Lenders to PHI Inc. are crying foul over the former Lafayette helicopter company’s conduct prior to bankruptcy, saying a pair of last-ditch loans may hurt its unsecured bondholders.
As Bloomberg reports, lawyers for PHI noteholders are set to argue for more time to look into a $130 million loan to the company from its own chief executive officer. They also want to examine a last-minute $70 million financing arrangement they say will help push through a bankruptcy plan that is “highly coercive and contains numerous death traps.”
According to Bloomberg, lawyers for PHI said in an objection that the bondholders’ claims are “baseless” and that the unsecured creditors committee is simply trying to delay the bankruptcy in order to seize control of the process.
The showdown comes as a number of other helicopter companies have faced financial difficulties including bankruptcy, sparked in large part by a downturn in the oil and gas industry.
In September, about six months before seeking Chapter 11 protection, PHI CEO and largest shareholder Al Gonsoulin lent $130 million to the company to refinance an asset-backed loan it had defaulted on. The company secured a $70 million loan from Blue Torch Capital that created a separate class of debt two days before filing for bankruptcy in March.
The transactions could allow PHI to preserve a meaningful “portion of the current equity ownership structure at the expense of the unsecured creditors,” according to the motion.