AeroCentury secures interim OK of plan; final hearing set for Aug. 31

By Sarah Lizee

Olympia, Wash., July 13 – AeroCentury Corp. received interim approval of its Chapter 11 plan of reorganization and disclosure statement on Monday, according to an order filed with the U.S. Bankruptcy Court for the District of Delaware.

The hearing on final confirmation of the plan is scheduled for Aug. 31.

The proposed plan contemplates two potential paths to the debtors’ emergence from bankruptcy, as previously reported.

The first plan is the sponsored plan scenario that is dependent upon the company finding a suitable plan sponsor that would enter into an agreement with the company to operate the debtors’ businesses on a go-forward basis and relaunch the debtors’ aircraft acquisition, leasing, and disposition operations using capital to be provided by the plan sponsor.

Should the company find a sponsor, the company will disclose the identity of that entity and the terms of the agreement in a plan supplement to be filed with the court. If there is no plan sponsor by the deadline, the company will proceed with the other path.

The second possibility is the stand-alone plan. This would occur if no plan sponsor is found or an acceptable plan sponsor agreement is not reached with a plan sponsor.

Under the stand-alone plan, the debtors’ remaining assets will be monetized for the benefit of their stakeholders.

According to the disclosure statement, holders of priority non-tax claims will receive payment in full in cash or other treatment that leaves their claims unimpaired.

Holders of other secured claims will receive payment in full in cash, the collateral securing their claims, or other treatment that leaves their claims unimpaired.

Under both the stand-alone plan and the sponsored plan, the pre-petition lender’s sole and exclusive recourse on account of the pre-petition loan claims will be limited to the assets subject to any asset sales to the pre-petition lender under the Falko sale order and no other assets of the debtors, and the pre-petition lender unconditionally and irrevocably waives any other rights to assert any claims or encumbrances against the debtors, their affiliates or subsidiaries, or the estates.

Under both the stand-alone plan and the sponsored plan, to the extent that a PPP loan claim is not forgiven under the paycheck protection program, each holder of an allowed PPP loan claim will receive, at the option of the debtors, reinstatement of their claims or other treatment rendering their claims unimpaired.

Under both the stand-alone plan and the sponsored plan, each holder of an allowed general unsecured claim will receive payment in full in cash or other treatment leaving their claims unimpaired.

Under the stand-alone plan, all intercompany claims will be canceled, and under the sponsored plan, they will be reinstated.

Under the stand-alone plan, holders of interests will receive their pro rata share of distributions from the post-effective date debtor assets until no assets remain, provided that no distributions will be made until all preceding claims have been paid in full or otherwise satisfied. Under the sponsored plan, all holders of interests will receive either cash, reinstatement of their claims, or a combination of these.

AeroCentury is an aircraft operating lessor and finance company based in Burlingame, Calif. The company filed bankruptcy on March 29 under Chapter 11 case number 21-10636.

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