preserving the long-term viability and value of the airline and protecting its employees. "All my objectives regarding the company align with this overriding goal," he said. "The plan outlined in the RSA 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, our people, and our customers."
Neff has also agreed to forego some of the statutory rights he acquired when he purchased the debt last month, including leapfrogging many other creditors in case of any winding up. The airline says that to "support the restructuring process under the terms of the proposed plan described in the RSA," the CEO will pass on a USD70 million benefit he would have otherwise received. That money will instead go to other stakeholders, including bondholders and employees, to provide "greater consideration and value to them."