Liquidation looms in Great Plains' bankruptcy

TULSA, Okla. (AP) _ The U.S. trustee in Great Plains Airlines' bankruptcy reorganization has suggested she may ask the court to liquidate the carrier, according to new court documents. <br/><br/>The

Wednesday, October 6th 2004, 4:18 pm

By: News On 6

TULSA, Okla. (AP) _ The U.S. trustee in Great Plains Airlines' bankruptcy reorganization has suggested she may ask the court to liquidate the carrier, according to new court documents.

The trustee, Mary May, has been concerned since April that the case was heading for dismissal or liquidation because the airline was making little progress reorganizing, according to her status report.

May said she has held off asking the bankruptcy judge to order a liquidation to give the airline an opportunity to resume flights and sell assets, the trustee's status report filed Monday said.

``It may well be time to rethink this perspective,'' May wrote, adding, ``the prospects for resuming commercial passenger or charter flights in the future are unknown, but appear unlikely.''

Great Plains attorney Sid Swinson said Wednesday he was not feeling well and could not comment. Airline chairman David Johnson did not immediately return a phone call.

The Tulsa-based airline filed for Chapter 11 bankruptcy in January after nearly three years of unprofitable operation. All five of the carrier's aircraft have been repossessed and flights have been canceled.

In its status report, Great Plains said it is still seeking financing to resume operations as either a regional airline or as a charter carrier and has met with several investors.

Great Plains also said it is looking for buyers for its certificate authorizing passenger flights, which is issued by the Federal Aviation Administration, and related flight manuals. The airline said it believes these assets ``may have considerable value.''

``Presently, two potential purchasers of the certificate are in contact with (Great Plains) and sale terms are being negotiated with one of the two potential purchasers,'' the airline said in its report also filed Monday.

The trustee's report said Great Plains has received an offer of $400,000 to buy the certificate and certain aircraft parts.

But John Clabes, the FAA's spokesman in Oklahoma City, said airlines' certificates are not transferable. Anyone who bought it in hopes of flying passengers would have to be reviewed separately for a new certificate, he said.

``The short answer is you just can't sell those things,'' Clabes said Wednesday. ``For all practical purposes they're worthless to anybody but the company to which they're originally issued. It's just a piece of paper.''

John Penn, a Fort Worth, Texas-based attorney with extensive airline bankruptcy experience, said the trick to selling an FAA-issued certificate is to sell the entire airline with the certificate as part of the asset base.

``The certificate is a very important piece because if you buy a company that already has a certificate then you don't have to go through all the regulatory requirements to get you own certificate from scratch,'' said Penn, a partner with Houston-based Haynes and Boone.

Great Plains began flying in April 2001 with $27 million in state tax credits and loans backed by the city of Tulsa to fill a void of direct flights from Oklahoma City and Tulsa to business centers on the coasts.

But the airline served only regional cities until August 2003 when a $750,000 loan from St. Clair County, Ill., allowed Great Plains to lease three propjets and add flights there and to Chicago and Washington D.C. Those flights were also canceled in January.

Both Great Plains and May said in the status reports that Great Plains is nearly out of cash, but the company's current finances are largely unknown because it hasn't filed required monthly operating reports since May.

The airline, in its report filed by Swinson, acknowledged that the judge may order a liquidation under Chapter 7 of the U.S. bankruptcy code if the certificate and the manuals are not sold.