The bankruptcy estates of defunct regional airline Silver Airways and its Caribbean affiliate Seaborne Virgin Islands are now down to this: With their assets auctioned off, the trustee overseeing both has asked a Fort Lauderdale judge to green-light the conversion of the companies’ Chapter 11 reorganization cases to Chapter 7 liquidations.

“Each of the Debtors’ estates are administratively insolvent,’ wrote Soneet Kapila, the trustee appointed last month by U.S. Bankruptcy Judge Peter Russin, in a motion to the court.

Kapila wrote that “the cost of the chapter 11 cases increases each day” as more requests for repayments arrive from creditors who say they are owed money since Silver and Seaborne filed for protection from creditors at the end of last year.

“As such there has been a substantial and continuing loss or diminution to the estates,”Kapila said.

“There is no likelihood of rehabilitation,” Kapila added. “The sale of substantially all the assets of the Debtors has been approved by this Court and each of the sale transactions has closed.”

“There is no business to rehabilitate,” he said. “Moreover, the Trustee does not have a reasonable possibility of confirming a plan of reorganization.”

A hearing on Kapila’s motion is set for July 31.

Employee claims

It remains unclear how much money, if any, might be available to former employees who filed claims with the court for backpay. In various filings, former employees from flight crew members to ground workers have complained they are owed various amounts of back pay. The court file contains a number of letters and emails to the judge from employees who say they weren’t paid for May or June, had their pay cut by 45% or lost benefits promised them under labor contracts.

In an email Thursday, Kapila told the South Florida Sun Sentinel he still needs to investigate the extent of the claims from former employees and others who are still seeking repayments that have accrued since both airlines sought court protection Dec. 30.

“The case is still young with a large amount of post-petition claims,” Kapila said.  “Any recoveries for employees and similarly situated administrative claimants will depend on future recoveries in the bankruptcy estates.”

Judge Russin is scheduled to hear the employees’ claims — also on July 31. 

Based in Hollywood, Silver started flying 14 years ago, once serving 28 destinations in Florida, other Southeast states and locations in the Bahamas. After its shutdown in early June, the airline’s assets were sold to an affiliate of Wexford Capital, an investment group that maintains offices in West Palm Beach and Greenwich, Conn.

Seaborne, which Silver acquired in 2018, has flown for 25 years in the Caribbean. A sole seaplane still serves St. Thomas and St. Croix after the island-hopping airline was acquired in an auction earlier this month by the Leonite Fund I LP, an investment group based in Delaware.