Alaska's largest rural airline is scrambling to find a buyer that can keep the company intact as it emerges from bankruptcy, rather than seeing its planes sold off piecemeal through a liquidation process.
RavnAir Group flew to more than 100 Alaska communities before shutting down and filing for bankruptcy last month amid the COVID-19 pandemic, forcing some remote villages to charter planes to get their residents medical care. Ravn is now running for-sale ads in the Anchorage Daily News and the Wall Street Journal, and a half-dozen potential buyers have signed non-disclosure agreements that allow them to review sensitive company data, according to court filings.
Ravn's management is touting $30 million in federal COVID-19 aid that it says the federal government could grant — if a potential buyer is found.
But as the federal judge in Ravn's bankruptcy case pointed out at a hearing Wednesday, that money "ain't in hand, yet." And the company still owes $90 million to an array of lenders represented by the French international bank BNP Paribas, whose attorney calls a sale a "Hail Mary" and is pushing to have Ravn's planes sold off piecemeal through a liquidation process that would shut down the company for good.
"If it comes together that there's somebody who's interested in taking the (federal) money and funding a plan, that would be great news," BNP's attorney, David Neier, said at the hearing. "But we're not giving up the liquidation process because there is no other path that has emerged that will work with this estate."
Ravn is majority-owned by a pair of East Coast private equity companies, J.F. Lehman and Co. and W Capital Partners. Before the pandemic, the company operated 72 planes and had 1,300 workers, and its network extended across the state, from the oil-rich North Slope to the major commercial fishing port of Dutch Harbor in the Aleutian Islands, with dozens of other destinations in between.
The pandemic caused a 90% drop in passenger bookings over three weeks, and Ravn laid off all but 40 of its employees and filed for bankruptcy protection in Delaware.
Since then, Ravn's management — led by chief executive Dave Pflieger, who collected more than $1.4 million in salary, bonuses and expense payments in the past year, according to court filings — has been fighting to find a buyer that could spare the company from liquidation.
Beyond its newspaper advertisements, it's promoted petitions and tweeted at President Donald Trump and Treasury Secretary Steven Mnuchin. It also worked closely with Alaska's Congressional delegation to secure the possible relief money from the federal government, and it says it's contacted 19 different entities about a possible sale.
The efforts to keep the company intact are aligned with the array of Alaska and other businesses owed millions of dollars by Ravn that are known as the "unsecured creditors" in the bankruptcy case. That means their claims rank behind the $90 million in debts to the "secured creditors" represented by BNP, the French bank.
Ravn estimates that a liquidation would raise no more than $41 million. That would not be enough to pay the claims of the unsecured creditors, which include Anchorage-based Petro Star, GCI and Northern Air Cargo.
So the unsecured creditors' attorneys hope to see Ravn sold intact, which could allow it to start generating revenue again and make it more likely that the Alaska-based businesses and others are paid off.
At Wednesday's hearing, an attorney representing the unsecured lenders, Robert Stark, said Ravn has not given itself enough time nor hired an investment banker to help find a buyer. And he argued that the secured lenders are pushing the company too quickly toward liquidation.
"We're all puppets. And they're the puppet masters," Stark said. He added: "This company needs a chance to rehabilitate. It needs to heal, like every other part of this country."
A spokesman for BNP, the bank that represents the secured creditors, declined to comment. At the hearing, Neier, the bank's attorney, disputed the "puppet master" remarks and argued that Ravn's sale efforts are not "illusory."
"It's more of a, 'Let's see if we can do something better in the time we have allowed,'" Neier said.
Neier said that Ravn already faces a revenue shortfall and will need more cash to get through the bankruptcy process. But Stark asked the judge at the hearing, Brendan Shannon, to give Ravn an extra month to find a buyer.
Shannon instead agreed to extend the deadline two weeks, to July 9, saying that Alaska's required two-week quarantine period for visitors has not given Ravn "a meaningful opportunity to really market these assets," like its planes.
"By all reports, this company is healthy, profitable and operating," Shannon said. "If there's an opportunity to reorganize this, provide these services, save these employees' jobs, I would be on board with that. I can't make economic circumstances and I cannot create value, but I can provide opportunity."
Shannon and Ravn's attorneys both noted that there are still questions about whether or how the Department of the Treasury would allow a potential buyer to claim the $30 million in federal aid.
"We haven't received written confirmation, although we're seeking it from Treasury that they understand that's how we’re going to be using it and that it would be transferable," said Jane Kim, a Ravn attorney.
The federal money, and the uncertainty around it, is a big factor in assessing Ravn's value, according to a person affiliated with a potential buyer, who asked to remain anonymous because of the sensitivity of the bidding process.
"How can any potential buyer take that to the bank?" the person said. "The business itself has no value, unless and until (the chief executive) provides some kind of documentation to support their representation that a successor to Ravn would have access to this money."
Ravn officials did not respond to requests for comment.