Ravn Air Group creditors committee objects to DIP financing motion

By Caroline Salls

Pittsburgh, April 27 – Ravn Air Group, Inc.’s official committee of unsecured creditors objected to the company’s proposed debtor-in-possession financing, according to a Friday filing with the U.S. Bankruptcy Court for the District of Delaware.

Given the uncertainty surrounding the length of the Covid-19 crisis and timing of any government relief, the committee said the Ravn debtors have found themselves and their ability to continue providing essential services “entirely at the mercy of their pre-petition (and now DIP) lenders.”

“The pre-petition lenders, however, chose to ignore the fact that the debtors could have continued operating and providing critical services to many communities in this dire time of need and instead, took advantage of the predicament to enhance their investment and priority position through the Chapter 11 process at the expense of other creditors,” the objection said.

“The DIP facility has but one purpose – jam through the restructuring at lightning speed by imposing egregious milestones to get the pre-petition lenders paid in full in cash in a matter of days, while providing them with additional returns through multiple fees and generous interest rates under the DIP facility.”

The creditor group said the fees and interest rates are especially onerous because nearly one-third of the pre-bankruptcy loans are being rolled up into post-bankruptcy debt.

The committee said Ravn got a $6 million advance, representing less than a quarter of the full DIP financing amount, that “does not provide sufficient runway for a restructuring.”

In addition, the committee said the DIP financing agreement includes milestones for Ravn’s Chapter 11 cases that will push the company toward a fire sale or disorderly liquidation.

Specifically, the committee said the proposed milestones require Ravn to file an acceptable Chapter 11 plan and related disclosure statement on April 25, obtain approval of the disclosure statement within 48 days and secure confirmation of the plan within 76 days of the bankruptcy filing date.

“The debtors will simply not have enough time to consider any restructuring alternatives (other than the acceptable plan that pays the pre-petition/DIP lenders in full in cash) and all available sources of exit financing by April 25,” the objection said.

Ravn is an Anchorage-based airline company. The company filed bankruptcy on April 5 under Chapter 11 case number 20-10755.

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