iAero Tech files Chapter 11 bankruptcy with over $500 million in debt

By Sarah Lizee

Olympia, Wash., Sept. 20 – Aerotech Miami Inc., which does business as iAero Tech, and 15 affiliated debtors filed Chapter 11 bankruptcy on Tuesday in the U.S. Bankruptcy Court for the Southern District of Florida.

In a declaration filed Wednesday, the company said its business has faced a number of recent challenges, including prior mismanagement by former leadership, volatile fluctuation in cash flows caused by the Covid-19 pandemic, unprofitable agreements with Private Jet Services Group, LLC, the entry of an adverse arbitration award in the amount of about $29 million as a result of a contract dispute with Private Jet Services, and the unanticipated, recent temporary cessation of flight services for iAero Airways’ largest customer account.

As a result, the debtors are facing headwinds in securing new capital or renegotiating their current debt obligations due to their overleveraged balance sheet, which consists of about $860 million of secured debt, of which about $75 million matures on Dec. 31, 2023, the company said.

The debtors and their prepetition secured lenders have negotiated a restructuring support agreement that the company will seek to implement through the Chapter 11 case.

The RSA provides for a dual-track process, through which the debtors will pursue a Chapter 11 plan of reorganization and engage in a process for a possible sale of the assets of the debtors.

Under a reorganization scenario, prepetition third-lien claims will be exchanged for 100% of new equity interests, subject to adjustment on account of any new warrants issued due to foreign ownership limitations and dilution for any management incentive plan.

Synovus claims will receive new secured term loans in the aggregate amount of $89.55 million, secured by a first-priority lien on all assets of the reorganized debtors.

Prepetition Synovus aircraft term loan claims will be reinstated.

To fund the process, the prepetition secured lenders, including Synovus and certain Blackstone entities, agreed to provide up to $22.5 million in debtor-in-possession financing. Synovus is the administrative and collateral agent for the DIP facility.

Interest on the DIP financing is term SOFR+ 10 basis points CSA plus 400 bps per annum, paid monthly in arrears in cash.

The facility is set to mature in eight months.

The lenders provided about $17.5 million in bridge financing prior to the petition date.

The company is also seeking approval to access prepetition cash collateral.

iAero Tech is hoping to receive confirmation of a plan within 110 days.

In its petition, the company listed 200 to 999 creditors, up to $50,000 in assets and $500 million to $1 billion in liabilities.

Its largest unsecured creditors are Sky Capital Partners, Inc., based in Miami, with a $5.75 million broker claim, PricewaterhouseCoopers, based in Atlanta, with a $5 million professional services claim, Magnum Airdynamics, based in Miami Lakes, Fla., with a $1.7 million vendor claim, and Arthur J. Gallagher & Co., based in Los Angeles, with a $1.34 million insurance claim.

King & Spalding LLP and Berger Singerman LLP are representing the company.

Miami-based iAero Tech operates a business-to-business air charter airline with a fleet of 42 passenger and cargo aircraft, servicing customers both domestically and internationally. The company’s Chapter 11 case number is 23-17503.

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