Global Aviation gets DIP loan forbearance, access to cash collateral

By Caroline Salls

Pittsburgh, April 21 - Global Aviation Holdings Inc. requested court approval of a stipulation that provides a limited forbearance tied to its debtor-in-possession financing and allows the company to continue to use cash collateral, according to a Monday filing with the U.S. Bankruptcy Court for the District of Delaware.

The company said it received an unexpected notice of default on March 25 under which all of the DIP lenders' commitments and any funding under the DIP financing agreement were suspended and the rights of the Global Aviation debtors to use cash collateral were terminated.

"The default notice thus resulted in an immediate cut off of all funding," the company said in the motion.

The default notice said agent Cerberus Business Finance, LLC and the lenders would consider any wind down or liquidation budget submitted by the debtors.

As a result of the immediate lack of access to funding, Global Aviation said all of the debtors except for one business line operated by North American ceased operations, and all employees were let go, except for about 100 employees who remained at North American to support continuing operations for a customer.

The company said North American's continued operations require additional funding beyond the revenue generated by the customer contract, and the remaining debtors need to move forward with a liquidation of their remaining estates.

To obtain this additional funding, Global Aviation said the debtors negotiated an agreement with Cerberus for a limited forbearance to reinstate the use of cash collateral in order to fund the sale of North American's assets associated with its remaining business line and fund an orderly winddown of the remaining debtors.

In addition, the forbearance stipulation provides a mechanism by which the debtors and Cerberus will share in receipts from collection of accounts receivable and proceeds of the sale of the debtors' inventory and some of North American's assets.

Global Aviation, a Peachtree City, Ga.-based provider of charter air transportation for the U.S. military and of commercial global passenger and cargo air transportation services, filed for bankruptcy on Nov. 12. The Chapter 11 case number is 13-12945.

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