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Old 03-30-2012, 08:23 PM
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Direct Air owes $8.6M to firms; Thousands more due ticket-holders Mobile

March 26, 2012
Direct Air owes $8.6M to firms; Thousands more due ticket-holders

Thomas Caywood, TELEGRAM & GAZETTE STAFF




The charter air service Direct Air, which suspended operations last week, stranding area passengers in Florida and wrecking spring vacation plans for others, owes a total of $8.6 million to its largest creditors, according to court records.

That sum doesn't include the potentially tens of thousands of dollars owed to individual customers who bought tickets for air travel on flights that have since been canceled.

Direct Air filed a required list of its largest creditors with the U.S. Bankruptcy Court in Worcester yesterday that includes an $84,716 debt to the Massachusetts Port Authority.

MassPort spokesman Richard Walsh couldn't immediately confirm Direct Air's tally of the debt but said the company owes MassPort, a quasi-public agency that owns Worcester Regional Airport, for landing fees and terminal rent at the airport.

MassPort initially waived landing fees as an incentive to get Direct Air to fly out of the Worcester airport, which has long struggled to attract regular commercial air service. Mr. Walsh said the fees the company owes MassPort date back to February 2011.

The Myrtle Beach, S.C.-based charter air service had provided low-cost air service from the airport for about three years before filing for bankruptcy protection late last week.

Direct Air owes the most by far, $3.3 million, to Chemoil Corp. of Fort Lauderdale, Fla., a jet fuel supplier that recently cut off service to Direct Air over unpaid bills, throwing the company's scheduled flights into disarray and ultimately leading to its abrupt suspension of operations.

Direct Air's majority owners last week removed its upper management team and filed for Chapter 11 bankruptcy reorganization in U.S. Bankruptcy Court in Worcester.

Direct Air released a statement at the time saying rising fuel prices and other expenses had left the discount charter service in a "severe operating loss position," meaning that it was losing a lot of money.

In its initial bankruptcy filing, which contained little financial information, Southern Sky Air & Tour LLC, doing business as Direct Air, reported assets of between $500,000 and $1 million - far less than its reported debts of between $10 million and $50 million.

The list of its 20 largest unsecured creditors filed with the court yesterday includes other airport authorities in Pennsylvania, South Carolina, Michigan, New York, Florida and Illinois.

JetPay LLC of Carrollton, Texas, an online payment processing service, is owed $2 million, according to the document. Other large unsecured creditors include aircraft operators Sky King Airlines of Lakeland, Fla., which is owed $889,000; Xtra Airways of Boise Idaho, which is owed $663,000; and Vision Airlines of Suwanne, Ga., which is owed $140,864.

Direct Air reported owing Quickflight Inc. of Lexington, Ky., an aircraft ground handling service, more than $116,000. Other unsecured creditors include television stations in Colchester, Vt., and Buffalo, N.Y.

The filing is signed by Hank L. Torbert, the founder of a Washington, D.C.-based investment group that bought a controlling stake in Direct Air last September.

The bankruptcy filing identifies the people now authorized to act for Direct Air in the bankruptcy as Mr. Torbert, Reginald Greiner and Edward Warneck. Mr. Warneck has been the public face of Direct Air as its marketing director, while Mr. Greiner is a principal of Mr. Torbert's private equity investment firm Avondale Ventures LLC.

Direct Air has said it plans to resume flights after May 15, but U.S. Department of Transportation officials have said the agency would have to reauthorize Direct Air to operate charter flights for that to happen, assuming it emerges from bankruptcy by then.
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