Flight 3407 operator files for Ch. 11

CLARENCE, N.Y. (WIVB) - Mounting debt is forcing Pinnacle Airlines , the parent company of Colgan Air, to file for bankruptcy protection. Colgan Air was the operator of Flight 3407, which crashed in Clarence Center in 2009.

"We intend to use the Chapter 11 process to reset our financial and operational structure in order to position Pinnacle for viability  over the long term," said President and CEO Sean Menke.

The regional carrier based out of Memphis, Tennessee says its current business model is not sustainable. And while the company will continue operating flights for Delta Airlines, its Colgan Air unit will be winding down operations.

"We are committed to delivering safe, reliable travel throughout the process," Menke stated.

Buffalo-area bankruptcy attorney Garry Graber explains the personal injury lawsuits still pending against Pinnacle Airlines and its Colgan Air subsidiary are still valid. The crash of Continental connection Flight 3407 in 2009 in Clarence Center, operated by Colgan Air, killed 50 people.

"There's no need to panic. There's no need to assume that the lawsuits are no good," said Graber.

Robin Tolsma is among those who have already settled out of court.

"This is the point. This is the time that they can change and be the best in the business. Have the safest airline. Have the best trained pilots. Prove to us that you can do it. And if you can't, get out of the business because you don't belong in the skies," she argued.

The remaining claims should not be impacted in the long-term, according to Graber, who explained, "Here, however, the jurisdiction of the bankruptcy court does not extend to adjudicating personal injury claims. So, I would expect that the cases will go forward in the district court where they are right now."

Pinnacle's restructuring plan also calls for Colgan Air and its Q-400 operation, the type of plane that crashed in Clarence Center, to stop flying by the end of the year.

The remaining Saab 340 fleet that Colgan operates for United Express will be wound down over the next several months.

Graber said, "That would not be unusual for a company to sell off or liquidate some subsidiaries again in order to become more profitable."

The prospect of Colgan disappearing from the regional airline industry is just fine with Tolsma, who's been a vocal critic since she lost her husband, Darren, in the crash.

"Their operating rules and procedures are just terrible. They are subpar. I don't think that they could restructure to be the best. So, I think the best thing for them is to go away," she stated.

The bankruptcy filing allows the regional air carrier to continue operating while it conducts a corporate restructuring. The company will continue operating flights for Delta Airlines.

Pinnacle has received a $74.3 million commitment for secured super-priority debtor-in-possession financing from Delta Airlines. $44.3 million will be used by Pinnacle to repay a secured promissory note held by Delta, the company said in a statement. The remaining $30 million in financing, along with cash generated by the company's ongoing operations, will be available to help ensure that Pinnacle has sufficient liquidity to meet its operational and restructuring needs.

"Our objective is to emerge from this process as a stronger, more focused company, " Pinnacle CEO Sean Menke said.