As reported by several media sites, including South Carolina Now, Direct Air has filed for chapter 11 bankruptcy protection in the Massachusetts U.S. Bankruptcy Court, days after the company cancelled all of its flights without warning.
Attorney Alan Braunstein made the filing for the Myrtle Beach-based air service company on March 15. According to the court documents the debtor is shown as Southern Sky Air & Tours, LLC d/b/a Direct Air and includes a consent from their Board of Managers.
A letter from the board, dated March 15, reads, “In the judgment of the Board of Managers, it is desirable and in the best interest of the Company, its creditors, employees, and other interested parties that a petition be filed by the Company seeking relief under the provisions of chapter 11 of title 11 of the United States Code.”
Earlier in the same week Direct Air made an abrupt halt in all service – without warning.
Reporters learned that the U.S. Department of Transportation, DOT, had no knowledge of Direct Air’s plans for a bankruptcy filing according to their spokesman.
In a news release made available to the press on March 16, Direct Air explained that an investor group, based in Washington, DC, had purchased a bulk of the air service in September. Management for the former owners saw to the day-to-day business until this week.
The release said, “Despite the investment of additional working capital into Direct Air in the preceding months by the new majority owners, rising fuel costs and other operating expenses pushed the charter company into a severe operating loss position.”
In regards to the sudden halting of flight service, Direct Air apologized to its customers, communities and employees.
Prior to the filing, Direct Air said that they planned to resume flight travel by May. The company now hopes to exit the bankruptcy as soon as they can.
Direct Air owes money to the Myrtle Beach International Airport and had a performance bond with the county, per MYR spokeswoman Lauren Morris, for $151,000.
When Direct Air halted service, according to Morris, the airport called the bond.
MYR will still be due $175,000 after the bond. The money owed, per Morris, is for landing fees, equipment rental gees and security fees.
Morris stated that it was not unusual for Direct Air to fall behind in its payments during low-travel off-season times. Once the higher travel season resumed the company would usually be able to repay its balance due.
There will be some impact on MYR with the loss of Direct Air services, even if flights are resumed as early as May. Morris said, “Our hope has always been that they come back, they have eight percent of our total traffic. We have continued gains in our air service every year, we hope that can offset any losses.”
Morris said that MYR has to look at routes, types of aircrafts and frequency before the airport can determine what their losses will be without Direct Air.
Facing a business or personal bankruptcy can be complicated and stressful. Contact a bankruptcy attorney for help with your filing.