Joel R. Glucksman
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201-896-7095 jglucksman@sh-law.comFirm Insights
Creditors Try to Force Evergreen International Airlines into Involuntary Chapter 7 Liquidation
Author: Joel R. Glucksman
Date: January 3, 2014
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Delford Smith, founder and CEO of Evergreen International Airlines, is struggling to establish a viable financial exit plan for the ailing airline, amid new threats from creditors to push the company into involuntary Chapter 7 bankruptcy liquidation proceedings.
The unsecured creditors filed an involuntary petition against Evergreen last week under Chapter 7 of the bankruptcy law, according to OregonLive. Evergreen now has 20 days to respond. However, if evidence comes to light that the company is not paying its debts, it’s possible that the bankruptcy court may adjudicate the company a bankrupt, in which case a Chapter 7 bankruptcy trustee will be appointed to liquidate its assets.
Currently, two hotels are seeking more than $440,000 for Evergreen crew members’ lodging, and a plowing company is demanding the payment of $25,000 for clearing snow from Evergreen cargo jets at New York’s John F. Kennedy Internationa. The airline has been facing financial struggles for several months, and flew its last flight on Dec. 2, the news source explained. The distressed airline, which operated for nearly 30 years, may face additional suits from creditors who are becoming frustrated by the company’s failure to pay its debts.
In response to the threat to push the company into involuntary Chapter 7 liquidation proceedings, Smith told the newspaper that he does not wish to liquidate the company, but instead to file a Chapter 11 reorganization plan.
“I don’t think 7 will work, I think we’ll need 11,” he told OregonLive in a telephone call. “We’ve virtually shut the airline down. It’s not a big rhubarb. We’re going to perpetuate the company.”
Smith also noted that he sold Evergreen Helicopters Inc. for nearly $300 million to help reduce the airline’s outstanding debt, but that he is waiting for the cargo market to turn around before reconstituting the airline
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