Business/Economy

Bids due, auction set in PenAir bankruptcy

Friday at 5 p.m. is the deadline for parties to place a bid in writing for the assets of Alaska airline PenAir, which filed for Chapter 11 bankruptcy protection a little over a year ago.

An auction is set for next week on Oct. 3 at the Dena'ina Civic and Convention Center, said Jerry McHale, the trustee in the bankruptcy case.

The Anchorage-based company is one of the largest regional airlines in the state. It serves a number of rural communities with flights to and from Anchorage.

Alaska Airlines and Wexford Capital, an East Coast company that manages hedge funds, are two approved bidders so far, McHale said. Wexford has loaned PenAir money during the bankruptcy.

There are more than just those two approved bidders, McHale said, but he would not name other bidders.

"There are companies that I think will be bidding that do have Alaska operations," he said.

Danny Seybert, PenAir CEO, said he believes there will be "at least one other bidder," maybe two.

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"I'm not at liberty to say at this point," he said Thursday.

[Trustee in PenAir bankruptcy case seeks sale of company's assets]

Though approved as a bidder, Alaska Airlines is not submitting a bid, company spokesman Tim Thompson said in an email.

"Being an approved bidder only meant we were allowed to review certain financial information," he said. "Our number one priority is to protect the interests of serving our customers with safe, accessible service to Unalaska/Dutch Harbor and other PenAir communities."

After the auction happens, there will be a hearing Oct. 5 to approve a sale based on the successful bid.

Whoever the winning bidder is will also have to get approval from the Federal Aviation Administration and the Department of Transportation, McHale said. He doesn't expect "mass layoffs," and said he expects the airline will continue to operate.

During the course of the bankruptcy, there were problems with payments due for employees' insurance plans, McHale said. The health plan appeared to be underfunded by about $642,000, according to a court filing from earlier in September.

McHale said that he's made "substantial payments" toward the insurance problem.

"Scraped together cash and put it toward that, so it wasn't a problem," he said.

Annie Zak

Annie Zak was a business reporter for the ADN between 2015 and 2019.

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