FLYi granted court OK to immediately discontinue flight operations

By Caroline Salls

Pittsburgh, Jan. 5 - FLYi, Inc., parent of Independence Air, obtained court approval to voluntarily discontinue all flights scheduled to depart after 7 p.m. on Thursday, according to a Thursday filing with the U.S. Bankruptcy Court for the District of Delaware.

The filing said the company's current cash and financial position supports the immediate discontinuation of flight operations.

The company also got the court's approval to implement a wind-down employee plan, to pay severance, vacation and other benefits to terminated employees or employees on leave and to modify collective bargaining agreements.

According to the court order, the employee wind-down plan cannot exceed $4.4 million and the request under the wind-down plan to make payments to six "insiders" will be addressed during a Jan. 12 hearing.

On Wednesday, FLYi's U.S. Trustee objected to the wind-down employee plan because the motion does not outline the duties of senior management.

U.S. Trustee Kelly Beaudin Stapleton said the company seeks to retain some members of senior management during the wind-down without indicating how they will carry out their fiduciary obligations to the company and its creditors.

According to the objection, bankruptcy code prohibits the proposed bonuses to senior management, the role of senior management must be clarified and the proposed payments under the wind-down employee plan are excessive.

In connection with the flight discontinuation, the court authorized the airline to automatically refund customers with reservations for flights scheduled to depart beyond the cessation time and to automatically refund customers for return flights that are not rescheduled.

"To date there has not been a firm offer put forward that meets the financial criteria necessary to continue operations as is," chairman and chief executive officer Kerry Skeen said in a Tuesday news release.

As previously reported, the Dulles, Va.-based parent of Independence Air has been soliciting offers to purchase or invest in the company since it filed for bankruptcy on Nov. 7.

FLYi's Chapter 11 case number is 05-20011.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.