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BREAKING: Spirit Airlines Files Motion to Wind Down After Rescue Efforts Fail, DIP Lenders Agree to Cash Collateral Use

Shortened Notice
Spirit Airlines
Wind-Down Procedures
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Relevant Document:
Wind Down Motion
Declaration

The Spirit Airlines debtors filed a motion to wind down operations and liquidate remaining assets after U.S. government rescue financing talks collapsed, leaving the debtors without sufficient capital to sustain operations amid fuel costs driven by the Iran war. To implement the wind down, DIP lenders have agreed to the debtors’ use of cash collateral, excluding revolving priority collateral, in line with a wind down budget, together with proceeds realized from winding down.

The DIP lenders have agreed to amend the DIP credit agreement and DIP order to revise provisions that are “incompatible with the Debtors’ current circumstances.” The proposed amendments are summarized HERE.

According to the motion, the debtors are requesting the court to give them “breathing room” by ordering an administrative stay. The debtors explain that they are unable to commit to payment of all accrued administrative expense claims in full, and need time to carry out the wind down efforts and establish the corpus of value available for distribution to creditors. The stay would also reduce administrative burn and allow the debtors to establish an orderly administrative claims process.

In addition to the wind down and modifications to the final DIP order and credit agreement, the debtors request approval of or authorization to carry out the following:
 

  • Modify or terminate certain employee programs;
     
  • Approval of a KIEP and KERP for senior management;
     
  • Amended rejection procedures;
     
  • Non-fleet assets sales procedures;
     
  • Non-fleet assets abandonment procedures;
     
  • The debtors’ use of third-party contractors as necessary to implement the wind-down;
     
  • The preemption of applicable laws and ordinances for the debtors to effectuate the wind-down; and
     
  • Protections for individuals involved in developing and implementing the wind down.

The debtors ask the court to set a hearing on the wind down motion (along with the related fleet wind down motions) on May 5 at 11 a.m. ET. Although the debtors say they are already authorized by the court’s first day orders to take many of the wind down actions, they want “to give the Court and all parties in interest visibility into the events forthcoming in the Chapter 11 Cases, to ensure full legal authority to execute the Wind-Down, and to disclose the events relating to the Wind-Down that took place prior to the hearing on this Motion.”

More to come…
 

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