Regional airline cancels flights, no bankruptcy yet

At the start of June, Florida-based vacation airline Silver Airways formally ceased operations after six months of looking for a way out of bankruptcy resulted in a stalking horse offer of $5.77 million.

This amount will not even begin to make a dent in the more than $500 million that the low-cost carrier owes to creditors and, as soon as the sale was approved by Southern District of Florida Judge Peter D. Russin, the Connecticut hedge fund that purchased Silver called for an immediate end of operations.

On June 11, Silver put out an Instagram post telling passengers with booked travel to "not go to the airport," as any scheduled flights would not be departing. Passengers were also told to contact their credit company or travel agency for refunds (as unsecured creditors with commensurately very small losses, travelers are generally at the bottom of a repayment list in cases of bankruptcy).

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'Without immediate authorization, Seaborne would be irreparably harmed'

A regional seaplane airline launched in 1992 out of the U.S. Virgin Islands, Seaborne Islands was purchased by Silver in 2018. After the latter's collapse became imminent, Seaborne announced that it intended to continue running flights to St. Thomas and St. Croix from its hub at Puerto Rico's Luis Muñoz Marín Airport.

"Seaborne's fleet consists of De Havilland DHC-6-300 Twin Otter Seaplanes," Silver had on its website before it was taken down. "A vital part of St. Croix’s transportation infrastructure, the Seaborne seaplane gives travelers a thrilling, fast, convenient, and unique way to connect between St. Thomas and St. Croix."

Related: Canceled flight? Stop contacting bankrupt airlines for refunds

Between May 30 and June 6, Silver flights to St. Thomas and St. Croix were temporarily suspended for scheduled aircraft corrosion inspections. With the subsequent bankruptcy of its parent company preventing it from resuming these flights, Seaborne is now asking a U.S. Virgin Islands court to authorize an auction that would allow it to find a buyer and continue operations.

In court filings, Seaborne said that it has already received a stalking horse bidder willing to pay $200,000 in cash and take on its $625,000 in debt. It is asking the court for a June 24 hearing on the request and an auction that can be held as early as July 1 — a timeliness that Seaborne argues is necessary to avoid a long period of stopped operations.

"Without immediate authorization to proceed with a sale process for its assets, Seaborne Virgin Islands, Inc. will be irreparably harmed," the airline said in a court filing.

Seaborne is owned by Silver but has one key difference

As one of the few large seaplane companies in the small market within the U.S. Virgin Islands, Seaborne has strong regional name recognition and a customer base that relies on these flights to get to the larger Puerto Rico for certain shopping and business needs.

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Seaborne filed documents saying that it is currently in discussions with at least 30 potential buyers; any bidder would need to offer at least $100,000 more than the stalking horse offer, while bids would be accepted in increments of $50,000.

"Unlike Wexford's bid for Silver, the Seaborne bidder has agreed to accept the payroll and normal ordinary course payables, which effectively ensures continuous operation," Seaborne's Executive Director of Operations Phil Lambrechts said in a statement to local press. "We are excited to see that Seaborne has attracted interest from investors that want to maintain and grow its service in the U.S. Virgin Islands."

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