The bankruptcy court overseeing the Chapter 11 proceedings of Pinnacle Airlines approved the company’s retention of Steven Rossum as chief restructuring officer, and the retention of Rossum’s firm, NSB Aviation, to provide “interim management and restructuring services,” according to a June 25 court order.
NSB is a “Florida-based aviation consultancy firm,” according to court filings. According to a statement filed with the court, Rossum said he was previously general counsel and chief financial officer at both AirTran Airways and at National Air Cargo. Rossum further said he has also held “senior executive positions” with ASTAR Air Cargo and DHL Airways.
Rossum and NSB are to be paid $57,000 per month, according to an engagement letter that was filed with the bankruptcy court in Manhattan.
The creditors’ committee in the case said it “[did] not oppose” the retention of Rossum, but pointed out that the company needed to take steps to reign in expenses, including holding down the costs of advisors and executives.
Noting the testimony of Pinnacle’s former CEO Sean Menke that the company needed to achieve about $70 million in cost savings in its Chapter 11, $42 million of which were anticipated to come form labor union concessions, the panel said, “The requisite cost-savings should not – and cannot – be borne by labor alone. According to Mr. Menke’s testimony, even if the Debtors achieve the anticipated savings from their negotiations with labor, they still have to cut an additional $28 million in costs from other sources.”
More ominously, however, the panel also said, “In order to exit bankruptcy, the debtors must satisfy their administrative and other priority claims. At this point in time, the debtors’ ability to pay such claims in full is by no means assured, and funding beyond the Delta exit financing may need to be raised by the debtors.”
As reported, Menke resigned effective June 1. His resignation announcement in mid-April followed news reports that Menke received a $250,000 pay raise – bringing his annual salary to $675,000 – just two weeks before the company’s bankruptcy filing, according to The Buffalo News. – Alan Zimmerman
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