MAXjet files Chapter 11 bankruptcy, seeks $390,000 to accommodate stranded customers

By Caroline Salls

Pittsburgh, Dec. 28 - MAXjet Airways, Inc. filed for Chapter 11 bankruptcy Dec. 24 in the U.S. Bankruptcy Court for the District of Delaware after the company ceased its operations earlier that day.

As previously reported, MAXjet's financial position has been negatively affected by fuel price inflation, other operating cost increases, competitive pressure and a decline in consumer spending.

In addition, the company said a substantial deterioration in financial market confidence has halted further fundraising efforts, leaving its board of directors with no choice but to discontinue operations and recommend a bankruptcy filing.

MAXjet's current management is expected to remain in place to oversee the sale and/or liquidation of the business and to coordinate the analysis and resolution of claims.

The company said it does not expect there to be any value available for distribution to shareholders, so trading of the company's shares on the London Stock Exchange's Alternative Investment Market will remain suspended.

MAXjet is requesting court approval of $390,000 in funding to provide alternate flight and hotel accommodations for potentially stranded customers.

MAXjet said in the motion that at least 500 passengers were left stranded at the end of December, and about 800 more passengers had a return flight scheduled between Jan. 1 and Jan. 17.

According to court documents, the company has between $10 million and $50 million in assets and between $50 million and $100 million in debt.

The company's largest unsecured creditor is Israeli Aircraft, Tel Aviv, Israel, with a $2.28 million trade claim.

According to a Friday court filing, a class of about 300 of MAXjet's former employees is suing the company for back pay and benefits in connection with an alleged violation of a federal law requiring company's to give employees 60 days advance notice of termination.

The employees were terminated in a mass layoff on Dec. 24.

MAXjet is an all business class airline based in Dulles, Va. Its Chapter 11 case number is 07-11912.

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