Tradewinds files for bankruptcy [Archive]

tonytech2

29th Jul 2008, 18:56

Airline acts to hold off creditors

By Donald W. Patterson (http://www.news-record.com/whois/donald_w_patterson)
Staff Writer News and Record
Tuesday, July 29 updated 5:28 am

GREENSBORO - TradeWinds Airlines announced Monday that it has filed for Chapter 11 bankruptcy protection, citing "a perfect storm" of adverse market conditions and what it called failed financial commitments.
Based on events leading up to filing Friday in the Southern District of Florida, the case could become even more stormy.
It involves an airline that has a long and troubled history in the Triad, including two earlier flights into bankruptcy.
In a statement Monday, the Gate City-based cargo aviation company said it had been beset by high fuel costs, decreased business, increased competition and a shortage of working capital.
The company said it will continue to operate during the court reorganization, adding that it would consider a sale or "an internal restructuring which will result in a smaller but sounder business."
Court filings indicate TradeWinds has assets of between $1 million and $10 million, liabilities of between $10 million and $50 million and more than 430 creditors.
Earlier this year, the company had about 200 employees, leased five 747s, owned six A-300s and flew routes within the U.S., and to Asia, South America, Europe, the Caribbean and China.
Scott L. Baena, a Miami lawyer representing the company, said TradeWinds went through a restructuring in February that involved refinancing of its existing debt.
At that time, Birmingham, Ala., businessman, Donald V. Watkins, acquired 77 percent of TradeWinds.
He and two city of Detroit pension funds are the principal investors in TradeWinds and find themselves in a bitter dispute over the company that has already wound up in court.
Baena said Watkins agreed to provide TradeWinds with $10 million in capital in two equal payments.
"That money was critical to the (restructuring) plan," Baena said Monday. "That money was not contributed. It is subject to litigation."
Watkins' Detroit attorney, Keefe A. Brooks, said that in March his client made the first payment, which included more than $800,000 in a cash payment, plus stock and other property.
The pension funds, which loaned Watkins $30 million to acquire TradeWinds, sued him for breach of contract for failure to make a $5 million capital contribution. Watkins countersued.
Brooks said Watkins has been in discussion with two other potential TradeWinds investors.
"This is not going to be helpful to this process," Brooks said of the bankruptcy filing. "This is unfortunate that they are going this route."
Brooks said TradeWinds officials did not advise Watkins that they planned to file for bankruptcy.
Efforts to reach Jeffrey Conry, TradeWinds' president, were unsuccessful.
Court papers say that in June, TradeWinds downsized its business, stopped using its 747s and laid off an undetermined number of employees.
From the 1960s through the 1980s, TradeWinds was known as Blue Bell Aviation and then Wrangler Aviation, a unit of the Greensboro-based jeans' manufacturer. Wrangler later sold the operation.
In the 1990s, TradeWinds underwent four changes in ownership, two bankruptcies and a former chief executive going to jail.
For a time in the 1980s, TradeWinds provided the only overseas flights out of Piedmont Triad International Airport, making trips to Puerto Rico.