Judge Lets Silver Airways Use Cash Collateral
Judge Peter D. Russin of the US Bankruptcy Court for the Southern District of Florida has granted Silver Airways permission to use cash collateral to continue operating while the airline works to refinance and restructure its finances. This ruling, issued on January 7, 2025, is a critical development for the beleaguered regional carrier as it navigates its Chapter 11 process.
According to Silver Airways’ bankruptcy filing, the airline intends to use cash collateral to cover essential operating expenses, including payroll, fuel costs, insurance, aircraft maintenance, and airport leases. The order allows the carrier to pay employee prepetition compensation, prepetition unpaid wages, normal operating expenses, amounts due to government agencies, as well as remit insurance and employee benefit payments. It also authorizes financial institutions to process necessary transactions to and from Silver’s accounts. This flexibility is essential for preserving the airline’s going concern and maintaining its enterprise value during the restructuring process.
Silver Airways argued that using cash collateral is vital to keeping its business operations running smoothly. “The continued operation of the debtors’ businesses will preserve and maintain their going concern, enterprise value, and enable the debtors to continue to operate and maximize its value in the reorganization process,” the filing stated. The airline stressed that without the ability to access these funds, its operations would be substantially interrupted, leading to a significant loss in the value of its assets and substantial harm to its creditors and the estate.
The court’s decision permits Silver Airways to use cash collateral for an initial period of two weeks while it finalizes its debtor-in-possession financing. Although the airline is in negotiations for this financing, it has not yet secured a final agreement. Should these talks not result in a viable financing arrangement, the airline could face the forced sale or liquidation of its assets. Early access to cash is therefore seen as a lifeline that will help stabilize the company during this critical period.
Silver Airways, along with its subsidiary Seaborne Virgin Islands, filed for Chapter 11 bankruptcy on December 30, 2024. The filings indicate that the airline faces a significant debt load, with liabilities estimated to be between USD100 million and USD500 million. The financial difficulties stem from the combined impacts of the Covid-19 pandemic, which led to a sharp decline in travel demand, rising costs of human capital—especially for pilots and aircraft technicians—as well as escalating fuel expenses and the increasing cost of aircraft parts. Supply-chain disruptions have further frustrated the company’s growth-oriented business plan.
Despite these challenges, Silver Airways maintains a modest yet diverse fleet. The airline currently operates eight leased ATR42-600s and six leased ATR72-600s, serving intrastate routes within Florida and international routes to the Bahamas and between San Juan and various Caribbean ports. Its subsidiary, Seaborne Airlines, operates two leased amphibious DHC-6-300s for flights between St. Croix and St. Thomas. Seaborne, which previously underwent Chapter 11 in 2018, was acquired by Silver Airways, further consolidating the carrier’s regional market position.
With the new cash collateral ruling, Silver Airways hopes to stabilize operations and work toward a financial restructuring that may include converting secured creditor debt to equity. The airline is targeting an exit from Chapter 11 as early as the end of March 2025. Industry observers and creditors alike will be watching closely as Silver Airways strives to regain stability, rebuild its balance sheet, and emerge stronger from its bankruptcy proceedings.
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Sources: AirGuide Business airguide.info, bing.com, ch-aviation.com