Western Global Airlines’ Chapter 11 plan of reorganization confirmed

By Sarah Lizee

Olympia, Wash., Nov. 22 – Western Global Airlines’ pre-packaged Chapter 11 plan of reorganization was confirmed on Tuesday by the U.S. Bankruptcy Court for the District of Delaware, according to an order.

As background, the company reached a restructuring support agreement with key financial stakeholders, including existing bondholders holding more than 85% of the outstanding senior notes due in 2025, in support of a plan to stabilize the business and its financial future, with the company’s founder reinvesting alongside bondholders and other financial partners.

The plan aims to reduce the company’s debt by $450 million and infuse significant new capital into the company. The parties also intend to provide consideration to an employee stock ownership plan.

In late June, founder Jim Neff purchased the company’s $115 million of outstanding senior secured debt for $45 million in a competitive process independently conducted by the lenders.

He has also agreed to forego some of the statutory rights that he would otherwise maintain as the holder of this debt and pass on the $70 million benefit to the other stakeholders, including the bondholders, the employees, and the employee stock ownership plan, the company said.

Through the plan, the RSA parties will invest about $86 million in new money in the debtors, inclusive of $75 million in debtor-in possession financing from Neff and members of an informal group, and $11 million in exit equity capital.

The debtors’ current funded debt of about $560 million will be compromised or canceled under the plan.

On the effective date, DIP agent DKB Partners, LLC will have its DIP claims exchanged on a dollar-for-dollar basis for new convertible notes.

DKB will purchase $17.5 million of the convertibles and receive 80.4% of the new common stock and invest $11 million in reorganized Western Global in consideration for the remaining 19.6%.

Holders of allowed unsecured notes claims will receive their pro rata share of the $17.5 million unsecured note cash pool.

Holders of allowed general unsecured claims will receive their pro rata share of the $3 million general unsecured cash pool, with distributions capped at 10%.

The Estero, Fla.-based provider of contracted air cargo transportation services filed bankruptcy on Aug. 7 under Chapter 11 case number 23-11093.

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