Last month, the Chapter 7 Trustee in the Sunset Aviation bankruptcy began filing preference actions against various defendants seeking the recovery of alleged avoidable transfers. The Sunset Aviation bankruptcy proceeding includes the consolidated bankruptcies of Sunset Aviation, Inc., JetDirect Aviation and Regal Jets, LLC. The first bankruptcy commenced on February 25, 2009, when Regal Jets filed a petition for chapter 11 bankruptcy protection with the United States Bankruptcy Court for the District of Delaware. On March 6, 2009, Sunset Aviation filed a petition for bankruptcy under chapter 7 of the Bankruptcy Code. JetDirect filed its chapter 7 petition on May 1, 2009. On June 10, 2009, the Regal bankruptcy proceeding was converted from a chapter 11 reorganization to a chapter 7 liquidation. Soon after, the Office of the United States Trustee appointed the Chapter 7 Trustee.
Prior to filing for bankruptcy, Debtors provided a range of services for the private aviation industry. These services included brokering the sales and rentals of private jets, in-flight catering, records management and aircraft utilization. According to court filings by the Chapter 7 Trustee, although the Debtors were separate legal entities, the companies operated from the same headquarters, co-mingled assets and were generally viewed by their creditors as a single entity. Based on these findings, the Trustee filed a motion to substantively consolidate the bankruptcy proceedings in July of 2010. The Court granted the Trustee’s consolidation motion the following month.
The Preference Actions
As is common in avoidance actions, the Chapter 7 Trustee in Sunset Aviation seeks to recover pursuant to several different causes of action. Pursuant to section 547 of the Bankruptcy Code, the Trustee seeks to avoid and recover transfers for the ninety days prior to the Debtors’ petition date – November 27, 2008 to February 25, 2009. According to the complaints, the “preference period” is calculated based on the earliest bankruptcy petition date for the consolidated Debtors.
The Sunset Aviation bankruptcy is before the Honorable Peter J. Walsh. Judge Walsh previously served as the Chief Judge of the Delaware Bankruptcy Court. Cozen O’Connor and ASK Financial LLP serve as Plaintiff’s counsel for the Trustee.