Friday, May 16, 2014

Evergreen Aviation bankruptcy reveals schism among lenders, creditors

A flurry of filings this week in the Evergreen International Aviation bankruptcy case in Delaware has revealed a sharp division among stakeholders. On one side is an Arizona company that leased 1.5 million square feet to Evergreen to park aircraft. On the other side is a coalition of lenders led by Goldman Sachs.

The parties are squabbling about who should be first in line when and if the trustee in the case proceeds with a proposed sale of "substantially all" of Evergreen's aircraft assets to Jet Midwest, a Kansas City company.

Marana Aerospace Solutions of Arizona has argued it should be paid first, partly because it had begun in December to proceed with the sale of Evergreen's Supertanker -- a modified Boeing 747 -- in lieu of rent and other payments that the Oregon company had failed to make. But when an involuntary bankruptcy case was filed against Evergreen later in the month -- and then Evergreen itself filed for dissolution on the last day of December -- the sale was frozen.

The lenders argue their claims should come ahead of Marana's. They note in a filing that Evergreen owes them more than $100 million and "the Lenders have valid first and second priority liens upon all of the Assets, and any lien Marana may claim to have on the Supertanker would be junior to the Lenders' liens."

In another wrinkle that emerged this week, the trustee managing the case said he was told Evergreen planes had been moved from some of the leased space -- information he said that turned out to be inaccurate. As a result, a dispute has arisen over which Evergreen aircraft remains in the bankruptcy case and which may be deemed "abandoned."

The trustee proposed earlier this month to sell "substantially all" of Evergreen's assets, including the Supertanker and other aircraft, to Jet Midwest for $4.28 million.

- Mike Francis