Judge Warns Midway May Be Liquidated
RALEIGH, N.C. (AP) _ A federal bankruptcy judge is threatening to liquidate Midway Airlines because the carrier won’t be able to emerge from bankruptcy on Oct. 29.
U.S. Bankruptcy Judge A. Thomas Small said he may convert Midway’s Chapter 11 bankruptcy to a Chapter 7 liquidation on Sept. 24 unless the airline can quickly propose a reorganization plan showing how it can continue as a successful business operation.
The changed status would force Midway, which filed for bankruptcy protection two years ago, to cease operation and sell all assets to pay creditors.
``The judge wants a reorganization plan done, and if that’s not going to happen in the near future, he’s going to liquidate the company,″ Midway president and chief executive officer Robert Ferguson said. ``If we don’t, the gig’s up.″
Once the busiest airline at Raleigh-Durham International Airport with 40 planes and 2,700 employees, Midway is trying to reinvent itself as a commuter feeder for US Airways. The carrier grounded its jets in July 2002.
Midway officials told Small Thursday that negotiations with Dallas-based Beta Capital Group that had been under way since this spring had fallen through.
In return for a $20 million investment to pay off creditors, Beta Capital wanted a stake in Midway’s assets. Talks collapsed when US Airways, which now holds a claim to the assets, refused, Ferguson said.
As part of its commuter feeder contract with Midway, US Airways had required Midway to emerge from bankruptcy by Oct. 31.
The airline also needs its pilot union to agree to amend its contract to get US Airways to extend the terms of a $12 million loan. If not, the loan will come due on Oct. 31 unless a reorganization plan has been confirmed, Ferguson said.