Direct Air Bankruptcy

Direct Air, the only commercial air line out of Worcester Airport, recently filed for bankruptcy under chapter 11. Direct Air attempted to reorganize its business in order to continue operation. This attempt was short lived. Within a few weeks of filing the United State Trustee, whom over sees bankruptcy cases for abuse, filed a motion to convert the chapter 11 reorganization case to a chapter 7 liquidation case.

As grounds for this motion the US Trustee averred that Direct Air was no longer operating (flying) and that it was unlikely that they would be permitted by the FAA and/or FTA to start flying again. As such Judge Melvin Hoffman did not believe that there was any likelihood that Direct Air could re-organize and he order the case converted. The conversion effectively puts Direct Air out of business.

In chapter 7 a case trustee will be appointed. The case trustee's responsibility is to gather any assets of Direct Air, liquate or sell the assets, and to the extent possible pay back any outstanding creditors. All creditors, including passengers who now hold useless tickets, will be required to file a "proof of claim" in order to get reimbursed from the estate. It will likely take several years prior to money becoming available to creditors. At which time creditors are likely only get a small percentage of what they are owed, if anything at all.