Global Aviation OK to enter stipulation on interim loan forbearance

By Kali Hays

New York, May 6 - Global Aviation Holdings Inc. received court permission to enter into a stipulation with Cerberus Business Finance, LLC and North American Airlines Inc. allowing a limited forbearance under Global Aviation's debtor-in-possession financing agreement and consenting to continued use of cash collateral, according to a Monday order with the U.S. Bankruptcy Court for the District of Delaware.

North American Airlines is a debtor in the Global Aviation bankruptcy case, and Cerberus is the administrative and collateral agent for the DIP agreement.

As previously reported, under the stipulation, North American will transfer to Cerberus a $1.05 million payment made by Aecom National Security Programs Inc. under a contract between the parties.

In exchange, Cerberus will remit back to North American the funds it sweeps from the airline's bank accounts that constitute payments in advance from Aecom and any additional payments made by Aecom under the contract for invoices issued on or after March 29.

Those payments can be used to pay vendors and any other costs associated with the Aecom contract.

Also under the stipulation, the debtors cannot use cash collateral without the written consent of Cerberus, and the default notice remains in full force and effect.

As reported, Global Aviation had not been in compliance with its financing agreement because it claimed an unfavorable variance between the actual net cash flow and the budgeted amount for the period ended March 14 and a more that 10% unfavorable variance between actual cash receipts and the amount budgeted for the period ended March 14.

The company subsequently defaulted under the DIP agreement and Cerberus suspended all funding commitments and terminated cash collateral March 25.

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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