On Monday, October 6th 2008, Sun Country Airlines, Mendota Heights Minnesota based airline, filed for Chapter 11 bankruptcy. Last week, I had blogged about the WARN email to their employees and a possible cash crunch. Couple of days back, the parent company, Petters Group Worldwide, “became the target of a federal probe for allegedly defrauding hedge funds“. CEO and Chairman Stan Gadek said that the airline plans to continue on its normal operations. Please note – Chapter 11 bankruptcy allows a company to reorganize its finances with protection from creditors.
The airline was already going through a finance crunch and was trying to bridge in some credit from the current slow times to the profitable winter months. The airline is a small carrier with 9 Boeing 737, but does employ 858 to 1110 workers (normal to peak periods). On a happy note, the airline did not cease to exist and passengers will definitely not be affected!
From Wall Street Journal -
Sun Country had planned on a short-term bridge loan from its owner to
get through the slow autumn period and into its heavy winter travel
season.
But that plan fell through after the parent company ran into legal
troubles. Over the weekend, Stan Gadek, Sun Country’s chief executive,
learned that federal authorities were thinking of putting the Petters
companies into receivership. To avoid that fate and keep control of the
airline, which isn’t being investigated by prosecutors, his board voted
to seek court protection instead, Mr. Gadek said.
The airline chief said Monday that Sun Country doesn’t expect any
disruptions because of the bankruptcy filing, which also includes its
parent, Petters Aviation LLC.
“I think it’s a positive move,” Mr. Gadek said. “It removes the
uncertainty and distraction” for employees, customers and airline
vendors. “It’s my goal to attract new capital and ownership to this
company,” he said. “Our business model is not broken. We made money in
July and August.” The companies filed in U.S. Bankruptcy Court in
Minneapolis.
