Dynamic International Airways bankruptcy filing prompted by litigation

By Caroline Salls

Pittsburgh, July 20 – Dynamic International Airways, LLC filed Chapter 11 bankruptcy Wednesday in the U.S. Bankruptcy Court for the Middle District of North Carolina.

According to a news release, the airline's decision to file bankruptcy is related to litigation matters resulting from Hajj flights it operated in 2014 for Air India, as well as the entry of a judgment in the U.S. District Court for the Middle District of North Carolina affirming an arbitration award against Dynamic issued by the Canadian Arbitration Association in April.

The arbitration decision determined that Dynamic was in breach of contract by failing to pay commissions to BKP Enterprises in connection with the Hajj flights.

While it has filed a notice of appeal and intends to challenge the judgment and award, the company said it has no immediate recourse to stay the judgment and has determined the filing of the Chapter 11 case is necessary.

During the Chapter 11 case, Dynamic said it intends to continue its normal operations and has arranged for a $6 million debtor-in-possession credit facility to facilitate both its operations while in Chapter 11 and also its ability to reorganize.

“Operating under the protection of the U.S. bankruptcy court will enable us to continue to serve our customers, keep our team employed and work with our vendors while we navigate through the challenges presented,” chief executive officer Paul Kraus said in the release.

“Once we have completed the reorganization process, we expect Dynamic Intl. to emerge as a stronger company with a sound financial structure that is appropriate not only for today’s level of business activity, but also for the future.”

According to the DIP financing motion, the lender is Solitude Strategies, LLC.

The facility will mature on the earliest of Dec. 31, the occurrence of an event of default and the effective date of a Chapter 11 plan.

A total of $1.5 million in emergency advances will be available under the facility if the final hearing is held before Aug. 12, while $2.3 million will be available if it is held during the week of Aug. 19.

Dynamic’s bankruptcy petition listed $10 million to $50 million in assets and $50 million to $100 million in debt.

The company is represented by Bell, Davis & Pitt, PA.

Dynamic is a High Point, N.C.-based airline. The Chapter 11 case number is 17-10814.

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