AeroCentury Corp. Files Petition for Chapter 11 Reorganization

BURLINGAME, Calif., March 29, 2021 (GLOBE NEWSWIRE) -- AeroCentury Corp. (the "Company") today announced it and certain of its subsidiaries commenced a voluntary case (the “Chapter 11 Case”) under chapter 11 of title 11 of the United States Code (“Chapter 11”) in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”).

The Company has determined that the Chapter 11 process is the most effective next step to resolve the Company’s outstanding indebtedness and to progress toward the Company’s goal of continuing in the regional aircraft business in order to preserve enterprise value for the Company’s stakeholders. The Company will continue to operate its business as “debtor-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and the orders of the Bankruptcy Court. The Company’s management of its portfolio assets and operations with respect to its aircraft and communications and interaction with lessees will remain unchanged, and the Company intends to pay vendors and suppliers under customary terms for goods and services received on or after the filing date and pay its employees in the usual manner.

To ensure its ability to continue operating in the ordinary course of business, the Company has filed with the Bankruptcy Court motions seeking a variety of “first day” relief, including authority to continue utilizing and maintaining its existing cash management system and authority to pay its employees in the ordinary course of business. Business operations across the AeroCentury platform are continuing without interruption.

The Company has proposed in one of its Chapter 11 motions an auction sale (“Auction Sale”) for its assets in order to fund repayment of its indebtedness to its sole secured lender, Drake Asset Management Jersey Limited (“Drake”). The Company has entered into a stalking horse agreement with Drake to acquire the aircraft collateral securing the Drake indebtedness, subject to higher and better bids. In the event Drake is the successful bidder, the closing of the purchase will resolve all of the Company’s outstanding indebtedness to Drake.

As of the filing date, the Company believes it has sufficient cash on hand to support its ongoing operations. Depending upon the length of the COVID-19 induced crisis and its impact on revenue, the Company may seek access to additional capital as the reorganization progresses.