Judge Peter D Russin of the US Bankruptcy Court for the Southern District of Florida allowed Silver Airways (3M, Fort Lauderdale International) to use cash collateral to continue operating while it tries to refinance and restructure in an order issued on January 7, 2025.
"The debtors intend to use cash collateral to pay operating expenses of their businesses, which primarily include, payroll, fuel, insurance, aircraft maintenance expenses, and airport leases," Silver's filing says.
The order allows Silver Airways to pay employee prepetition compensation, prepetition unpaid wages, normal business expenses, amounts due to government agencies, remit insurance and employee benefit payments, and make post-petition payments necessary to keep operating. The order also authorises financial institutions to process payments to and from Silver's accounts.
"The continued operation of the debtors’ businesses will preserve and maintain their going concern, enterprise value, and enable the debtors to continue to operate and maximise its value in the reorganisation process," Silver Airways argued. "If the debtors are not allowed to use cash collateral, the business operations will be substantially interrupted. This would result in a significant diminution in the value of the debtors' assets (including the cash collateral) to the detriment of the debtors' creditors and other harm to the estate."
The airline asked to use cash collateral for an initial two-week period while it obtains and finalises debtor-in-possession financing. Silver Airways is reportedly in talks about debtor-in-possession financing but has not locked in an agreement as of January 7. Failure to do so may result in the forced sale or liquidation of the airline.
The initial creditors' list submitted to the United States Bankruptcy Court in the Southern District of Florida is 123 pages long, and pro forma filings say the regional carrier owes somewhere between USD100 million and USD500 million.
"The debtors accumulated a significant debt load due to the Covid-19 pandemic and the resulting rising costs of human capital (particularly pilots and aircraft technicians), fuel, and aircraft parts and components," Silver's filing reads. "Additionally, the debtors’ growth-oriented business plan has been frustrated by continued supply-chain failures."
As ch-aviation previously reported, Silver Airways and subsidiary Seaborne Virgin Islands (San Juan Luis Muñoz Marin) filed for Chapter 11 on December 30, 2024. CEO Steven Rossum said the most important task is to restructure the carrier's financial affairs and operations while in Chapter 11. Silver's filings are yet to outline the details of any financial restructuring, which may involve asking secured creditors to convert debt to equity. However, the filings say the airline hopes to exit Chapter 11 as early as the end of March.
Silver Airways has a fleet of eight leased ATR42-600 and six leased ATR72-600s. It operates intrastate routes within Florida and also flies to the Bahamas and between San Juan Luis Muñoz Marin and Caribbean ports. Seaborne Airlines has two leased amphibious DHC-6-300s which operate on the St. Croix SPB-St. Thomas SPB city pair. Seaborne went through Chapter 11 in 2018, after which it was acquired by Silver Airways.
