Trustee eyes sale of Evergreen assets
However, complications have arisen, leading several parties to file objections.
The United States Trustee, which oversees bankruptcy proceedings in Delaware, where Evergreen filed its articles of incorporation, is objecting to several provisions. It argues those provisions “include findings that the record does not support, provide the buyer with protections beyond that provided by section 363 of the Bankruptcy Code, and, in some instances, may also implicate jurisdictional issues.”
Marana Aerospace, which operates a Southern Arizona aircraft maintenance and storage facility previously owned by the Central Intelligence Agency, then Evergreen, filed an objection on several grounds.
It argues the trustee is trying to sell property that now rightfully belongs to Marana rather than Evergreen. “Specifically,” it says, “the trustee is proposing to sell a Boeing 747 aircraft, tail number N479EV, and two engines located on N479EV.”
It goes on to say:
“The aircraft is known as the ‘Supertanker.’ Marana Aerospace properly foreclosed its valid mechanics and garagekeepers’ lien in the Supertanker prior to the Dec. 31, 2013, petition date. The Supertanker is not now, and has never been, located on property rented or owned by the debtors. It has always been located on property solely in the possession and control of Marana Aerospace. The debtors agreed to pay Marana Aerospace $3,000 per month for parking charges for the Supertanker.
“Second, the trustee cannot sell property which has been abandoned. On April 23, 2014, this court determined that all property left on or in land previously leased by Marana Aerospace to debtor Evergreen Airlines was deemed abandoned by Evergreen Airlines. The trustee cannot now sell that property.”
It also objects to the first lienholder being fully paid from the proceeds, leaving nothing for lienholders like Marana, whose $2 million claim for unpaid aircraft service and storage fees would be later.
Multnomah County filed an objection because Evergreen owes it $4.6 million in back property taxes. It argues it should rightfully hold first lienholder status, entitling it to the proceeds.
In a separate filing, a creditor group filed a motion inMay asking the court to amend or vacate the order extending Giuliano’s deadline for making a decision on property leases. In that filing, the group also raised one of the same issues as Marana Aerospace.
Giuliano sought in April to have the deadline extended from the end of April to the end of May. He argued that there were so many leases, and obtaining credit had taken so long, that he needed additional time to determine the best course of action. He also sought extra time to arrange sale of company assets, which in many cases, would resolve lease issues.
The creditors group did not oppose the motion at the time, but now argues, “It appears that at the hearing on the extension motion,” held April 23, “substantive relief was ultimately included in the extension order that was dramatically beyond the scope of that requested. … Specifically, as set forth in the extension order, many valuable assets of the estates are deemed to be abandoned by the trustee, including valuable assets that are proposed to be sold to the buyer pursuant to the sale motion.”
The motion goes on to note, “The extension order also provides that all property to be included in the sale of assets must be removed by May 30, 2014.“ It argues — as does Marana Aerospace — that such speedy removal simply isn’t possible.
Marana cited the Supertanker and other old Boeing jets, as an example.
The company said it would require substantial time and expense to make the one-of-a-kind firefighting tanker and the other planes airworthy again. If it did the work, it would need to be paid, the company said, and no other vendor would have legal access, as the plane is being stored on the Marana site.
The creditors further object to the abandoned assets declaration, saying that serves to effectively eliminate from consideration many of the assets the trustee proposes to sell. Given the opportunity, they would have raised objection, they said.
On Monday, Giuliano filed a response indicating he had resolved the objections raised by the United States Trustee, and had entered into discussions with Marana Aerospace over that company’s objections. He also told the court he had worked out provisions for removal of sale items.
However, he told the court that with regard to Marana’s other issues, “The trustee, Marana, Jet Midwest and the debtors’ pre-petition lenders … have not been able to agree on terms that are acceptable to all the parties.
“To the extent that the Marana objection cannot be resolved, the trustee requests that this court overrule it.”
Giuliano went on to dispute Marana’s claim to have completed a legal foreclosure on the Supertanker. He said believes the creditors are prepared to present evidence to the contrary at the May 15 hearing.
He promised to address the abandonment issue at the hearing as well. He said he does not intend to abandon any assets, whether included in the pending sale or not.