Company Scrambling To Avoid Bankruptcy
Al Gore and other high-profile fractional owners of Nashville-based
FractionAir aircraft won't be getting off the ground anytime soon,
according to NashvillePost.com. The four-year-old fractional jet
service couldn't fly today even if it had airworthy aircraft and
the cash to fill 'em up with Jet-A.
In early May, the financially troubled company voluntarily
surrendered its Federal Aviation Administration (FAA) authorization
to operate as a fractional business, according to Kathleen Bergen,
an FAA spokeswoman in Atlanta. Then, in late May, FractionAir
voluntarily "put on deposit" a certificate that allows it to
operate as a charter service. That certificate is good through the
end of August.
In a meeting with creditors on Thursday, June 22, Galen Capital
Group, LLC announced plans to restructure the outstanding debt of
FractionAir, a wholly owned subsidiary of TEDA Travel Inc.
"FractionAir has completed the first stage of a potential
restructuring plan with its creditors and will be presenting a
formal plan in writing for adoption by all creditors during the
next 30 days."
Meeting attendees/creditors were told the company owed $19.5
million in unsecured and secured debt but had no assets. The
company owes more on the four airplanes left in its fleet than they
are worth. Only one of the four is airworthy, but it is in
maintenance. A fifth plane was repossessed.
The bankruptcy option
FractionAir seems intent to avoid is a Chapter 7, or complete
liquidation, in which all creditors involved-Galen Capital
included-would lose most or all of their investments in the flopped
What the Galen announcement omitted, according to the
NashvillePost.com expose, is that William P. Danielczyk, Galen
Capital's chairman, is also the chairman of FractionAir and TEDA,
not just a capital contributor of the troubled firm.
Nor did it reveal that Galen's vice chairman and managing
director, Michael Kane, is also FractionAir's chief financial
officer. "TEDA is merely a shell company that FractionAir merged
with last year as part of a soon-ditched plan to go public," wrote
the Post's Richard Lawson.
Even if the company gets its financial house in order, it would
still have to contend with the FAA before taking to the skies.
Bergen said the FAA will review the company's status at the end of
As for Al Gore? If he loses his plane, at least he's still got
"his" Internet to play with...