Silver/Seaborne Secures Temporary Lifeline Loan of $5.5 Million, Must Auction Assets by May 29 as Carrier Deemed Beyond Saving

The judge overseeing the Silver Airways/Seaborne Virgin Islands Chapter 11 bankruptcy case has given permission for the airlines to obtain a new loan of up to $5.5 million. However, in order to obtain the financing, they must auction off “substantially all of their assets” no later than May 29.

Financing will be provided by KIA II, a lender reportedly based in Connecticut. According to an interim order made on Tuesday by Judge Peter Russin, the lending entity will be allowed “superpriority administrative expense claim status” in both bankruptcy matters, as well as “automatically perfected senior security interests in and liens” on the airlines’ collateral. Creditors have reportedly agreed to this arrangement.

The loan, Judge Russin found, after a hearing on April 17, “is necessary to avoid immediate and irreparable harm to the Debtors and their estates.” The cash infusion is “essential for the continued operation of the Debtors’ businesses and the preservation of the value of the Debtors’ assets.”

The lenders will, according to the judge's order, be permitted to immediately provide $3 million to Silver/Seaborne. The money will be used for operating capital, allowed administrative costs for the bankruptcy cases, payment of other expenses according to a budget submitted to the court.

In a bid to provide “adequate protection” to the secured creditors, the judge has ordered “junior replacement liens” on assets created after the airlines filed for bankruptcy. Brigade, one of the said creditors, will also receive two cash payments totaling $125,000. The tax liens placed on the airlines’ tangible property by the Broward County Tax Collector will also be unaffected, Judge Russin ruled.

In addition to the submitted budget, the airlines must adhere to a series of milestones, including the asset auction on or before May 29. Once that auction has been concluded, Brigade will receive an additional $125,000 from the funds received by the sale of Seaborne's assets.