There will be one less charter flight company servicing the East Coast. Fleet Aviation LLC, which operates out of Westchester County Airport in New York and serves vacation destinations like Martha’s Vineyard, Nantucket and the Hamptons, has filed for Chapter 7bankruptcy. As a result, the company will cease to exist and its assets will be liquidated to pay off debt.
Fleet Aviation has had its share of troubles recently. In August, the U.S. Attorney’s Office in Manhattan sued the carrier for violating federal aviation regulations, alleging it used an unqualified pilot on numerous flights in 2008 and 2009. That lawsuit was settled when the company agreed to pay a fine of $40,000. Earlier in the year, the company’s CEO resigned. In its bankruptcy filing in U.S. Bankruptcy Court for the Southern District of New York, the company listed up to $50,000 in assets and up to $500,000 in debt.
Chapter 7 for businesses is a measure used when a business has overwhelming debt and can no longer operate profitably. Once Chapter 7 bankruptcy is filed, all collection actions stop. The court then appoints a trustee to sell the company’s assets and pay off debt to creditors and investors based on a priority ranking.
Whether filing for Chapter 7 makes sense for a business depends on the how the business is structured. A business owner considering debt relief under Chapter 7 may find it helpful to seek the assistance of an experienced bankruptcy attorney.
Source: Bloomberg, “Hamptons, Nantucket Carrier Seeks Bankruptcy Protection,” Tiffany Kary and David McLaughlin, Oct. 17, 2012