Western Global Airlines files bankruptcy with founder, bondholder support

By Sarah Lizee

Olympia, Wash., Aug. 7 – Western Global Airlines filed Chapter 11 bankruptcy on Monday in the U.S. Bankrutpcy for the District of Delaware, according to a press release.

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

Western Global Airlines has lined up $75 million in debtor-in possession financing from founder Jim Neff and some members of an informal group. Of that amount, $25.67 million is a rollup of prepetition debt.

The DIP agent is DKB Partners, LLC.

The facility is set to bear interest at SOFR plus 900 basis points and mature in 120 days. There is a 3% upfront fee and a 2% exit fee.

The RSA outlines a Chapter 11 plan of reorganization that aims to reduce the company’s debt by $450 million and infuse significant new capital into the company. The parties also plan to provide consideration to an employee stock ownership plan.

“The RSA achieves many of the goals Western Global sought from the outset of its restructuring efforts, including deleveraging the balance sheet by 86% and partnering with new investors,” the company said in the release.

In late June, 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 ESOP, the company said.

Through the plan, the RSA parties will invest about $86 million in new money in the debtors, inclusive of the DIP financing, and $11 million in exit equity capital.

Upon emergence, the DIP financing will convert into senior secured convertible notes.

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

In its petition, the company listed 1,000 to 5,000 creditors, $100 million to $500 million in assets and $500 million to $1 billion in liabilities.

Its largest unsecured creditors are U.S. Bank NA, based in St. Paul, with a $419.14 million unsecured note claim, Lufthansa Technik, based in Philadelphia, with a $10.45 million trade debt claim, GE Engine Services Distribution, LLC, based in Pittsburgh, with a $7.45 million trade debt claim, Trans-Caribbean Cargo Corp., based in Miami, Fla., with a $6.74 million litigation claim, and Delta Airlines, based in Atlanta, with a $4.97 million trade debt claim.

Weil, Gotshal & Manges LLP and Richards, Layton & Finger is the company’s legal counsel, Evercore is investment banker, FTI Consulting is restructuring adviser, and Seabury is commercial adviser.

The informal group is advised by Paul, Weiss, Rifkind, Wharton & Garrison LLP and Landis Rath & Cobb LLP as legal counsel, and Ducera Partners LLC as investment banker.

The company is hoping to emerge from the process in about 110 days.

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

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