Pace Airlines Bankruptcy


In the Chapter 7 bankruptcy case of Pace Airlines Inc. which is now defunct, the bankruptcy trustee Edwin Allman is requesting that he be allowed to pursue a lawsuit against a tourism company which purportedly owes Pace $1.46 million.

Pace filed a breach-of-contract lawsuit shortly before its collapse involving a payment dispute with Southern Sky Air & Tours LLC, doing business as Direct Air.

Allman said that his research into the background of the dispute “would indicate that the allegations of Pace’s complaint … have merit and that the expenditure of the estate’s funds for the purpose of prosecuting this action is justified.”

Pace said in the lawsuit that it entered into a service contract in February 2009 with Direct Air worth just more than $2 million.

The contract was scheduled to run from March 29 through Sept. 7 of 2009 and would involve flights from Smith Reynolds Airport and Punta Gorda, Fla., near Port Charlotte.

Pace said Direct Air breached the contract by canceling the agreement. Pace told Direct Air on June 19, 2009, that it owed $1.46 million. Pace sent a second letter on July 23, 2009, demanding payment, which Direct Air has declined to make.

The bankruptcy trustee wants to pursue Direct Air for payment so that it can repay existing creditors such as the employees who were not compensated after the airline collapsed.  The bankruptcy trustee may have the right to file a lawsuit on behalf of a bankrupt company if doing so will benefit the bankruptcy estate and creditors.  In this case, if the lawsuit against Direct Air is won, the bankruptcy estate would receive a lump sum amount allowing it to further reimburse creditors in the case.

(source: )