Peninsula Airways, Inc., dba PenAir
Bankruptcy Court Docket Sheet

District of Alaska (Bankruptcy)

3:2017-bk-00282 (akb)

Objection / Opposition (Generic - use when specific objection event not listed)

Case 17-00282 Doc 388 Filed 06/18/18 Entered 06/18/18 07:58:31 Desc Main Document Page 1 of 5 1 GREGORY M GARVIN ACTING U. S. TRUSTEE FOR REGION 18 2 KATHRYN PERKINS 3 OFFICE OF THE UNITED STATES TRUSTEE 700 STEWART STREET, SUITE 5103 4 SEATTLE, WASHINGTON 98101-1271 TELEPHONE: (206) 553-2000 5 FAX: (206) 553-2566 6 UNITED STATES BANKRUPTCY COURT DISTRICT OF ALASKA 7 8 In Re:) Case No. 17-00282) 9 Peninsula Airways, Inc.,) Chapter 11) 10) UNITED STATES TRUSTEE'S LIMITED 11 Debtor.) OBJECTION TO MOTION TO APPOINT) CHAPTER 11 TRUSTEE 12)) 13) 14 The Acting United States Trustee, Gregory M. Garvin, by and through his undersigned 15 counsel, hereby files this limited objection to the Amended and Superseding Joint Motion of (A) 16 Jet Stream Lessors; (B) Turbo Lease LLC; (C) Wexford Capital LP; and (D) Debellow Investors 17 LLC for Order Appointing Chapter 11 Trustee (the "Trustee Motion") on the basis that any 18 19 chapter 11 trustee appointed under § 1104(a) must be accorded the full panoply of rights and 20 powers accorded to chapter 11 trustees by the Bankruptcy Code, and should not be limited solely 21 to the role of a § 363 sale agent. In support of this limited objection, the United States Trustee, 22 respectfully represents as follows: 23 LIMITED OBJECTION 24 25 The moving parties have sought the appointment of a chapter 11 trustee under § 1104(a) 26 but have requested the Court circumscribe the trustee's authority to take any action other than to 27 conduct a § 363 sale of the Debtor's operational assets. Such a request is inconsistent with 28 UNITED STATES TRUSTEE'S Office of the United States Trustee LIMITED OBJECTION United States Courthouse 700 Stewart Street, Suite 5103 Page 1 Seattle, Washington 98101 (206) 553-2000 Fax: (206) 553-2566 Case 17-00282 Doc 388 Filed 06/18/18 Entered 06/18/18 07:58:31 Desc Main Document Page 2 of 5 1 § 323(a) which provides that a trustee shall be the representative of the estate and other sections 2 of the Bankruptcy Code, including § 1106(a)(1) which vests a trustee with substantial powers. 3 The bankruptcy court in Foodstar, Inc., aptly described the substantial power shift from the DIP 4 to the trustee which occurs upon the appointment of a trustee under § 1104(a) as follows: 5 6 Under the Code, the debtor remains the debtor in possession unless and until a trustee is appointed by court order under Section 1104. 7 When a trustee is appointed, the debtor is no longer a debtor "in possession"—the trustee succeeds to all the rights and properties of 8 the debtor, which is thereby displaced from its property interests. 9 The appointment of a trustee effects a statutory transfer or assignment of the debtor's property, including its contractual 10 relationships, from the debtor to the trustee. 11 323 B.R. 566, 571 (Bankr. S.D.N.Y. 2005) citing 11 U.S.C. § 323(a) ("The trustee in a case under 12 this title is the representative of the estate."); 11 U.S.C. § 323(b) ("The trustee in a case under this 13 title has capacity to sue and be sued."); Commodity Futures Trading Comm'n v. Weintraub, 471 14 15 U.S. 343, 352–53, 105 S.Ct. 1986, 85 L.Ed.2d 372 (1985) ("Congress contemplated that when a 16 trustee is appointed, he assumes control of the business, and the debtor's directors are 'completely 17 ousted.'") quoting H.R. Rep. No. 95–595, pp. 220–21 (1977)). Here, the moving creditors seek 18 to limit the power of the proposed trustee through an order prohibiting that trustee from operating 19 the Debtor's business under § 1108. But for the reasons set forth below, such an order would 20 21 result in the termination of the Debtor's business operations under § 1107 regardless of whether 22 the operations were controlled by a trustee or the debtor-in-possession. It would also unduly 23 infringe on any chapter 11 trustee's independent business judgement and fiduciary duties. 24 The moving parties have requested that the Court limit the scope of the potential chapter 25 11 trustee's powers by entering an order under § 1108 which prohibits the trustee from operating 26 27 the Debtor's business. However, such a limitation would have the all-encompassing effect of 28 UNITED STATES TRUSTEE'S Office of the United States Trustee LIMITED OBJECTION United States Courthouse 700 Stewart Street, Suite 5103 Page 2 Seattle, Washington 98101 (206) 553-2000 Fax: (206) 553-2566 Case 17-00282 Doc 388 Filed 06/18/18 Entered 06/18/18 07:58:31 Desc Main Document Page 3 of 5 1 prohibiting any party, including the current DIP, from operating the Debtor's business. 2 Specifically, § 1107 of the Bankruptcy Code accords a DIP all the rights and powers of a chapter 3 11 trustee with two limitations: (1) the DIP cannot seek compensation under § 330, and (2) the 4 DIP's rights and powers are "subject to any limitations on a trustee serving in a case." 11 U.S.C. 5 6 § 1107. The power of a DIP or chapter 11 trustee to operate a chapter 11 debtor's business is set 7 forth in § 1108 which provides that "unless the court, on request of a party in interest and after 8 notice and a hearing orders otherwise, the trustee may operate the debtor's business." 11 U.S.C. 9 § 1108 (emphasis added). Reading those two statutes in conjunction, it necessarily follows that 10 if the Court places a limitation on a chapter 11 trustee prohibiting the trustee from operating the 11 12 Debtor's business under § 1108, that limitation would equally apply to the DIP who under § 1107 13 is "subject to any limitations" on the chapter 11 trustee in the case. If the Court enters an order 14 prohibiting a chapter 11 trustee from maintaining the Debtor's business operations, that order 15 would, therefore, also statutorily prohibit the DIP from maintaining the Debtor's business 16 operations. 17 18 In addition to jeopardizing the Debtor's ongoing business operations, the proposed limited 19 scope of the chapter 11 trustee's role would also be incongruent with the trustee's fiduciary duty 20 to maximize the distribution to creditors. "A bankruptcy or reorganization trustee is a fiduciary 21 of each creditor of the estate." In re Cochise Coll. Park, Inc., 703 F.2d 1339, 1357 (9th Cir. 22 1983), In re Ngan Gung Rest., 254 B.R. 566, 570 (Bankr. S.D.N.Y. 2000)("A trustee has the 23 24 statutory duty to protect and preserve property of the estate for the purpose of maximizing a 25 distribution to creditors."). Consistent with that fiduciary duty, "courts afford the trustee far 26 reaching discretion to operate, modify or cease a debtor's business" operations. U.S. ex rel. 27 Harrison v. Estate of Deutscher, 115 B.R. 592, 597 (M.D. Tenn. 1990). In order to ensure any 28 UNITED STATES TRUSTEE'S Office of the United States Trustee LIMITED OBJECTION United States Courthouse 700 Stewart Street, Suite 5103 Page 3 Seattle, Washington 98101 (206) 553-2000 Fax: (206) 553-2566 Case 17-00282 Doc 388 Filed 06/18/18 Entered 06/18/18 07:58:31 Desc Main Document Page 4 of 5 1 chapter 11 trustee has the authority to fulfill his fiduciary duties, a chapter 11 trustee must be 2 given the full panoply of rights normally accorded a chapter 11 trustee, so that he can exercise his 3 independent business judgment to determine what is in the best interest of the estate. While the 4 United States Trustee appreciates the moving creditors' assertion that the only way forward is a 5 6 § 363 sale, any future chapter 11 trustee must be given sufficient discretion and business judgment 7 to make that decision as a fiduciary of the estate. The Court should not limit or supplant a trustee's 8 discretion by entering an order containing a single, circumscribed roadmap of how best to fulfill 9 the trustee's overarching fiduciary obligation to maximize the value of the estate. 10 Additionally, the Debtor's existing management has made it clear in several filings before 11 12 this Court that they believe their fiduciary duty to maximize distributions to creditors can best be 13 fulfilled by pursuing a reorganization that leaves them at the helm of the Debtor's management. 14 While the United States Trustee is not taking a position on the merits of that belief, that belief is 15 diametrically at odds with the moving creditors' position that a § 363 sale of the assets is the best 16 way to maximize distributions to creditors. Given the incongruity between existing 17 18 management's view and the moving creditor's view, it would be in everyone's best interest to 19 appoint an independent fiduciary under § 1104(a) to assess whether to pursue a sale under § 363 20 or propose a chapter 11 plan of reorganization that retains existing management. Appointing a 21 single person to govern the Debtor's chapter 11 course would also potentially prevent future 22 ambiguity as to the trustee's authority to compel the Debtor's existing management to cooperate 23 24 in marketing the Debtor's assets, despite their belief that their fiduciary duties would best be 25 fulfilled by contesting such a sale. It is thus in the best interest of all parties for the Debtor's 26 future management to operate under a consistent and singular understanding of how best to fulfill 27 their fiduciary duties to maximize the distribution to creditors. This can best be achieved by 28 UNITED STATES TRUSTEE'S Office of the United States Trustee LIMITED OBJECTION United States Courthouse 700 Stewart Street, Suite 5103 Page 4 Seattle, Washington 98101 (206) 553-2000 Fax: (206) 553-2566 Case 17-00282 Doc 388 Filed 06/18/18 Entered 06/18/18 07:58:31 Desc Main Document Page 5 of 5 1 vesting that chapter 11 trustee with the full authority accorded such trustees under § 323 as the 2 representative of the estate. 3 Finally, as to the proposed compensation of the chapter 11 trustee, the United States 4 Trustee hereby reserves his rights to object to the proposed fee structure of any chapter 11 trustee 5 6 whose compensation would be determined under 11 U.S.C. § 326. While the United States 7 Trustee does not specifically object to the concept of a § 506(c) carve-out, additional details on 8 that proposed fee structure are needed in order for the United States Trustee to better assess the 9 propriety of that fee structure. 10 WHEREFORE, for the reasons set forth herein, the United States Trustee requests that if 11 12 the Court is inclined to appoint a chapter 11 trustee, that that trustee be appointed with the full 13 authority accorded to a § 1104(a) professional under the Bankruptcy Code. 14 15 DATED this 18th day of June, 2018. 16 Respectfully submitted, 17 Gregory M. Garvin 18 Acting U.S. Trustee for Region 18 19 /s/ Kathryn E. Perkins 20 Kathryn E. Perkins, Cal. Bar #240149 Attorney for the United States Trustee 21 22 23 24 25 26 27 28 UNITED STATES TRUSTEE'S Office of the United States Trustee LIMITED OBJECTION United States Courthouse 700 Stewart Street, Suite 5103 Page 5 Seattle, Washington 98101 (206) 553-2000 Fax: (206) 553-2566

Objection / Opposition (Generic - use when specific objection event not listed)

Case 17-00282 Doc 394 Filed 06/21/18 Entered 06/21/18 16:26:59 Desc Main Document Page 1 of 11 Cabot Christianson, Esq. Alaska Bar No. 7811089 LAW OFFICES OF CABOT CHRISTIANSON, P.C. 911 W. 8th Avenue, Suite 201 Anchorage, Alaska 99501 (907) 258-6016 cabot@cclawyers.net Attorneys for Debtor IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF ALASKA In re:)) PENINSULA AIRWAYS, INC., d/b/a) PENAIR,) Case No.: 17-00282 GS) Chapter 11 Debtor.)) DEBTOR'S OBJECTION TO AMENDED MOTION TO APPOINT CHAPTER 11 TRUSTEE 911 WEST 8TH AVENUE, #201 C ANCHORAGE, ALASKA 99501 Debtor Peninsula Airways, Inc., dba PenAir ("Debtor") responds to the LAW OFFICES OF CABOT CHRISTIANSON, P.C. "amended and superseding joint motion," at Docket 384, ("the Trustee Motion") of (907) 258-6016 C Fax (907) 258-2026 Wexford, Jetstream, and Turbo Lease to appoint a Chapter 11 trustee in this case, as follows. Chapter 11 trustees cannot file Section 363 motions The Motion asks this Court to authorize the appointment of a Chapter 11 trustee for the purpose of filing a Section 363 motion to sell the Debtor's business, but Chapter 11 trustees do not have this authority. PAGE 1: OPPOSITION TO AMENDED TRUSTEE MOTION H:\3306\MAIN\OPP TO AMENDED T'S MOTION.WPD Case 17-00282 Doc 394 Filed 06/21/18 Entered 06/21/18 16:26:59 Desc Main Document Page 2 of 11 Section 704(a) sets forth the duties of a Chapter 7 trustee. Section 1107 states that a debtor in possession has all those same powers. Section 1106(a) sets forth the duties of a Chapter 11 trustee. Section 1106(a)(1) lists some, but not all, of the paragraphs in Section 704(a), namely paragraphs (2), (5), (7), (8), (9), (10), (11) and (12). None of those paragraphs come anywhere close to authorizing a sale of assets or filing a Section 363 motion. Paragraph (1), which authorizes the Chapter 7 trustee (and the Chapter11 debtor- in-possession) to "collect and reduce to money the property of the estate for which such trustee serves" authorizes Section 363 motions, but paragraph (1) does not apply to a Chapter 11 trustee. Nor do any of the other subsections of 1106(a), subsections (2) through (8), 911 WEST 8TH AVENUE, #201 C ANCHORAGE, ALASKA 99501 come anywhere close to authorizing a Chapter 11 trustee to sell assets or file a Section 363 motion. LAW OFFICES OF CABOT CHRISTIANSON, P.C. (907) 258-6016 C Fax (907) 258-2026 Given the specificity of the statutory picking-and-choosing in Section 1106(a)(1), it is apparent that the exclusion, in that statute, of Section 704(a)(1)'s power to sell assets, was deliberate and intentional on the part of the drafters of the Bankruptcy Code. Similarly, the absence of any other portion in Section 1106(a) that empowers a chapter 11 trustee to sell assets is not an oversight. This Court lacks the power to rewrite the Code in the way that Wexford, et al., desire. PAGE 2: OPPOSITION TO AMENDED TRUSTEE MOTION H:\3306\MAIN\OPP TO AMENDED T'S MOTION.WPD Case 17-00282 Doc 394 Filed 06/21/18 Entered 06/21/18 16:26:59 Desc Main Document Page 3 of 11 Chapter 11 trustee cannot sell non-bankruptcy property The term sheet attached to the Trustee Motion, page 145/151, includes: "100% of the equity interests (the PenAir Equity") of Peninsula Airways, Inc. (the "Company")" (emphasis in original) but these equity interests are not property of the bankruptcy estate and therefore cannot possibly be within the power of a Chapter 11 trustee to sell. Bankruptcy issues aside, it is not entirely clear why the term sheet includes both the assets, and the equity interests in the Debtor. Regardless, if these equity interests are important to the transaction, then the Chapter 11 trustee has no control over them. The Chapter 11 trustee has no control over the Debtor's real property leases 911 WEST 8TH AVENUE, #201 C ANCHORAGE, ALASKA 99501 Debtor did not assume any real property leases under Section 365, and in particular did not attempt to assume the two leases covering the buildings at 6000 LAW OFFICES OF CABOT CHRISTIANSON, P.C. (907) 258-6016 C Fax (907) 258-2026 and 6100 Bering Drive that constitute Debtor's base of operations. PenAir Realty Holdings, LLC is the lessor of these properties. Therefore the Chapter 11 trustee has no power to include these leasehold interests in a sale of the business. Nor did Debtor formally assume the various real property leases, under which the State of Alaska is lessor, at the airports at the destinations that Debtor serves. Without control of these key leases, a Chapter 11 trustee has nothing to sell. No one will buy an airline without a hangar, office space, or airport access. PAGE 3: OPPOSITION TO AMENDED TRUSTEE MOTION H:\3306\MAIN\OPP TO AMENDED T'S MOTION.WPD Case 17-00282 Doc 394 Filed 06/21/18 Entered 06/21/18 16:26:59 Desc Main Document Page 4 of 11 The Chapter 11 trustee has no control over other significant conditions of the Wexford term sheet Some of the conditions precedent identified in the Wexford term sheet include: ! Capacity Purchase Agreement and Code Share Agreement with Alaska Airlines, Inc. ! Employment agreements with certain designated officers of the Company. ! Regulatory and governmental approvals. The Chapter 11 trustee has no ability to make these conditions happen, and certainly not on the timeline set forth in the motion. The Wexford version of a Chapter 11 trustee is unworkable Initially, Wexford, et al., sought the appointment of a chief restructuring 911 WEST 8TH AVENUE, #201 C ANCHORAGE, ALASKA 99501 officer, or alternatively an examiner. Docket 362. Now, in their amending and LAW OFFICES OF CABOT CHRISTIANSON, P.C. superseding motion at Docket 384, they seek to appoint a "chapter 11 trustee with (907) 258-6016 C Fax (907) 258-2026 instructions." Those instructions are to (a) maintain current operations under substantially the same current management, but (b) to establish, negotiate and consummate a sale of the business assets in a Section 363 motion, using a $5.5 million Wexford offer as a stalking horse bid. As an alternative to a "chapter 11 trustee with instructions," the creditors request the appointment of a regular Chapter 11 trustee. PAGE 4: OPPOSITION TO AMENDED TRUSTEE MOTION H:\3306\MAIN\OPP TO AMENDED T'S MOTION.WPD Case 17-00282 Doc 394 Filed 06/21/18 Entered 06/21/18 16:26:59 Desc Main Document Page 5 of 11 One of the reasons, that Wexford, et al., keep changing the title of the trustee-ish person they seek to appoint, is that the whole concept of such an appointment is unworkable. As already detailed above, a Chapter 11 trustee appointed under Section 1104 of the Bankruptcy Code is authorized to operate the business but not to sell assets. The Wexford group wishes to invert these provisions. They ask this Court to appoint a Chapter 11 trustee who does not operate the business and whose sole responsibility is to sell assets - exactly the opposite of what the Code provides. This inverted and bifurcated set of responsibilities is unworkable. If the Debtor is in charge of operations but the appointed Chapter 11 trustee is in charge of selling the company, what is the extent of the Chapter 11 authority to direct the 911 WEST 8TH AVENUE, #201 C ANCHORAGE, ALASKA 99501 employees of the Debtor? Does the Chapter 11 trustee have the authority to commandeer Debtor's financial management team to prepare information for a LAW OFFICES OF CABOT CHRISTIANSON, P.C. (907) 258-6016 C Fax (907) 258-2026 data room? Does the Chapter 11 trustee have the authority to instruct aircraft maintenance personnel to justify projected maintenance costs? Who controls the ability to determine the scope of confidentiality agreements that will be required of each prospective buyer? Even though in theory, the Chapter 11 trustee will not be managing the day- to-day operations of the company, the most likely effect of appointment of a trustee will be that the day-to-day operations will crumble. Customers, employees, PAGE 5: OPPOSITION TO AMENDED TRUSTEE MOTION H:\3306\MAIN\OPP TO AMENDED T'S MOTION.WPD Case 17-00282 Doc 394 Filed 06/21/18 Entered 06/21/18 16:26:59 Desc Main Document Page 6 of 11 vendors, and other interested parties will not care to understand the difference between a Chapter 11 trustee and a Chapter 7 trustee. Once they understand that "the bankruptcy court has appointed a trustee in the PenAir case" they will lose all confidence that the company will exist at all. Movants have the burden of proof, by the clear and convincing standard, that their version of a Chapter 11 trustee should be appointed Wexford, et al., have the burden to show, by the clear and convincing standard, that appointment of their version of a Chapter 11 trustee is justified. As discussed in In re LHC, LLC, 497 B.R. 281, 291 (Bankr. N.D. Ill. 2013), the majority of courts considering the issue have concluded that the clear and convincing standard, as opposed to the preponderance of evidence standard, applies with respect to whether a Chapter 11 trustee should be appointed. 911 WEST 8TH AVENUE, #201 C ANCHORAGE, ALASKA 99501 The moving party has the burden of proving grounds that justify the appointment of a Chapter 11 trustee and, in doing so, must LAW OFFICES OF CABOT CHRISTIANSON, P.C. overcome a strong presumption that the debtor is to remain in (907) 258-6016 C Fax (907) 258-2026 possession. In re Madison Mgmt. Grp., Inc., 137 B.R. 275, 281 (Bankr.N.D.Ill.1992). Neither the United States Supreme Court nor the Seventh Circuit Court of Appeals has determined the appropriate burden of proof for appointment of a Chapter 11 trustee. Several bankruptcy courts in this district have applied the clear and convincing standard. Raymond Prof'l Grp., Inc. v. William A. Pope Co. (In re Raymond Prof'l Grp., Inc.), 421 B.R. 891, 909 (Bankr.N.D.Ill.2009); In re Bellevue Place Assocs., 171 B.R. 615, 623 (Bankr.N.D.Ill.1994), aff'd., Nos. 94 C 5089, 94 C 5090, 94 C 5091, 1994 WL 687474 (N.D.Ill. Dec. 8, 1994); Madison Mgmt., 137 B.R. at 281; In re Sanders, Bankr.No. 99 B 9876, 2000 WL 329574, at (Bankr.N.D.Ill. Mar. 2, 2000). A minority of courts from other jurisdictions apply the preponderance of the evidence standard. See In re Keeley & PAGE 6: OPPOSITION TO AMENDED TRUSTEE MOTION H:\3306\MAIN\OPP TO AMENDED T'S MOTION.WPD Case 17-00282 Doc 394 Filed 06/21/18 Entered 06/21/18 16:26:59 Desc Main Document Page 7 of 11 Grabanski Land P'ship, 455 B.R. 153, 162–163 (8th Cir. BAP 2011); Tradex Corp. v. Morse, 339 B.R. 823, 829 (D.Mass.2006); In re Veblen West Dairy LLP, 434 B.R. 550, 555–56 (Bankr.D.S.D.2010). (footnotes omitted). In addition to these authorities, the Second and Third Circuits have also held that the clear and convincing standard applies. Adams v. Marwil (In re Bayou Grp., LLC) 564 F.3d 541, 546 (2d Cir. 2009); Official Comm. of Asbestos Claimants v. G–I Holdings, Inc. (In re G–I Holdings, Inc.), 385 F.3d 313, 317–18 (3d Cir.2004). There is no basis to conclude that the Wexford stalking horse offer is in the best interests of the estate. Implicit in the motion to appoint a Chapter 11 trustee is that the Wexford $5.5 million stalking horse bid is in the best interests of the estate. The motion contains much rhetoric on this point. But the numbers tell a different story. 911 WEST 8TH AVENUE, #201 C ANCHORAGE, ALASKA 99501 The Debtor recently received a statement from Wexford to the effect that the DIP loan balance is $4,485,305 as of June 20, 2018. Wexford is charging 20% LAW OFFICES OF CABOT CHRISTIANSON, P.C. (907) 258-6016 C Fax (907) 258-2026 interest, and also its attorney fees, so this balance is increasing quickly. The balance will likely exceed $4.6 million by the time the desired Section 363 sale closes. This leaves $900,000 as the best possible outcome for the bankruptcy estate. But the offer does not include the assumption of any employment contracts, and is completely opaque as to how many PenAir employees Wexford will, in its discretion, choose to retain. The non-retained employees will be summarily fired, PAGE 7: OPPOSITION TO AMENDED TRUSTEE MOTION H:\3306\MAIN\OPP TO AMENDED T'S MOTION.WPD Case 17-00282 Doc 394 Filed 06/21/18 Entered 06/21/18 16:26:59 Desc Main Document Page 8 of 11 and their WARN Act claims will be substantial. Two months severance pay for the fired employees, which is what the WARN Act requires. Debtor's payroll currently runs around $1.7 million per month. If, for discussion, Wexford retains only half of PenAir's employees, then the WARN Act liability to the terminated employees could be in the $1.7 million range, nearly twice the "benefit" to the estate from the sale. The offer also does not address whether Wexford will assume liability for unflown tickets. Currently, the credit card exposure for unflown tickets is approximately $1.5 million. FNBA has indemnified First Bank, Debtor's credit card provider, for any losses, and FNBA has a $750,000 cash deposit and a first security interest in an aircraft to backstop that indemnity. In a worst case situation, 911 WEST 8TH AVENUE, #201 C ANCHORAGE, ALASKA 99501 the estate could be on the hook for the $750,000 shortfall. It should be undisputed that if a Section 363 sale occurs, then the next event LAW OFFICES OF CABOT CHRISTIANSON, P.C. (907) 258-6016 C Fax (907) 258-2026 in this case will be conversion to Chapter 7 so that the remaining assets in the case (primarily, the Saab 340 inventory that Wexford does not want) can be turned to cash, proofs of claims evaluated, and funds distributed. This means that the Section 363 carries with it the unstated, but nevertheless unavoidable, cost of a Chapter 7 trustee, his or her attorney, and accountant. In contrast, these Chapter 7 expenses will not be incurred if the case is dismissed. PAGE 8: OPPOSITION TO AMENDED TRUSTEE MOTION H:\3306\MAIN\OPP TO AMENDED T'S MOTION.WPD Case 17-00282 Doc 394 Filed 06/21/18 Entered 06/21/18 16:26:59 Desc Main Document Page 9 of 11 Because of vagueness in the Wexford offer, it is impossible to state with any certainty what the net benefit, if any, will be to the estate. However, it is clear that after one backs out the employee severance claims, and the unflown ticket liability, the fees of the Chapter 11 trustee and his counsel, and the fees of the Chapter 7 trustee and Chapter 7 professionals, it is very unlikely that the sale will generate any benefit at all to the administrative creditors in this case, and could easily be a significant net negative. Wexford's proposed carveout, solely for the benefit of the trustee and his professionals, is problematic In the Trustee Motion, the movants proposes a carveout, solely for the benefit of the Chapter 11 trustee and his professionals. At footnote 16, the movants indicate that addition details will be forthcoming. Debtor will await those 911 WEST 8TH AVENUE, #201 C ANCHORAGE, ALASKA 99501 details before responding in depth to the proposal. The issue, of course, is that if LAW OFFICES OF CABOT CHRISTIANSON, P.C. the movants are guaranteeing, or outright paying, the fees of the Chapter 11 trustee (907) 258-6016 C Fax (907) 258-2026 and his professionals, whether the trustee can be truly disinterested. There is also the issue of whether a carveout, solely for Wexford-favored professionals as opposed to the Debtor's attorneys and accountants, is appropriate. The case cited by Wexford, In re Cooper Commons, LLC, 512 F. 3d 533 (9th Cir. 2008) is not on point, because in that case the excluded professional had expressly waived the right to surcharge the lender's collateral. Conclusion PAGE 9: OPPOSITION TO AMENDED TRUSTEE MOTION H:\3306\MAIN\OPP TO AMENDED T'S MOTION.WPD Case 17-00282 Doc 394 Filed 06/21/18 Entered 06/21/18 16:26:59 Desc Main Document Page 10 of 11 The Trustee Motion asks this Court to confer powers upon the Chapter 11 trustee that are not permitted under the Bankruptcy Code. It asks the Chapter 11 trustee to sell non-bankruptcy assets over which the trustee has no control or any reasonable prospects of being able to control. It is virtually mathematically impossible for the proposed Section 363 sale - brass ring which is supposed to be the whole purpose of appointing the Chapter 11 trustee - to provide a meaningful benefit to the bankruptcy estate. In fact, it is more likely that the sale will trigger more in the way of additional administrative expenses, than the sale will generate in net sale proceeds. The movants need to establish by clear and convincing evidence that a Chapter 11 trustee should be appointed, but the clear and convincing evidence points entirely in the opposite direction. 911 WEST 8TH AVENUE, #201 C ANCHORAGE, ALASKA 99501 The Trustee Motion is dead on arrival and should be denied. Dated this June 21, 2018. LAW OFFICES OF CABOT CHRISTIANSON, P.C. (907) 258-6016 C Fax (907) 258-2026 LAW OFFICES OF CABOT CHRISTIANSON, PC Attorneys for Debtor By: /s/ Cabot Christianson Cabot Christianson PAGE 10: OPPOSITION TO AMENDED TRUSTEE MOTION H:\3306\MAIN\OPP TO AMENDED T'S MOTION.WPD Case 17-00282 Doc 394 Filed 06/21/18 Entered 06/21/18 16:26:59 Desc Main Document Page 11 of 11 CERTIFICATE OF SERVICE The undersigned hereby certifies that on June 21, 2018, a true and correct copy of the above document was served by electronic means through the ECF system as indicated on the Notice of Electronic Filing. By: /s/ Margaret Stroble Margaret Stroble 911 WEST 8TH AVENUE, #201 C ANCHORAGE, ALASKA 99501 LAW OFFICES OF CABOT CHRISTIANSON, P.C. (907) 258-6016 C Fax (907) 258-2026 PAGE 11: OPPOSITION TO AMENDED TRUSTEE MOTION H:\3306\MAIN\OPP TO AMENDED T'S MOTION.WPD

Memorandum in Support

Case 17-00282 Doc 400 Filed 06/29/18 Entered 06/29/18 12:21:37 Desc Main Document Page 1 of 6 Cabot Christianson, Esq. Alaska Bar No. 7811089 LAW OFFICES OF CABOT CHRISTIANSON, P.C. 911 W. 8th Avenue, Suite 201 Anchorage, Alaska 99501 (907) 258-6016 cabot@cclawyers.net Attorneys for Debtor IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF ALASKA In re:)) PENINSULA AIRWAYS, INC., d/b/a) PENAIR,) Case No.: 17-00282 GS) Chapter 11 Debtor.)) DEBTOR'S REPLY MEMORANDUM IN SUPPORT OF 911 WEST 8TH AVENUE, #201 C ANCHORAGE, ALASKA 99501 MOTION TO CONFIRM LAW OFFICES OF CABOT CHRISTIANSON, P.C. AS COUNSEL FOR DEBTOR LAW OFFICES OF CABOT CHRISTIANSON, P.C. Debtor Peninsula Airways, Inc., dba PenAir ("Debtor") responds as follows to the (907) 258-6016 C Fax (907) 258-2026 objection, filed at Docket 367, by the Wexford/TurboLease/Jetstream creditors, to the Debtor's motion ("Retention Motion"), filed at Docket 354, to confirm Law Offices of Cabot Christianson, P.C. ("LOCC") as counsel for the debtor. Background LOCC was confirmed without incident at the beginning of this case, at Docket 95. At Docket 311, this entered an order on LOCC's second fee application for services rendered from November 20, 2017, through February 28, 2018. The order authorized PAGE 1: DEBTOR'S REPLY MEMORANDUM RE CONTINUED LOCC RETENTION H:\3306\MAIN\REPLY RE LOCC RETENTION.WPD Case 17-00282 Doc 400 Filed 06/29/18 Entered 06/29/18 12:21:37 Desc Main Document Page 2 of 6 fees and costs in the amount $106,771.83, but set a hearing for April 20, 2018, as to whether full payment was appropriate. By the time of that hearing, the situation was that Jetstream had issued a notice of default on April 9, Wexford had cut off its line of credit on April 10 and refused to extend plan deadlines on April 13. Debtor was also behind on its payroll taxes. The issue of payment of LOCC's fees was continued several times and is now scheduled for July 2, 2018. On May 10, 2018, at Docket 352, LOCC filed a supplemental disclosure stating that PenAir Realty Holdings, LLC ("Realty") had recently executed a Legal Services Agreement ("LSA") which guaranteed LOCC payment of LOCC's fees incurred in this case. To secure that guarantee, Realty gave LOCC a junior deed of trust on Realty's collateral. To date, Realty has made two payments to LOCC on account of the LSA: a $35,000 payment on May 4, 2018, and $40,000 on June 4, 2018. 911 WEST 8TH AVENUE, #201 C ANCHORAGE, ALASKA 99501 At the upcoming July 2, 2018 hearing, if this case is not dismissed, Debtor seeks an order granting the Retention Motion, and also authorizing payment on the second fee LAW OFFICES OF CABOT CHRISTIANSON, P.C. (907) 258-6016 C Fax (907) 258-2026 application for work performed last winter. Discussion The objecting creditors' first argument is that the issue of LOCC's continued retention as counsel for the Debtor should be heard at the same time as its pending motion to appoint a trustee, and the U. S. Trustee's motion for dismissal in which the Debtor has joined. That argument is now moot, because those motions will both be heard at the July 2 hearing. PAGE 2: DEBTOR'S REPLY MEMORANDUM RE CONTINUED LOCC RETENTION H:\3306\MAIN\REPLY RE LOCC RETENTION.WPD Case 17-00282 Doc 400 Filed 06/29/18 Entered 06/29/18 12:21:37 Desc Main Document Page 3 of 6 The basic issue for this Court to decide is whether Realty's guarantee renders LOCC not "disinterested" within the meaning of Section 327(a) and Section 101(14)(C), which require that LOCC "not have an interest materially adverse to the interest of the estate or any class of creditors or equity security holders, by reason of any direct or indirect relationship to, connection with, or interest in, the debtor or for any other reason." The key words here are "materially" and "adverse." That is, the question for this Court to decide is whether, by virtue of Realty's guarantee, LOCC's judgment will be impaired, or otherwise materially affected, in a way that advances the interests of Realty at the expense of the Debtor. Throughout this case, the shoe has been on the other foot: Realty has subordinated its interests to the Debtor's reorganization effort. Realty made no effort to have its real 911 WEST 8TH AVENUE, #201 C ANCHORAGE, ALASKA 99501 estate leases assumed under Section 365, because the unsecured creditors would almost certainly have insisted that lease assumption occur only as part of confirmation. Realty LAW OFFICES OF CABOT CHRISTIANSON, P.C. (907) 258-6016 C Fax (907) 258-2026 agreed to reduce its rent to Debtor by more than half, as an inducement for Wexford to increase the DIP credit line by $1 million - only to see Wexford freeze that line when there was still $450,000 left to draw. Realty has, in effect, become a mini-DIP lender who has lent money to the estate, and continues to do so, at 0% interest. The objecting creditors attempt to construct an argument that the "insider- supporters," presumably meaning Realty and Danny Seybert, will obtain some sort of inappropriate benefit from a dismissal. This argument is difficult to follow: if this case is dismissed, then the issue of LOCC's continued retention is moot because the bankruptcy PAGE 3: DEBTOR'S REPLY MEMORANDUM RE CONTINUED LOCC RETENTION H:\3306\MAIN\REPLY RE LOCC RETENTION.WPD Case 17-00282 Doc 400 Filed 06/29/18 Entered 06/29/18 12:21:37 Desc Main Document Page 4 of 6 case no longer exists; and if the case is not dismissed, then there is no alleged benefit because there is no dismissal. In any event, there is no way that Realty or Seybert are better off in a dismissal context than if this case stays in Chapter 11. As already briefed in connection with the motion to dismiss, any dismissal will almost certainly be followed by a second Chapter 11, because only in a bankruptcy proceeding can the approximately $20 million of unsecured debt be managed. Whether or not the case is dismissed, there is no credible argument that Realty's interests may be advanced at the expense of the Debtor's, through any action or inaction on the part of LOCC. The objecting creditors argue that the Realty guarantee of payment should be extended to the entire estate, but this argument makes no more sense than insisting that Wexford's proposed carveout, for the proposed chapter 11 trustee, be extended to all the estate professionals. The creditors cite to In re Carter, 101 B.R. 563 (Bankr. E.D. Wis. 911 WEST 8TH AVENUE, #201 C ANCHORAGE, ALASKA 99501 1989), a case in which the debtor assigned a land sale contract to its lawyers as security for fees, and then filed bankruptcy five hours later. The assignment in that case was of LAW OFFICES OF CABOT CHRISTIANSON, P.C. (907) 258-6016 C Fax (907) 258-2026 estate property, whereas the Realty guarantee does not involve estate property, so the case is easily distinguishable on its facts. In any event, Carter's logic was roundly PAGE 4: DEBTOR'S REPLY MEMORANDUM RE CONTINUED LOCC RETENTION H:\3306\MAIN\REPLY RE LOCC RETENTION.WPD Case 17-00282 Doc 400 Filed 06/29/18 Entered 06/29/18 12:21:37 Desc Main Document Page 5 of 6 criticized in In re Quincy Cargo, Inc., 155 B.R. 193, 196-197 (Bankr. C.D. Ill. 1993),1 and has not been followed by other courts. Conclusion There is no basis to argue that the Realty LSA, deed of trust, or payments, to LOCC are adverse to the debtor, let alone materially adverse. That being the case, LOCC's continued retention should be approved. Dated this June 29, 2018. LAW OFFICES OF CABOT CHRISTIANSON, PC Attorneys for Debtor By: /s/ Cabot Christianson Cabot Christianson 911 WEST 8TH AVENUE, #201 C ANCHORAGE, ALASKA 99501 LAW OFFICES OF CABOT CHRISTIANSON, P.C. (907) 258-6016 C Fax (907) 258-2026 1 "The Court is perplexed by the portion of the Carter opinion which requires that the assignment be made available for payment of all administrative claims. Allowed, unsecured, post-petition professional fees are administrative claims in bankruptcy. The only logical purpose for professionals to take a security interest in the debtor's property to secure their fees is to enhance the priority of their claim to a position superior to that of an administrative claim. By ordering that the secured property be made available and applied equally toward payment of all administrative expenses, Judge McGarity effectively undermines her entire holding, without explaining her rationale other than to state that such is required "to avoid any conflict with other administrative claimants." In re Carter, supra, 101 B.R. at 566. The Court does not concur in this portion of Judge McGarity's analysis. The Court views the arrangement between the Defendants and the Debtor in this case as legally identical to a cash "security retainer", which consists of a cash retainer which is held by professionals to secure payment of fees for future services that the professionals are expected to render." PAGE 5: DEBTOR'S REPLY MEMORANDUM RE CONTINUED LOCC RETENTION H:\3306\MAIN\REPLY RE LOCC RETENTION.WPD Case 17-00282 Doc 400 Filed 06/29/18 Entered 06/29/18 12:21:37 Desc Main Document Page 6 of 6 CERTIFICATE OF SERVICE The undersigned hereby certifies that on June 29, 2018, a true and correct copy of the above document was served by electronic means through the ECF system as indicated on the Notice of Electronic Filing. By: /s/ Margaret Stroble Margaret Stroble 911 WEST 8TH AVENUE, #201 C ANCHORAGE, ALASKA 99501 LAW OFFICES OF CABOT CHRISTIANSON, P.C. (907) 258-6016 C Fax (907) 258-2026 PAGE 6: DEBTOR'S REPLY MEMORANDUM RE CONTINUED LOCC RETENTION H:\3306\MAIN\REPLY RE LOCC RETENTION.WPD

Proceeding Memo

Case 17-00282 Doc 404 Filed 07/02/18 Entered 07/05/18 09:56:43 Desc Main Document Page 1 of 6 PROCEEDING MEMORANDUM Monday Anchorage, Alaska July 2, 2018 TIME CASE NUMBER, NAME, and CHAPTER TYPE OF PROCEEDING and COUNSEL 9:30 a.m. Case No. A17-00282-GS, In re PENINSULA AIRWAYS, d/b/a PenAir, Debtor. Ch 11. TELEPHONIC Cabot Christianson for the Debtor; Erik LeRoy for the UCC; Kathryn Perkins for the U.S. Trustee; Bruce Moore for FNBA; Alan Smith and Jim Leik for Jetstream Lessors; Conrad Tree at (305)447-1920 x 103, interested party with Jetstream Lessors; Ragan Powers for Alaska Airlines, Inc.; Andrea Handel for DOJ - DOT; Arthur Amron for Wexford Capital LP; Andre Jakubowski for Wexford Capital LP; Joshua Wolfshohl for Wexford Capital LP and Debello Investors LLP; Cecily Dumas for Ravn Air Group Inc; Randy Michelson for Turbo Lease LLC; Michael Edelman for Turbo Lease LLC; Paul Bell at (617)778-3188 for Turbo Lease LLC; John Moravec at (781)383-0093 for Turbo Lease LLC; Rob Schmidt for State of Alaska; Max Taylor at (303)342- 2564 for City & County of Denver & Denver Int'l Airport; Shivani Shah for Petro Star Inc; Liz Boydston for Petro Star Inc. Adjourned to: Tues. July 3, 2018 at 8:30 a.m. for: Cont'd Same APPEARANCES: Cabot Christianson for the debtor with Danny Seybert and Dave Richards Al Smith and Jim Leik for Jetstream Lessors Conrad Tree, interested party with Jetstream Lessors(telephonic) Micheal Edelman for Turbo Lease LLC Paul Bell for Turbo Lease LLC (telephonic) John Moravec for Turbo Lease LLC (telephonic) Joshua Wolfshohl and Andre Jakubowski for Wexford Capital LP Kathryn Perkins for the U.S. Trustee Liz Boydston and Angela Speight for Petro Star Inc. Michel Mills and Shane Kanady for SAAB Regan Powers for Alaska Airlines Erik LeRoy for the UCC Laura Bielak for Max Taylor, City/County of Denver (telephonic) SWORN AND EXAMINED: ** See attached Witness and Exhibit List ** Time on record 9:32:13 - Time off Record 12:27:00 1:20:10 3:53:22 Case 17-00282 Doc 404 Filed 07/02/18 Entered 07/05/18 09:56:43 Desc Main Document Page 2 of 6 NOTES AND/OR ORDERS OF BANKRUPTCY JUDGE: X No order will be submitted A) EVIDENTIARY Hearing on United States Trustee's Motion to Convert or Dismiss Chapter 11 Case With Recommendation of Dismissal (DE #327); B) EVIDENTIARY Hearing on Debtor's Motion to Confirm Law Offices of Cabot Christianson, P.C. as Counsel for Debtor (DE# 354); C) EVIDENTIARY Hearing on Amended And Superseding Joint Motion of (A) Jetstream Lessors; (B) Turbo Lease LLC; (C) Wexford Capital LP; And (D) Debello Investors LLC For Order Appointing Chapter 11 Trustee (DE# 384); D) Final Hearing on Wexford Capital LP's and Debello Investors LLC's Motion to Modify Automatic Stay (DE# 373). Court heard testimony of the witnesses and admitted Exhibits 1 thru 21 regarding matters: Item A) Hearing on United States Trustee's Motion To Convert or Dismiss Chapter 11 Case with Recommendation of Dismissal (DE# 327); and Item C) Hearing on Amended and Superseding Joint Motion of (A) Jetstream Lessors; (B) Turbo Lease LLC; (C)Wexford Capital LP; and (D) Debello Investors LLC's For Order Appointing Chapter 11 Trustee(DE# 384). Matter is continued to Tuesday, July 3, 2018 at 8:30 a.m. /s/ Gary Spraker BANKRUPTCY JUDGE calendar Case 17-00282 Doc 404 Filed 07/02/18 Entered 07/05/18 09:56:43 Desc Main Document Page 3 of 6 Case No. A17-00282-GS Judge: Gary Spraker Maincase Title In re Peninsula Airways, d/b/a PenAir, Debtor. Ch 11. Adversary Case Title Date of Hrg Monday, July 2, 2018 Deputy Clerk Lori DesJarlais Attorneys for Debtor Attorneys for Creditors Cabot Christianson (chi) Kathryn Perkins for US Trustee (per) Debtor Creditor Called Ex No. id. ev. Ex no. id. Witnesses Exhibits by ev. W1 Arthur Amron smi Wexford Capital LP 411 West Putman Avenue Grenich CT 06830 occ: Partner and General Counsel for Wexxford Capital X Ex 1 -17 Joint Exhibits 1 - 17 are all admitted smi ** See attached Pages 5 and 6 of DE# 401 ** Ex 18 Exhibit B Wexford Term Sheet (DE# 384-5) smi Ex 19 Exhibit C Proposed Time Line (DE# 384-6) smi Ex 20 PenAir Collateral Cashflow chri Ex 21 Debtors Response to Wexford Motion To Modify Stay (DE# 383) w2 John Ronald Honigmann smi Turbo Lease LLC 20 Fern Avenue Leichfield CT 06759 occ: President of Turbo Lease Case 17-00282 Doc 401 404 Filed 06/29/18 07/02/18 Entered 06/29/18 07/05/18 13:05:31 09:56:43 Desc Main Document Page 5 4 of 6 ADMINISTRATIVE CREDITORS' JOINT EXHIBIT LIST 1. Order Granting Debtor's Motion for Blanket Authority to Assume, Modify, or Enter into New, Aircraft Leases, Dkt. No. 150. 2. Amended Order (I) Authorizing Secured Postpetition Financing, (II) Granting Security Interests and According Superpriority Administrative Claim Status, and (III) Granting Related Relief, Dkt. No. 183. 3. Notice of Debtor Modifying and Assuming Five (5) Saab 2000 Jetstream Aircraft Leases and Associated Engines, and Rejecting One (1) Saab 340B Jetstream Lease, Dkt. No. 187. 4. Notice of Debtor's Assumptions and Rejections of Turbo Leases Aircraft Leases, Dkt. No. 222. 5. Order Granting Motion to Amend DIP Loan Agreement, Dkt. No. 260. 6. Debtor's and Jetstream's Joint Motion for Order Approving Settlement, Dkt. No. 314. 7. Debtor's Response to the U.S. Trustee's Motion to Convert or Dismiss with Recommendation of Dismissal, Dkt. No. 334. 8. Declaration of David M. Richards, Dkt. No. 335. 9. Order Granting Motion for Order Approving Settlement, Dkt. No. 347. 10. Debtor's Amended Schedules, Dkt. No. 353. 11. Declaration of Arthur Amron, Dkt. No. 384-1. 206.359.8000 / Facsimile 206.359.9000 1201 Third Avenue, Suite 4900 12. Declaration of John Honigmann, Dkt. No. 384-2. Seattle, WA 98101-3099 PERKINS COIE LLP 13. Declaration of Stuart Klaskin, Dkt. No. 384-3. STATEMENT RE CONDUCT OF HEARING -5- 127084-0001/140456548.1 Case 17-00282 Doc 401 404 Filed 06/29/18 07/02/18 Entered 06/29/18 07/05/18 13:05:31 09:56:43 Desc Main Document Page 6 5 of 6 14. Debtor's Supplemental Memorandum Regarding Dismissal, Dkt. No. 392. 15. Debtor's Objection to Amended Motion to Appoint Chapter 11 Trustee, Dkt. No. 394. 16. Debtor's Reply Memorandum re: Motion to Dismiss, Dkt. No. 397. 17. Chart comparing Debtor's performance against Budget [part of para. 10 of Amron Declaration] 206.359.8000 / Facsimile 206.359.9000 1201 Third Avenue, Suite 4900 Seattle, WA 98101-3099 PERKINS COIE LLP STATEMENT RE CONDUCT OF HEARING -6- 127084-0001/140456548.1 Case 17-00282 Doc 404 Filed 07/02/18 Entered 07/05/18 09:56:43 Desc Main Document Page 6 of 6 Page -2- Continued witness / exhibit sheet Date July 2, 2018 In re: PenAir Debtor / Pltf Creditor / Deft Called Ex No. id. ev. Ex No. id. ev. Witnesses Exhibits by W3 Stuart Adam Klaskin smi Jetstream Aviation Capital LLC 2601 South Bayshore Drive Suite 1130 Miami Florida 33130 occ: Chief Executive Officer W4 Daniel Peter Seybert smi PenAir 6100 Boeing Avenue Anchorage, AK. 99502 occ: CEO

Convert Case From Chapter 11 to Chapter 7 (BKCONV01)

Case 17-00282 Doc 406 Filed 07/06/18 Entered 07/06/18 14:29:16 Desc Main Document Page 1 of 2 1 GREGORY M. GARVIN 2 ACTING U. S. TRUSTEE FOR REGION 18 3 KATHRYN PERKINS OFFICE OF THE UNITED STATES TRUSTEE 4 700 STEWART STREET, SUITE 5103 SEATTLE, WASHINGTON 98101-1271 5 TELEPHONE: (206) 553-2000 FAX: (206) 553-2566 6 7 8 UNITED STATES BANKRUPTCY COURT 9 DISTRICT OF ALASKA 10 11 Case No. 17-00282-GS 12 In re Chapter 11 13 Peninsula Airways, Inc., 14 ORDER DIRECTING THE APPOINTMENT OF TRUSTEE 15 Debtor. 16 17 This matter came before the Court on the United States Trustee's Motion to Convert or 18 Dismiss With Recommendation of Dismissal (ECF No. 327) (UST Motion) and the Amended and 19 Superseding Joint Motion of (A) Jetstream Lessors; (B) Turbo Lease LLC; (C) Wexford Capital 20 LP; and (D) Debello Investors LLC or Order Appointing Chapter 11 Trustee (ECF No. 384) 21 (Creditor Motion). Having reviewed the UST Motion, the Creditor Motion, all of the responses 22 and objections to those motions, and considered all of the arguments made at the evidentiary 23 hearing held on July 2nd and 3rd 2018, and having set forth certain findings of fact and 24 conclusions of law orally on the record on July 6, 2018, which are adopted and incorporated 25 herein pursuant to Fed.R.Civ.P. 52(a) and Fed.R.Bank.P. 7052, the Court finds: 26 A. Notice of the UST Motion and Creditor Motion was adequate; 27 B. Cause exists under §1112(b); and 28 ORDER DIRECTING THE APPOINTMENT Office of the United States Trustee OF TRUSTEE – PAGE 1 of 2 700 Stewart St., Suite 5103 Seattle, Washington 98101 (206) 553‐2000 Case 17-00282 Doc 406 Filed 07/06/18 Entered 07/06/18 14:29:16 Desc Main Document Page 2 of 2 1 C. Rather than dismiss or convert this bankruptcy case, the appointment of a chapter 11 2 trustee under § 1104(a) is in the best interest of creditors and the estate. 3 Therefore, it is ORDERED 4 1. The UST Motion is approved as provided for herein; 5 2. The Creditor Motion is denied as moot; and 6 3. The United States Trustee shall appoint a Chapter 11 trustee in this case. 7 Dated this 6th day of July 2018. 8 9 _/s/ Gary Spraker____________________ 10 GARY SPRAKER United States Bankruptcy Judge 11 Serve: C. Christianson, Esq. 12 E. LeRoy, Esq. J. Wolfshol, Esq. 13 A. Smith, Esq. M. Edelman, Esq. 14 K. Perkins, Esq. 15 ECF Participants via NEF U.S. Trustee 16 Case Manager 17 18 19 20 21 22 23 24 25 26 27 28 ORDER DIRECTING THE APPOINTMENT Office of the United States Trustee OF TRUSTEE – PAGE 2 of 2 700 Stewart St., Suite 5103 Seattle, Washington 98101 (206) 553‐2000

BNC Certificate of Notice

Case 17-00282 Doc 409 Filed 07/08/18 Entered 07/08/18 20:51:14 Desc Imaged Certificate of Notice Page 1 of 4 United States Bankruptcy Court District of Alaska In re: Case No. 17-00282-GS Peninsula Airways, Inc., dba PenAir Chapter 11 Debtor CERTIFICATE OF NOTICE District/off: 097--3 User: admin Page 1 of 2 Date Rcvd: Jul 06, 2018 Form ID: pdfcrs Total Noticed: 1 Notice by first class mail was sent to the following persons/entities by the Bankruptcy Noticing Center on Jul 08, 2018. +Gregory M. Garvin, Acting U.S. Trustee, Region 18, Office of the U.S. Trustee, 700 Stewart Street, Suite 5103, Seattle, WA 98101-4438 Notice by electronic transmission was sent to the following persons/entities by the Bankruptcy Noticing Center. NONE. TOTAL: 0 ***** BYPASSED RECIPIENTS ***** NONE. TOTAL: 0 Addresses marked '+' were corrected by inserting the ZIP or replacing an incorrect ZIP. USPS regulations require that automation-compatible mail display the correct ZIP. Transmission times for electronic delivery are Eastern Time zone. I, Joseph Speetjens, declare under the penalty of perjury that I have sent the attached document to the above listed entities in the manner shown, and prepared the Certificate of Notice and that it is true and correct to the best of my information and belief. Meeting of Creditor Notices only (Official Form 309): Pursuant to Fed. R. Bank. P. 2002(a)(1), a notice containing the complete Social Security Number (SSN) of the debtor(s) was furnished to all parties listed. This official court copy contains the redacted SSN as required by the bankruptcy rules and the Judiciary's privacy policies. Date: Jul 08, 2018 Signature: /s/Joseph Speetjens _ CM/ECF NOTICE OF ELECTRONIC FILING The following persons/entities were sent notice through the court's CM/ECF electronic mail (Email) system on July 6, 2018 at the address(es) listed below: Alan D. Smith on behalf of Creditor Jetstream Lessors adsmith@perkinscoie.com Andrea Handel on behalf of Creditor United States of America andrea.handel@usdoj.gov Brooks W. Chandler on behalf of Creditor City of Unalaska bchandler@bcfaklaw.com, lrasmussen@bcfaklaw.com Bruce A. Moore on behalf of Creditor First National Bank Alaska brucem@lbblawyers.com, cindyb@lbblawyers.com Cabot C. Christianson on behalf of Debtor Peninsula Airways, Inc., dba PenAir cabot@cclawyers.net, margaret@cclawyers.net Charles A. Cacciola on behalf of Creditor City of Unalaska ccacciola@bcfaklaw.com Christiaan D Horton on behalf of Interested Party Worldwide Aircraft Services, Inc. chorton@cecb.com David Ashton on behalf of Creditor PORT OF PORTLAND david.ashton@portofportland.com, julia.weisenbach@portofportland.com Deitra L. Ennis on behalf of Creditor Municipality of Anchorage, Dept of Law bankruptcy@muni.org Erik LeRoy on behalf of Creditor Committee Unsecured Creditors Committee erik@alaskanbankruptcy.com Gary C. Sleeper on behalf of Creditor Alaska Central Express, Inc. cflug@jdolaw.com Gary C. Sleeper on behalf of Creditor Oxford Electronics, Inc. d/b/a Oxford Airport Technical Services cflug@jdolaw.com Hugh R McCullough on behalf of Interested Party Alaska Airlines, Inc hughmccullough@dwt.com, elainehuckabee@dwt.com;seadocket@dwt.com;donnaspaulding@dwt.com James Leik on behalf of Creditor Jetstream Lessors jleik@perkinscoie.com, kparran@perkinscoie.com;docketanc@perkinscoie.com Jane Kim on behalf of Interested Party Ravn Air Group, Inc. jkim@kellerbenvenutti.com Jay Ong on behalf of Interested Party Alaska CargoPort, LLC jong@munsch.com Joshua W Wolfshohl on behalf of Creditor Wexford Capital LP jwolfshohl@porterhedges.com Joshua W Wolfshohl on behalf of Creditor Debello Investors LLP jwolfshohl@porterhedges.com Kathryn Perkins on behalf of U.S. Trustee Office of the U.S. Trustee kathryn.e.perkins@usdoj.gov, Martha.A.VanDraanen@usdoj.gov;cori.gustafson@usdoj.gov Kevin A. Reck on behalf of Creditor The Massachusetts Port Authority kreck@foley.com, bshelley@foley.com Lauren Dorsett on behalf of Interested Party Alaska Airlines, Inc laurendorsett@dwt.com Max Robert Taylor, III on behalf of Creditor Denver International Airport max.taylor@flydenver.com Michael J. Edelman on behalf of Creditor Turbo Lease Inc. medelman@vedderprice.com Michael J. Edelman on behalf of Creditor Turbo Lease, LLC medelman@vedderprice.com Michael R. Mills on behalf of Interested Party Grant Aviation, Inc. bankruptcyak@dorsey.com, droege.michele@dorsey.com;mills.mike@dorsey.com;mckibben.pamela@dorsey.com;Johnson.Patty@dorsey.c om;Kanady.shane@dorsey.com Case 17-00282 Doc 409 Filed 07/08/18 Entered 07/08/18 20:51:14 Desc Imaged Certificate of Notice Page 2 of 4 District/off: 097--3 User: admin Page 2 of 2 Date Rcvd: Jul 06, 2018 Form ID: pdfcrs Total Noticed: 1 The following persons/entities were sent notice through the court's CM/ECF electronic mail (Email) system (continued) Michael R. Mills on behalf of Creditor Saab Defense and Security USA LLC bankruptcyak@dorsey.com, droege.michele@dorsey.com;mills.mike@dorsey.com;mckibben.pamela@dorsey.com;Johnson.Patty@dorsey.c om;Kanady.shane@dorsey.com Office of the U.S. Trustee USTPRegion18.ak.ecf@usdoj.gov Ragan L. Powers on behalf of Interested Party Alaska Airlines, Inc raganpowers@dwt.com, gailkataoka@dwt.com Randy Michelson on behalf of Creditor Turbo Lease, LLC randy.michelson@michelsonlawgroup.com Randy Michelson on behalf of Creditor Aero Century Corp. randy.michelson@michelsonlawgroup.com Robert H. Schmidt on behalf of Creditor State of Alaska rob.schmidt@alaska.gov Tobias Keller on behalf of Interested Party Ravn Air Group, Inc. tkeller@kellerbenvenutti.com Wayne G. Dawson on behalf of Debtor Peninsula Airways, Inc., dba PenAir wdawson@dawsonlaw-ak.com William C. Hankla on behalf of Creditor United States of America w.carl.hankla@usdoj.gov TOTAL: 34 Case 17-00282 Doc 409 Filed 07/08/18 Entered 07/08/18 20:51:14 Desc Imaged Certificate of Notice Page 3 of 4 1 GREGORY M. GARVIN 2 ACTING U. S. TRUSTEE FOR REGION 18 3 KATHRYN PERKINS OFFICE OF THE UNITED STATES TRUSTEE 4 700 STEWART STREET, SUITE 5103 SEATTLE, WASHINGTON 98101-1271 5 TELEPHONE: (206) 553-2000 FAX: (206) 553-2566 6 7 8 UNITED STATES BANKRUPTCY COURT 9 DISTRICT OF ALASKA 10 11 Case No. 17-00282-GS 12 In re Chapter 11 13 Peninsula Airways, Inc., 14 ORDER DIRECTING THE APPOINTMENT OF TRUSTEE 15 Debtor. 16 17 This matter came before the Court on the United States Trustee's Motion to Convert or 18 Dismiss With Recommendation of Dismissal (ECF No. 327) (UST Motion) and the Amended and 19 Superseding Joint Motion of (A) Jetstream Lessors; (B) Turbo Lease LLC; (C) Wexford Capital 20 LP; and (D) Debello Investors LLC or Order Appointing Chapter 11 Trustee (ECF No. 384) 21 (Creditor Motion). Having reviewed the UST Motion, the Creditor Motion, all of the responses 22 and objections to those motions, and considered all of the arguments made at the evidentiary 23 hearing held on July 2nd and 3rd 2018, and having set forth certain findings of fact and 24 conclusions of law orally on the record on July 6, 2018, which are adopted and incorporated 25 herein pursuant to Fed.R.Civ.P. 52(a) and Fed.R.Bank.P. 7052, the Court finds: 26 A. Notice of the UST Motion and Creditor Motion was adequate; 27 B. Cause exists under §1112(b); and 28 ORDERȱDIRECTINGȱTHEȱAPPOINTMENTȱȱ OfficeȱofȱtheȱUnitedȱStatesȱTrusteeȱ OFȱTRUSTEEȱ–ȱPAGEȱ1ȱofȱ2ȱ 700ȱStewartȱSt.,ȱSuiteȱ5103ȱ Seattle,ȱWashingtonȱ98101ȱ (206)ȱ553Ȭ2000ȱ Case 17-00282 Doc 409 Filed 07/08/18 Entered 07/08/18 20:51:14 Desc Imaged Certificate of Notice Page 4 of 4 1 C. Rather than dismiss or convert this bankruptcy case, the appointment of a chapter 11 2 trustee under § 1104(a) is in the best interest of creditors and the estate. 3 Therefore, it is ORDERED 4 1. The UST Motion is approved as provided for herein; 5 2. The Creditor Motion is denied as moot; and 6 3. The United States Trustee shall appoint a Chapter 11 trustee in this case. 7 Dated this 6th day of July 2018. 8 9 _/s/ Gary Spraker____________________ 10 GARY SPRAKER United States Bankruptcy Judge 11 Serve: C. Christianson, Esq. 12 E. LeRoy, Esq. J. Wolfshol, Esq. 13 A. Smith, Esq. M. Edelman, Esq. 14 K. Perkins, Esq. 15 ECF Participants via NEF U.S. Trustee 16 Case Manager 17 18 19 20 21 22 23 24 25 26 27 28 ORDERȱDIRECTINGȱTHEȱAPPOINTMENTȱȱ OfficeȱofȱtheȱUnitedȱStatesȱTrusteeȱ OFȱTRUSTEEȱ–ȱPAGEȱ2ȱofȱ2ȱ 700ȱStewartȱSt.,ȱSuiteȱ5103ȱ Seattle,ȱWashingtonȱ98101ȱ (206)ȱ553Ȭ2000ȱ

Appointing Trustee

Case 17-00282 Doc 412 Filed 07/09/18 Entered 07/09/18 15:01:22 Desc Main Document Page 1 of 2 1 UNITED STATES BANKRUPTCY COURT DISTRICT OF ALASKA 2 3 4 Case No. 17-00282-GS 5 In re Chapter 11 6 Peninsula Airways, Inc., ORDER GRANTING EX PARTE 7 APPLICATION FOR ORDER 8 APPROVING APPOINTMENT OF Debtor. CHAPTER 11 TRUSTEE 9 10 This matter comes before the Court on the United States Trustee's Ex Parte Application 11 for Order Approving Appointment of Chapter 11 Trustee (ECF No. 410) (Application). Having 12 reviewed the Application and the Trustee's Acceptance and Declaration filed concurrently 13 therewith (ECF No. 411), the Court finds that 1) after consultation with parties in interest, the 14 United States Trustee has selected Gerard A. McHale, Jr. for appointment as chapter 11 trustee 15 herein, 2) Mr. McHale is a disinterested person as defined in 11 U.S.C. § 101(14) who is otherwise 16 qualified to be a trustee, and 3) the Application should be approved. Based on the foregoing, 17 IT IS HEREBY ORDERED THAT: 18 A. The Ex Parte Application for Order Approving Appointment of Chapter 11 19 Trustee (ECF No. 410) is GRANTED. 20 B. The United States Trustee's appointment of Gerard A. McHale, Jr. as chapter 11 21 trustee is hereby approved. 22 C. Gerard A. McHale, Jr. (Trustee) shall: 23 1. Perform the duties specified in 11 U.S.C. § 1106; 24 2. Submit to a background investigation; and 25 3. The Trustee shall obtain a bond in the initial amount of no less than 26 $1,250,000 pursuant to 11 U.S.C. § 322(b)(2). The Trustee's bond shall be 27 in such form as is acceptable to the United States Trustee. The Trustee is 28 authorized to use estate funds for the purpose of paying the bond premium. PAGE 1 of 2 Case 17-00282 Doc 412 Filed 07/09/18 Entered 07/09/18 15:01:22 Desc Main Document Page 2 of 2 1 4. The chapter 11 trustee is authorized to retain counsel, if and as may be 2 necessary, to assist the chapter 11 trustee in the performance of his or her 3 duties and functions. Employment of counsel for the chapter 11 trustee is 4 subject to the court's approval under 11 U.S.C. § 327. 5 5. The chapter 11 trustee may seek further instructions and orders from the 6 court, as necessary, to facilitate, carry out and satisfy his or her duties and 7 functions. 8 6. The chapter 11 trustee is required to file monthly reports in this case no later 9 than the 15th of the month immediately following the reported month. 10 11 Dated this 9th day of July 2018. 12 _/s/ Gary Spraker______________________ 13 GARY SPRAKER 14 United States Bankruptcy Judge Serve: C. Christianson, Esq. 15 E. LeRoy, Esq. J. Wolfshol, Esq. 16 A. Smith, Esq. M. Edelman, Esq. 17 K. Perkins, Esq. 18 ECF Participants via NEF U.S. Trustee 19 Case Manager 20 21 22 23 24 25 26 27 28 PAGE 2 of 2

Bond

Case 17 - 00282 Doc 417 Filed 07 / 17 / 18 Entered 07 / 17 / 18 14: 11: 51 Desc Main Document Page 1 of 2 BOND NO. 016215813 IN THE UNITED STATES BANKRUPTCY COURT DISTRICT OF ALASKA IN RE: PENINSULA AIRWAYS, INC. CASE NO: 17 - 00282 - GS CHAPTER 11 BOND OF TRUSTEE KNOW ALL BY THESE PRESENTS, That we, GERARD A. MCHALE, JR. of FORT MYERS, FL, as Principal, and LIBERTY MUTUAL INSURANCE COMPANY, as Surety, are held and firmly bound to the United States of America in the sum of ONE MILLION TWO HUNDRED FIFTY THOUSAND AND 00 / 100 ($ 1, 250, 000. 00) DOLLARS, lawful money of the United States, for the payment of which, well and truly to be made, we bind ourselves, our heirs, executors, administrators, successors and assigns, jointly and severally, firmly by these presents. NOW, THEREFORE, THE CONDITION OF THIS OBLIGATION IS SUCH, that if the undersigned principal shall faithfully perform his official duties as TRUSTEE for the above named debtor, then this obligation is to be void and of no effect, otherwise to remain in full force and effect. This bond shall remain in full force and effect until the Surety has terminated further liability after 30 days written notice filed with the Clerk of the United States Bankruptcy Court for the DISTRICT OF ALASKA and with theU.S. Trustee, OR the Trustee obtains written authorization from the U. S Trustee or his / her designate releasing the Surety company from further liability under the bond. The Surety shall have no liability for any losses caused by conduct in which said named principal engaged prior to the effective date of this bond. DATED: July 9, 2018. GERARD A. MCHALE, JR ., Suarel Ametaal Approved by: PRINCIPAL Gary W. Dyer Assistant US Trustee LIBERTY MUTUAL INSURANCE COMPANY By: Elizabeth Schatt ELIZABETH SCHOTT ATTORNEY - IN - FACT THIS POWEROSFATTORNES AS NORVID un Edesl, 275 / ÞRIN PED ONREBBAZKEROONA: 11: 51 Desc Main This Power of Attorney limits the acts of those named herein, and the Ol @ ule na withbority to Bagle Camping except in the manner and to the extent herein stated. Certificate No. 7850085 Liberty Mutual Insurance Company The Ohio Casualty Insurance Company West American Insurance Company POWER OF ATTORNEY KNOWN ALL PERSONS BY THESE PRESENTS: That The Ohio Casualty Insurance Company is a corporation duly organized under the laws of the State of New Hampshire, that Liberty Mutual Insurance Company is a corporation duly organized under the laws of the State of Massachusetts, and West American Insurance Company is a corporation duly organized under the laws of the State of Indiana (herein collectively called the " Companies"), pursuant to and by authority herein set forth, does hereby name, constitute and appoint, Andrea Becker; Candice T. Gros; Catherine C. Kehoe, Clark P Fitz - Hugh; Conway C. Marshall; Darlene A. Bornt; David C. Joseph; Elizabeth C. Dukes; Elizabeth Schott; Elizabeth W. Kearney, Jessica Palmeri, Kristine Donovan; Linda C. Sheffield; Margaret Schatzman; R. Tucker Fitz - Hugh; Roxanne Craven; Sara S. DeJarnette; Stephen Beahm 2 all of the city of New Orleans, state of - LA B R each individually if there be more than one named its true and lawful attorney - in - fact to make, execute, seal, acknowledge and deliver, for and on its behalf as surety and as its act and deed, any and all undertakings, bonds, recognizances and other surety obligations, in pursuance of these presents and shall be as binding upon the Companies as if they have been duly signed by the president and attested by the secretary of the Companies in their own proper persons. IN WITNESS WHEREOF, this Power of Attorney has been subscribed by an authorized officer or official of the Companies and the corporate seals of the Companies have been affixed thereto this _ 31st day of July. 2017 Y INSUA SURA NSURA LTY CAN IN TUAL AMERIC 1919 The Ohio Casualty Insurance Company Liberty Mutual Insurance Company West American Insurance Company 1912 COM CONIPA 1991 COMPAA SERT SOM " . STATE OF PENNSYLVANIA David M. Carey, Assistant Secretary COUNTY OF MONTGOMERY On this 31st day of July 2017, before me personally appeared David M. Carey, who acknowledged himself to be the Assistant Secretary of Liberty Mutual Insurance Company, The Ohio Casualty Company, and West American Insurance Company, and that he, as such, being authorized so to do, execute the foregoing instrument for the purposes therein contained by signing on behalf of the corporations by himself as a duly authorized officer. IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed my notarial seal at King of Prussia, Pennsylvania, on the day and year first above written. COMMONWEALTH OF PENNSYLVANIA Notarial Seal Toresa Pastella, Notary Public Upper Merion Twp ., Montgomery County Teresa Pastella, Notary Public My Commission Expires March 28, 2021 Mombor, Pennsylvania Association of Notaries GA PAS ERES By: View thitelli OF Not valid for mortgage, note, loan, letter of credit, currency rate, interest rate or residual value guarantees. To confirm the validity of this Power of Attorney call 1 - 610 - 832 - 8240 between 9: 00 am and 4: 30 pm EST on any business day. NOTARY ANIA This Power of Attorney is made and executed pursuant to and by authority of the following By - laws and Authorizations of The Ohio Casualty Insurance Company, Liberty Mutual Insurance Company, and West American Insurance Company which resolutions are now in full force and effect reading as follows: ARTICLE IV - OFFICERS - Section 12. Power of Attorney. Any officer or other official of the Corporation authorized for that purpose in writing by the Chairman or the President, and subject to such limitation as the Chairman or the President may prescribe, shall appoint such attorneys - in - fact, as may be necessary to act in behalf of the Corporation to make, execute, seal, acknowledge and deliver as surety any and all undertakings, bonds, recognizances and other surety obligations. Such attorneys - in - fact, subject to the limitations set forth in their respective powers of attorney, shall have full power to bind the Corporation by their signature and execution of any such instruments and to attach thereto the seal of the Corporation. When so executed, such instruments shall be as binding as if signed by the President and attested to by the Secretary. Any power or authority granted to any representative or attorney - in - fact under the provisions of this article may be revoked at any time by the Board, the Chairman, the President or by the officer or officers granting such power or authority. ARTICLE XIII - Execution of Contracts - SECTION 5. Surety Bonds and Undertakings. Any officer of the Company authorized for that purpose in writing by the chairman or the president, and subject to such limitations as the chairman or the president may prescribe, shall appoint such attorneys - in - fact, as may be necessary to act in behalf of the Company to make, execute, seal, acknowledge and deliver as surety any and all undertakings, bonds, recognizances and other surety obligations. Such attorneys - in - fact subject to the limitations set forth in their respective powers of attorney, shall have full power to bind the Company by their signature and execution of any such instruments and to attach thereto the seal of the Company. When so executed such instruments shall be as binding as if signed by the president and attested by the secretary: N Certificate of Designation - The President of the Company acting pursuant to the Bylaws of the Company, authorizes David M. Carey, Assistant Secretary to appoint such attorneys - in fact as may be necessary to act on behalf of the Company to make, execute, seal, acknowledge and deliver as surety any and all undertakings, bonds, recognizances and other surety obligations. Authorization - By unanimous consent of the Company's Board of Directors, the Company consents that facsimile or mechanically reproduced signature of any assistant secretary of the Company, wherever appearing upon a certified copy of any power of attorney issued by the Company in connection with surety bonds, shall be valid and binding upon the Company with the same force and effect as though manually affixed. I, Renee C. Llewellyn, the undersigned, Assistant Secretary, The Ohio Casualty Insurance Company, Liberty Mutual Insurance Company, and West American Insurance Company do hereby certify that the original power of attorney of which the foregoing is a full true and correct copy of the Power of Attorney executed by said Companies, is in full force and effect and has not been revoked. IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed the seals of said Companies this day of INST SURAA INSURA SUALINS APOTEN CUALTY 10 CASO 1919 CE COA 1912 1991 PANY Renee C. Llewettyn, Assistant Secretary 733 of 1000 LMS _ 12873 _ 022017

Setting Hearing (SA)

Case 17-00282 Doc 421 Filed 07/30/18 Entered 07/30/18 11:56:37 Desc Main Document Page 1 of 2 UNITED STATES BANKRUPTCY COURT DISTRICT OF ALASKA In re:)) PENINSULA AIRWAYS, INC., d/b/a) PENAIR,) Case No.: 17-00282 GS) Chapter 11 Debtor.)) ORDER SETTING CASE STATUS CONFERENCE On the court's own motion, IT IS HEREBY ORDERED that the court will hold a status conference in this case on Thursday, August 16, 2018 at 2:00 p.m. in the Herbert A. Ross Historic Courtroom, Old Federal Building, 605 West Fourth Avenue, Anchorage, Alaska. Parties outside of Anchorage may participate telephonically if they contact the In-Court Clerks at (907) 271-2640 to provide their telephone numbers at least three (3) business days prior to the hearing. IT IS FURTHER ORDERED that the Trustee and his proposed professionals are expected to attend the status conference by phone or video conference, unless previously scheduled to be in Alaska to attend to other matters, in accordance with // PAGE 1 Case 17-00282 Doc 421 Filed 07/30/18 Entered 07/30/18 11:56:37 Desc Main Document Page 2 of 2 the court's posted procedures available at www.akb.uscourts.gov/court-participation- telephone-or-video-teleconference. Dated: July 30, 2018. /s/ Gary Spraker_____________________ GARY SPRAKER United States Bankruptcy Judge Serve: G. McHale, Jr., 1601 Jackson Street, Suite 200, Fort Meyers, FL 33901 C. Christianson, Esq. A. Lim, Esq. M. Markham, Esq. J. Wolfshohl, Esq. M. Edelman, Esq. A. Smith, Esq. J. Leik, Esq. E. LeRoy, Esq. K. Perkins, Esq. ECF Participants via NEF U.S. Trustee Calendar PAGE 2

Generic Motion / Application

Case 17-00282 Doc 426 Filed 07/31/18 Entered 07/31/18 09:54:09 Desc Main Document Page 1 of 3 1 Michael C. Markham Angelina E. Lim 2 Johnson Pope Bokor Ruppel & Burns, LLP 401 East Jackson Street, Suite 3100 3 Tampa, FL 33602 Telephone: (813) 225-2500 4 Facsimile: (813) 223-7118 5 Attorneys for Gerard A. McHale, Jr. Chapter 11 Trustee 6 7 8 9 10 UNITED STATES BANKRUPTCY COURT DISTRICT OF ALASKA (ANCHORAGE) 11 In re) 12) Case No. 17-00282 PENINSULA AIRWAYS INC., D/B/A PENAIR,) Chapter 11 13) Debtor.) 14 __________________________________________) 15 CHAPTER 11 TRUSTEE MOTION TO APPROVE CONTINUED USE OF DEBTOR-IN-POSSESSION BANK ACCOUNTS 16 17 Gerard A. McHale, Jr., the duly appointed and acting Chapter 11 Trustee (the "Trustee") 18 of Peninsula Airways, Inc. d/b/a Penair (the "Debtor"), by and through his undersigned counsel, 19 hereby seeks authority to continue to use the Debtor-in-possession bank accounts for receipts and 20 disbursements, and respectfully states as follows: 21 1. On August 6, 2017 (the "Petition Date"), the Debtor filed a Voluntary Petition for 22 Relief under Chapter 11 of the Bankruptcy Code. 23 2. On July 9, 2018, the Court ordered the appointment of a Chapter 11 Trustee. Case 17-00282 Doc 426 Filed 07/31/18 Entered 07/31/18 09:54:09 Desc Main Document Page 2 of 3 1 3. Upon the US Trustee's application of Gerard A. McHale, Jr. to serve as Chapter 11 2 Trustee in this case, the Court approved the appointment of the Trustee on July 9, 2018. (DE# 3 412). 4 4. The Trustee seeks approval to continue to use the bank accounts already established 5 by the Debtor as Debtor-in-possession accounts ("DIP Bank Accounts").1 6 5. The Debtor urgently requires cash for vendors which will only deal under "Cash- 7 on-Delivery" terms, which make it highly impractical for the Trustee to physically sign the checks, 8 given the geographic distance. In any event, the Trustee has instant online access to the DIP Bank 9 Accounts. The Trustee can review them daily and all checks will be pre-approved by him prior to 10 any issuance. 11 6. Any changes in the DIP Bank Accounts will adversely impact the cash flow of the 12 Debtor's operations because their credit card processing capabilities will be disrupted. 13 7. The Trustee anticipates a sale of the Debtor's assets shortly. 14 8. The Trustee has consulted with the Office of United States Trustee regarding this 15 arrangement. 16 9. Any objections to the relief sought should be filed no later than three (3) days before 17 the hearing set for this motion. 18 WHEREFORE, the Trustee respectfully requests the Court to enter an order, in the form 19 attached hereto as Exhibit "A" granting the Motion and such further and other relief as the Court 20 deems just and proper. 21 22 1 The DIP Bank Accounts are currently with approved depositories – Wells Fargo Bank, N.A. (accounts ending with 7776 & 2157); U.S. Bank (account ending with 7295); Key Bank (account ending with 7174); First National Bank of Alaska (accounts ending with 1327, 1319, 1301); and Bank of America, N.A. (account ending with 4052). 2 Case 17-00282 Doc 426 Filed 07/31/18 Entered 07/31/18 09:54:09 Desc Main Document Page 3 of 3 1 CERTIFICATE OF SERVICE 2 I HEREBY CERTIFY that on the 31st day of July, 2018, a true and correct copy of this 3 application was served by electronic means through the ECF system as indicated on the Notice of 4 Electronic Filing. 5 JOHNSON, POPE, BOKOR RUPPEL & BURNS, LLP 6 /s/ Michael C. Markham 7 Michael C. Markham, FBN: 768560 Angelina E. Lim, FBN: 158313 8 401 E. Jackson Street, Suite 3100 Tampa, FL 33602 9 Telephone: (813) 225-2500 Facsimile: (813) 223-7118 10 Attorneys for Trustee 4724135_1 11 12 13 14 15 16 17 18 19 20 21 22 23 3

Motion / Application (To Set Obj Deadline)

o Case 17 - 00282 Doc 428 Filed 08 / 03 / 18 Document Entered 08 / 03 / 18 14: 50: 22 Page 1 of 2 Desc Main FILED Robert E. Cohn HOGAN LOVELLS US LLP Columbia Square 555 Thirteenth Street, NW Washington, DC 20004 - 1109 Telephone: 202 - 637 - 5600 robert. cohn @ hoganlovells. com AUG - 3 2018 CLERK NA BANKRUPTOY QOVAT Special Counsel for Debtor IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF ALASKA In re: PENINSULA AIRWAYS, INC ., d / b / a PENAIR, Case No .: 17 - 00282 GS Chapter 11 Debtor. NOTICE OF TIME FOR FILING OBJECTION TO THIRD APPLICATION FOR PAYMENT OF ATTORNEY FEES AND COSTS TO SPECIAL COUNSEL FOR DEBTOR - HOGAN LOVELLS US LLP [ August 24, 2018 - Objection Deadline ] Notice is hereby given that the following applications for payment of fees and expenses have been filed: . - - - Date Date Application Filed Date Date Services Rendered Applicant Fees Fees - Expenses Hogan Lovells US LLP 7 / 19 / 18 3 / 1 / 18 - 6 / 30 / 18 $ 88, 983. 00 $ 63. 06 (special counsel for Debtor) PLEASE FURTHER TAKE NOTICE that if you object to the entry of an order granting the foregoing application, you must object in writing on or before August 24, 2018. Your objections are to be filed with the Office of the Clerk of the above - entitled court, at 605 W. 4th Avenue, Suite 138, Anchorage, Alaska, and serve a copy on the US Trustee, 605 W. 4th Avenue, Room 258, Anchorage, AK 99501 - 2296, and on the Chapter 11 Trustee on or before the said date. The application is available for inspection at the Office of the Clerk, 605 W. 4th Ave ., Suite 138, Anchorage, Alaska, or at the office of the undersigned. o " - o Case 17 - 00282 Doc 428 Filed 08 / 03 / 18 Document Entered 08 / 03 / 18 14: 50: 22 Desc Main Page 2 of 2 Should you fail to so object or having objected, fail to timely request a hearing, be further advised that the court may grant the applications described above without further notice to you. HOGAN LOVELLS US LLP Dated: August 2, 2018 Washington, DC By: Globete che Robert E. Cohn Columbia Square 555 Thirteenth Street, NW Washington, DC 20004 - 1109 Telephone: 202 - 637 - 5600 robert. cohn @ hoganlovells. com Special Counsel for Debtor Certificate of Service The undersigned hereby certifies that on August 2, 2018, a correct copy of the above notice was served via regular, first - classU.S. Mail on the Clerk's matrix in this case. By Udays. ch By: Robert E. Cohn

Generic Motion / Application

Case 17-00282 Doc 435 Filed 08/15/18 Entered 08/15/18 13:53:50 Desc Main Document Page 1 of 20 1 Michael C. Markham Angelina E. Lim 2 Johnson Pope Bokor Ruppel & Burns, LLP 401 East Jackson Street, Suite 3100 3 Tampa, FL 33602 Telephone: (813) 225-2500 4 Facsimile: (813) 223-7118 5 Attorneys for Gerard A. McHale Jr. Chapter 11 Trustee 6 7 UNITED STATES BANKRUPTCY COURT DISTRICT OF ALASKA (ANCHORAGE) 8 In re:) Chapter 11 9) PENINSULA AIRWAYS INC., D/B/A) Case No. 17-00282 10 PENAIR)) 11 Debtor.)) 12 CHAPTER 11 TRUSTEE'S EMERGENCY MOTION (I) FOR ENTRY OF AN 13 ORDER APPROVING AUCTION AND BID PROCEDURES, (B) AUTHORIZING AND SCHEDULING AN AUCTION FOR THE SALE OF THE DEBTOR'S ASSETS, AND (C) 14 GRANTING RELATED RELIEF, AND (II) FOR ENTRY OF AN ORDER (A) APPROVING THE SALE OF THE DEBTOR'S ASSETS FREE AND CLEAR OF ALL 15 LIENS, CLAIMS, ENCUMBRANCES, AND INTERESTS, (B) AUTHORIZING THE ASSUMPTION AND ASSIGNMENT OF EXECUTORY CONTRACTS AND 16 UNEXPIRED LEASES, AND (C) GRANTING RELATED RELIEF 17 Gerard A. McHale, Jr., as chapter 11 trustee for the above captioned debtor (the "Chapter 18 11 Trustee") files this Emergency Motion (the "Bid Procedures and Sale Motion") for (I) an 19 Order (A) Approving Auction and Bid Procedures, (B) Authorizing and Scheduling an Auction 20 for the Sale of the Debtor's Assets, and (C) Granting Related Relief (the "Bidding Procedures 21 Order"); and for (II) an Order (A) Approving the Sale of the Debtor's Assets Free and Clear of 22 All Liens, Claims, Encumbrances, and Interests, (B) Authorizing the Assumption and Assignment 23 of Executory Contracts and Unexpired Leases, and (C) Granting Related Relief (the "Sale Case 17-00282 Doc 435 Filed 08/15/18 Entered 08/15/18 13:53:50 Desc Main Document Page 2 of 20 1 Order"). In support of the Motion, the Chapter 11 Trustee, by and through its undersigned 2 counsel, respectfully represents: 3 PRELIMINARY STATEMENT 4 1. The Chapter 11 Trustee seeks the immediate entry of an order approving the 5 Bidding Procedures, attached as Exhibit A, related to an auction of the Debtor's assets, 6 scheduling a hearing to approve the proposed sale, and establishing notice procedures related to 7 the assumption and assignment of executory contracts and unexpired leases. 8 2. In this Motion, the Chapter 11 Trustee also seeks the ultimate entry of the Sale 9 Order approving a sale to the highest and/or best bid received at auction and authorizing the 10 assumption and assignment of certain executory contracts and unexpired leases. 11 JURISDICTION AND VENUE 12 4. The United States Bankruptcy Court for the District of Alaska (the "Court") has 13 jurisdiction over this matter pursuant to 28 U.S.C. § 1334(b). This matter is a core proceeding 14 under 28 U.S.C. § 157(b)(2). Venue is proper before this Court pursuant to 28 U.S.C. § 1408. 15 5. The legal predicates for the relief requested herein are Bankruptcy Code sections 16 105, 363, 365, 503, and 507 and Rules 2002, 6004, 6006, 9007, and 9014 of the Federal Rules of 17 Bankruptcy Procedure (the "Bankruptcy Rules"). 18 BACKGROUND 19 6. On August 6, 2017 (the "Petition Date"), the Debtor filed a voluntary petition for 20 relief under chapter 11 of the Bankruptcy Code. 21 7. On November 15, 2017, the Court entered its Amended Order (i) Authorizing 22 Secured Postpetition Financing, (ii) Granting Security Interests and According Superpriority Case 17-00282 Doc 435 Filed 08/15/18 Entered 08/15/18 13:53:50 Desc Main Document Page 3 of 20 1 Administrative Claim Status, and (iii) Granting Related Relief [Docket No. 183] (the "DIP 2 Order"). 3 8. The DIP Order authorized the Debtor to borrow up to $3.5 million from Debello 4 Investors LLC, an affiliate of Wexford Capital LP (collectively, with Debello Investors LLC, 5 "Wexford"), on a senior secured, super-priority basis pursuant to the DIP Credit Agreement. 6 9. The Debtor subsequently obtained approval of an amendment to the DIP Credit 7 Agreement, which (among other things) authorized the Debtor to borrow an additional $1.0 8 million under the DIP Facility [Docket No. 260] (the "Amended DIP Order"). 9 10. As the Court is aware, Wexford and the Debtor's two largest aircraft lessors 10 moved for the appointment of a chapter 11 trustee. In connection with that motion, Wexford 11 asserted that the Debtor's assets should be sold pursuant to a Section 363 sale, and presented a 12 term sheet for the acquisition of the Debtor's assets [Docket No. 384-5].1 After a two-day 13 evidentiary hearing, on July 6, 2018, the Court enter its order directing the appointment of a 14 chapter 11 trustee [Docket No. 406]. 15 11. Thereafter, on July 9, 2018, the Court entered an Order Granting Ex Parte 16 Application for Order Approving Appointment of Chapter 11 Trustee approving the appointment 17 of the Chapter 11 Trustee [Docket No. 412]. 18 12. Since his appointment, the Chapter 11 Trustee has moved quickly to assess the 19 Debtor's financial circumstances and determine a path forward. After considering all other 20 available alternatives, and after consulting with his counsel, the Chapter 11 Trustee determined 21 that a 363 sale of the Debtor's assets is the most prudent step. 22 1 The attached Bidding Procedures do not provide for a Stalking Horse or any Stalking Horse bidder protections as requested by Wexford. The Chapter 11 Trustee reserves the right to identify a Stalking Horse with a proposed expense reimbursement of up to $100,000, but the Chapter 11 Trustee is not inclined to provide for a break-up fee. Case 17-00282 Doc 435 Filed 08/15/18 Entered 08/15/18 13:53:50 Desc Main Document Page 4 of 20 1 RELIEF REQUESTED 2 A. The Bid Procedures and Form of Notice 3 13. The Chapter 11 Trustee seeks approval of the Bidding Procedures attached as 4 Exhibit A hereto (the "Bid Procedures"), and the entry of a Bidding Procedures Order.2 5 14. The Bid Procedures are designed to maximize value for the Debtor's estate, while 6 ensuring a fair and orderly sale process. The Bid Procedures are transparent and represent a fair 7 balance of the competing issues present in this case. 8 B. Scheduling an Auction and Sale Hearing 9 15. The Chapter 11 Trustee seeks to schedule the auction for the Acquired Assets, to 10 the extent an auction is necessary, during the last week of September or the first week of 11 October, 2018, at a location to be announced by the Chapter 11 Trustee. The Chapter 11 Trustee 12 also seeks to schedule the sale hearing to approve the sale of the Acquired Assets during the first 13 week of October, 2018. The Chapter 11 Trustee submits that this expedited sale schedule is 14 appropriate based on the amount of time the Debtor has been in bankruptcy (almost exactly one 15 year) and the Debtor's quickly deteriorating cash position. The Chapter 11 Trustee must sell the 16 Acquired Assets before entering the Debtor's slow season to prevent the Debtor from running 17 out of cash. 18 C. Notice Relating to Potential Assumption and Assignment of Executory Contracts and Unexpired Leases 19 20 16. As part of the Sale, the Chapter 11 Trustee seeks authority to assume and assign 21 certain executory contracts and/or unexpired leases (the "Desired 365 Contracts") to the 22 successful bidder. 2 The Bid Procedures do not contain dates certain, but the general timing of the sale has been agreed upon by major constituents in the case. It is anticipated that dates certain will be agreed upon once the date of the Sale Hearing is set. Accordingly, in the event of any conflict, the terms of the Bidding Procedures Order shall prevail. Case 17-00282 Doc 435 Filed 08/15/18 Entered 08/15/18 13:53:50 Desc Main Document Page 5 of 20 1 17. With respect to the Desired 365 Contracts, the Chapter 11 Trustee respectfully 2 requests approval of the following notice procedures: 3 a. No later than [fourteen (14)] days prior to the hearing to approve the Sale (the "Sale Hearing"), the Chapter 11 Trustee will file with the Court and 4 serve on each party to a Desired 365 Contract a notice setting forth the amount of cure owed thereunder according to the Debtor's books and 5 records (the "Cure Notice"). The Cure Notice shall state the cure amount that the Chapter 11 Trustee believes is necessary to assume such contract 6 or lease pursuant to Bankruptcy Code section 365 (the "Cure Amount"), and notify each party that such party's lease or contract may be assumed 7 and assigned to the successful bidder to be identified at the conclusion of the auction. 8 b. No later than [seven (7)] days prior to the Sale Hearing, any objection to 9 the Cure Amount must be filed with the Court (the "Cure Objection Deadline"). Any objection to the Cure Amount must state with specificity 10 what cure the party to the Desired 365 Contract believes is required with appropriate documentation in support thereof. If no objection is timely 11 received, the Cure Amount set forth in the Cure Notice shall be controlling notwithstanding anything to the contrary in any Desired 365 Contract or 12 other document as of the date of the Cure Notice; the non-debtor party to the Desired 365 Contract shall be deemed to have stipulated that the Cure 13 Amount set forth in the Cure Notice is correct; the non-debtor party shall be forever barred, estopped and enjoined from asserting or claiming 14 against the Chapter 11 Trustee or the successful bidder that any additional amounts are due or other defaults exist, that conditions to assignment must 15 be satisfied under such Desired 365 Contract or that there is any objection or defense to the assumption and assignment of such Desired 365 16 Contract, including any argument that there exist conditions to assumption and assignment that must be satisfied under such Desired 365 Contract or 17 that any required consent to assignment has not been given; and the non- debtor party to such Desired 365 Contract shall be forever barred from 18 objecting to the adequacy of the successful bidder's adequate assurance of future performance and that there exists any other basis on which to object 19 to such assumption and assignment. 20 D. The Sale of Assets is an Exercise of the Chapter 11 Trustee's Sound Business Judgment 21 22 18. Bankruptcy Code section 363(b) does not specify a standard for determining 23 when it is appropriate for a court to authorize the use, sale, or lease of property of the estate; Case 17-00282 Doc 435 Filed 08/15/18 Entered 08/15/18 13:53:50 Desc Main Document Page 6 of 20 1 however, bankruptcy courts have required that the authorization of such use, sale, or lease of 2 property of the estate out of the ordinary course of business be based upon sound business 3 justification. See Institutional Creditors of Continental Air Lines, Inc. v. Continental Air Lines, 4 Inc., et al. (In re Continental Air Lines, Inc.), 780 F.2d 1223, 1226 (5th Cir. 1986) ("[F]or a 5 debtor-in-possession or trustee to satisfy its fiduciary duty to the debtor, creditors and equity 6 holders, there must be some articulated business justification for using, selling, or leasing the 7 property outside the ordinary course of business."); see also In re Asarco, 650 F.3d at 601; In re 8 Cowin, No. 13-30984, 2014 WL 1168714, at *38 (Bankr. S.D. Tex. Mar. 21, 2014). Once the 9 Chapter 11 Trustee articulates a valid business justification, "[t]he business judgment rule is a 10 presumption that in making the business decision the directors of a corporation acted on an 11 informed basis, in good faith and in the honest belief that the action was in the best interests of 12 the company." In re S.N.A. Nut Co., 86 B.R. 98 (Bankr. N.D. Ill. 1995); see also In re Integrated 13 Res., Inc., 147 B.R. 650, 656 (Bankr. S.D.N.Y. 1992); In re Johns-Manville Corp., 60 B.R. 612, 14 615–16 (Bankr. S.D.N.Y. 1986) (". . . a presumption of reasonableness attaches to a Debtor's 15 management decisions."). 16 19. The Chapter 11 Trustee has a sound business justification for selling the Acquired 17 Assets pursuant to a competitive bidding process consistent with the Bidding Procedures. 18 20. The Chapter 11 Trustee submits that the sale process under the Bidding 19 Procedures will generate the highest and best offer for the Acquired Assets, and will provide a 20 greater recovery for the Debtor's estate than would be provided by any other available 21 alternative. The Chapter 11 Trustee's determination to sell the Acquired Assets through a 22 competitive bidding process as provided for in the Bidding Procedures is a valid and sound 23 exercise of the Chapter 11 Trustee's business judgment. Case 17-00282 Doc 435 Filed 08/15/18 Entered 08/15/18 13:53:50 Desc Main Document Page 7 of 20 1 21. Accordingly, the Chapter 11 Trustee believes that he has proposed a fair process 2 for obtaining the highest and best offer and sale of the Acquired Assets for the benefit of the 3 Debtor's estate and its creditors. 4 F. Request to Approve Sale Free and Clear Pursuant to 11 U.S.C. § 363(f) 5 22. By this Motion, the Chapter 11 Trustee also requests that the Court approve the 6 sale of the Acquired Assets to the successful bidder pursuant to Bankruptcy Code sections 105, 7 363, and 365. This portion of the relief is requested to be entered after the Sale Hearing, 8 pursuant to a form of Sale Order to be filed prior to the Sale Hearing. The Chapter 11 Trustee 9 submits that the sale of the Acquired Assets to the successful bidder is in the best interest of the 10 Debtor's estate and should be approved. 11 23. A debtor should be authorized to sell assets out of the ordinary course of business 12 pursuant to Bankruptcy Code section 363 and prior to obtaining a confirmed plan or 13 reorganization if it demonstrates a sound business purpose for doing so. See, e.g., Committee of 14 Equity Security Holders v. Lionel Corp. (In re Lionel Corp.), 722 F.2d 1063 (2d Cir. 1983); see 15 also In re Gulf Oil Corp., 404 B.R. 407 (Bankr. S.D. Tex. 2009). Factors considered in 16 approving a sale outside of plan include (i) the business justification, (ii) the amount of elapsed 17 time since the filing date, (iii) whether the proposed bid procedures facilitate competitive 18 bidding, (iv) whether the assets have been aggressively marketed, (v) the likelihood that a plan 19 will be confirmed in the near future, (vi) the effect of disposition on the future plan, and (vii) 20 whether the assets are increasing or decreasing in value. Id. 21 24. The disposition of the Acquired Assets will not control all terms of a future plan. 22 The allocation of the proceeds will be determined by either a plan and/or the priorities set forth 23 in the Bankruptcy Code, and/or express order of this Court. Further, a timely sale is important in Case 17-00282 Doc 435 Filed 08/15/18 Entered 08/15/18 13:53:50 Desc Main Document Page 8 of 20 1 this case in order to preserve the continuity of services of the Debtor's employees, the Debtor's 2 continued provision of critical air service to the Alaskan community and the avoidance of sudden 3 shut down as a result of reduced liquidity. 4 25. The Chapter 11 Trustee requests that the Court approve the sale of the Acquired 5 Assets free and clear of all liens, claims, and encumbrances. In evaluating such a sale, a court 6 must balance the need for flexibility with the concern of affected creditors. In re Terrace 7 Gardens Park P'ship, 96 B.R. 707, 715 (Bankr. W.D. Tex. 1989). The Court must also 8 determine that creditors' lien rights are adequately protected and that the offered price is the 9 highest price and/or best terms obtainable under the circumstances in the particular case. Id.; In 10 re Beker Indus. Corp., 63 B.R. 474, 477–78 (Bankr. S.D.N.Y. 1986). 11 26. The Chapter 11 Trustee maintains that at least one of the five subsections of 12 section 363(f) will be satisfied and, therefore, the Chapter 11 Trustee may sell the Acquired 13 Assets free and clear of all liens, claims, and encumbrances. Specifically, the Chapter 11 Trustee 14 submits that any such lien, claim, or encumbrance will be adequately protected by attachment to 15 the net proceeds of the sale, subject to any claims and defenses the Chapter 11 Trustee may 16 possess with respect thereto and/or the Chapter 11 Trustee will obtain the consent of the party 17 holding the lien, claim or encumbrance. See In re Wells, 296 B.R. 728, 734 (Bankr. E.D. Va. 18 2003) (holding that a chapter 7 trustee could sell property free and clear of equitable interest in 19 property with interest to attach to proceeds). Accordingly, the Chapter 11 Trustee requests that 20 the Acquired Assets be sold to the successful bidder free and clear of all liens, claims, and 21 encumbrances, with such liens, claims, and encumbrances attaching to the proceeds of the sale of 22 the Acquired Assets. 23 Case 17-00282 Doc 435 Filed 08/15/18 Entered 08/15/18 13:53:50 Desc Main Document Page 9 of 20 1 G. Authorization of Assumption and Assignment of Executory Contracts and 2 Unexpired Leases 3 27. To enhance the value to the Debtor of the proposed sale, the Chapter 11 Trustee 4 requests approval under Bankruptcy Code section 365 of the Debtor's assumption and 5 assignment of the Desired 365 Contracts to the successful bidder. The Chapter 11 Trustee 6 further requests that the Sale Order provide that the Desired 365 Contracts will be transferred to, 7 and remain in full force and effect for the benefit of the successful bidder notwithstanding any 8 provisions in the Desired 365 Contracts, including those described in Bankruptcy Code sections 9 365(b)(2) and (f)(1) and (3) that prohibit such assignment. 10 28. Adequate assurance of future performance depends on the facts and circumstances 11 of each case, but should be given a "practical, pragmatic construction." EBG Midtown S. Corp. 12 v. McLaren/Hart Env. Eng'g Corp. (In re Sanshoe Worldwide Corp.), 139 B.R. 585, 593 13 (S.D.N.Y. 1992); In re Rachels Indus., Inc., 109 B.R. 797, 803 (Bankr. W.D. Tenn. 1990); see 14 also In re Prime Motor Inns Inc., 166 B.R. 993, 997 (Bankr. S.D. Fla. 1994) ("[a]lthough no 15 single solution will satisfy every case, the required assurance will fall considerably short of an 16 absolute guarantee of performance."). Adequate assurance may be provided by demonstrating 17 the assignee's financial health and experience in managing the type of enterprise or property 18 assigned. See, e.g., In re Bygaph, Inc., 56 B.R. 596, 605-06 (Bankr. S.D.N.Y. 1986) (adequate 19 assurance is present when prospective assignee of lease from debtor has financial resources and 20 has expressed willingness to devote sufficient funding to business to give it strong likelihood of 21 succeeding). 22 29. The Chapter 11 Trustee will present evidence at the Sale Hearing to demonstrate 23 the financial credibility, willingness, and ability of the successful bidder to perform under the Case 17-00282 Doc 435 Filed 08/15/18 Entered 08/15/18 13:53:50 Desc Main Document Page 10 of 20 1 Desired 365 Contracts. The Sale Hearing thus will afford the Court and other interested parties 2 the opportunity to evaluate the ability of the successful bidder to provide adequate assurance of 3 future performance under the Desired 365 Contracts, as required under Bankruptcy Code section 4 365(b)(1)(C). Further, as set forth above, the Chapter 11 Trustee will give notice to all parties to 5 the Desired 365 Contracts of their intention to assume the Desired 365 Contracts and what the 6 Chapter 11 Trustee believes are the Cure Amounts. Finally, the Chapter 11 Trustee understands 7 that assumption and assignment of certain licenses and permits with the FAA, Department of 8 Transportation and other regulatory authorities shall be subject to their respective approvals. 9 Based on the foregoing, the Court should authorize the Chapter 11 Trustee to assume and assign 10 the Desired 365 Contracts to the successful bidder. 11 30. Accordingly, the Chapter 11 Trustee requests that the Court (i) enter a Bidding 12 Procedures Order; (ii) schedule the Sale Hearing to consider the Sale Order; and (iii) grant the 13 Chapter 11 Trustee other just relief. 14 WAIVER OF STAY UNDER BANKRUPTCY RULE 6004(h) 15 31. Bankruptcy Rule 6004(h) provides that "[a]n order authorizing the use, sale, or 16 lease of property other than cash collateral is stayed until the expiration of 14 days after entry of 17 the order, unless the court orders otherwise." Additionally, Bankruptcy Rule 6006(d) provides 18 that "[a]n order authorizing the trustee to assign an executory contract or unexpired lease under 19 § 365(f) is stayed until the expiration of 14 (fourteen) days after the entry of the order, unless the 20 court orders otherwise." Here, an expeditious closing of a sale is necessary and appropriate to 21 maximize value for the estate. Accordingly, the Chapter 11 Trustee requests that the Court 22 waive the fourteen-day stay period under Bankruptcy Rules 6004(h) and 6006(d). Case 17-00282 Doc 435 Filed 08/15/18 Entered 08/15/18 13:53:50 Desc Main Document Page 11 of 20 1 32. Accordingly, the Chapter 11 Trustee requests that the Court (i) enter the Bidding 2 Procedures Order; (ii) schedule the Sale Hearing to consider the Sale Order; and (iii) grant the 3 Chapter 11 Trustee other just relief. 4 NOTICE 5 33. Notice of this Motion shall be given to (a) the Office of the United States Trustee 6 for the District of Alaska; (b) the Debtor's 20 largest unsecured creditors; (c) Porter Hedges LLP, 7 1000 Main Street, 36th Floor, Houston, Texas 77002 (Attn: Joshua Wolfshohl), and via email to 8 JWolfshohl@porterhedges.com, counsel to the DIP Lender; (d) the United States Attorney's 9 Office for the District of Alaska; (e) the Internal Revenue Service; (f) any party known to have 10 asserted a Lien on the Acquired Assets; (g) all known affected federal, state, and local 11 regulatory, and taxing authorities; (h) any buyer that signed a nondisclosure agreement with 12 respect to the Acquired Assets; and (i) any party that has requested notice pursuant to 13 Bankruptcy Rule 2002 as of the time of service. Due to the nature of the relief requested, the 14 Chapter 11 Trustee submit that no other or further notice need be provided. 15 16 17 18 19 20 21 22 23 Case 17-00282 Doc 435 Filed 08/15/18 Entered 08/15/18 13:53:50 Desc Main Document Page 12 of 20 1 CONCLUSION 2 34. The Chapter 11 Trustee respectfully requests that the Court enter the Bidding 3 Procedures Order now and the Sale Order after the Sale Hearing and granting such other and 4 further relief as is just and proper. 5 Dated: August 15, 2018 6 JOHNSON POPE BOKOR RUPPEL & BURNS, LLP 7 By: /s/ Michael C. Markham Michael C. Markham 8 State Bar No. 768560 401 East Jackson Street, Suite 3100 9 Tampa, Florida 33602 Telephone: (813) 225-2500 10 Fax: (727) 462-0365 mikem@jpfirm.com 11 COUNSEL FOR CHAPTER 11 TRUSTEE 12 CERTIFICATE OF SERVICE 13 I certify that on August 15, 2018, I caused a copy of the foregoing document to be served 14 by the Electronic Case Filing System in the United States Bankruptcy Court for the District of 15 Alaska. 16 /s/ Michael C. Markham 17 Michael C. Markham 18 19 20 21 22 23 24 Case 17-00282 Doc 435 Filed 08/15/18 Entered 08/15/18 13:53:50 Desc Main Document Page 13 of 20 1 EXHIBIT A TO MOTION UNITED STATES BANKRUPTCY COURT 2 DISTRICT OF ALASKA 3 In re)) Case No. 17-00282-GS 4 Peninsula Airways, Inc.,)) 5 Debtor.)) 6 7 BIDDING PROCEDURES FOR THE SALE OF THE DEBTOR'S ASSETS 8 On August [__], 2018, the United States Bankruptcy Court for the District of Alaska (the 9 "Court") entered an "Order (A) Approving Auction and Bidding Procedures, and 10 (B) Authorizing and Scheduling An Auction for the Sale of Debtor's Assets" (the "Bidding 11 Procedures Order"), which approved these procedures by which Gerard A. McHale, Jr., as 12 trustee for the Debtor's estate (the "Trustee"), is authorized to conduct an auction for the sale of 13 substantially all of the Debtor's assets (collectively, the "Assets"). 14 1. Assets to be Sold Free and Clear of Any and All Claims and Interests. The Trustee seeks 15 to sell substantially all of the Assets. Except as otherwise provided in the asset purchase 16 agreement between the Trustee and the purchaser of the Assets, all of the Debtor's right, title, 17 and interest in and to the Assets will be sold free and clear of all liens, claims, and interests 18 (collectively, the "Encumbrances") to the maximum extent permitted by section 363 of the 19 Bankruptcy Code (other than certain permitted liens and assumed liabilities), with the 20 Encumbrances to attach to the net proceeds of the Sale with the same validity and priority as 21 those Encumbrances held with respect to the Assets. The Trustee also seeks to assume and assign 22 certain executory contracts and leases to the purchaser pursuant and subject to section 365 of the 23 Bankruptcy Code. 24 Case 17-00282 Doc 435 Filed 08/15/18 Entered 08/15/18 13:53:50 Desc Main Document Page 14 of 20 1 2. Access to Diligence Materials. 2 a. To participate in the bidding process and receive access to due-diligence 3 information (the "Diligence Materials"), a party must submit to the Trustee an executed non- 4 disclosure and confidentiality agreement in form and substance satisfactory to the Trustee and 5 evidence satisfactory to the Trustee demonstrating the party's financial capability to close a 6 transaction involving some or all of the Assets (a "Proposed Transaction"). 7 b. A party who qualifies for access to Diligence Materials is an "Approved Bidder." 8 All due-diligence requests must be directed to the Trustee. The Trustee shall provide to each 9 Approved Bidder reasonable due-diligence information, as requested by the Approved Bidder in 10 writing, as soon as reasonably practicable after the request, and the Trustee shall post all written 11 due diligence provided to any Approved Bidder to the Debtor's electronic data room. 12 c. For any Approved Bidder who is a competitor of the Debtor or is affiliated with 13 any competitor of the Debtor, the Trustee reserves the right to withhold any Diligence Materials 14 that the Trustee, in his sole discretion, determines are sensitive or otherwise not appropriate for 15 disclosure to the Approved Bidder. 16 d. Only Approved Bidders, Wexford Capital, and Alaska Airlines, Inc., will be 17 eligible to receive due-diligence information and access to the Debtor's electronic data room and 18 to additional non-public information regarding the Debtor. 19 e. Each Approved Bidder shall comply with reasonable requests for additional 20 information by the Trustee regarding the ability of the Approved Bidder to consummate a 21 Proposed Transaction. Failure by an Approved Bidder to comply with reasonable requests for 22 additional information may be a basis for the Trustee to determine that a bidder is no longer an 23 Approved Bidder or that a bid is not a Qualified Bid. The Trustee shall maintain in confidence Case 17-00282 Doc 435 Filed 08/15/18 Entered 08/15/18 13:53:50 Desc Main Document Page 15 of 20 1 any confidential information acquired from Approved Bidders in accordance with the 2 confidentiality agreements entered into with Approved Bidders. 3 3. Bid Qualification Process. To be eligible to participate in the Auction (defined below), 4 each offer, solicitation, or proposal (each, a "Bid"), and each party submitting such a Bid (each, a 5 "Bidder"), must be determined by the Trustee to satisfy each of the following conditions: 6 a. Good Faith Deposit. Each Bid must be accompanied by a deposit in the amount of 7 $550,000.00 to a segregated account to be identified and established by the Trustee (the "Good 8 Faith Deposit"). 9 b. Same or Better Terms. The Bid must be on terms that are substantially the same 10 or better than the terms of the Asset Purchase Agreement prepared and distributed by the Trustee 11 (the "Form APA"). 12 c. Asset Purchase Agreement. A Bid shall include a copy of the Form APA marked 13 to show all changes requested by the Bidder and an executed original of the Form APA with 14 proposed changes incorporated. A Bid may not be considered as qualified for the Auction if the 15 Bid contains additional material representations and warranties, covenants, closing conditions, or 16 termination rights. The Bid should include the following information: (a) the aircraft to be 17 acquired or the aircraft leases to be assumed; (b) the office/hangar locations to be assumed; (c) 18 the employees to be retained; and (d) the routes to be continued and any anticipated interruption 19 in service. 20 d. Corporate Authority. The Bid must include written evidence reasonably 21 acceptable to the Trustee demonstrating appropriate corporate authorization to consummate the 22 Proposed Transaction. Case 17-00282 Doc 435 Filed 08/15/18 Entered 08/15/18 13:53:50 Desc Main Document Page 16 of 20 1 e. Proof of Financial Ability to Perform. The Bid must include written evidence 2 from which the Trustee can conclude that the Bidder has the necessary financial ability to close 3 the Proposed Transaction and provide adequate assurance of future performance under all 4 contracts to be assumed and assigned in connection with such Proposed Transaction. 5 f. Contingencies. A Bid may not be conditioned on obtaining financing or any 6 internal approval, or on the outcome or review of due diligence, but may be subject to the 7 accuracy in all material respects of specified representations and warranties at the closing of the 8 Proposed Transaction. 9 g. Irrevocable. A Bid must be irrevocable through the Auction and if the Bid is 10 accepted as the Successful Bid, that Bid shall continue to remain irrevocable, subject to the 11 Bidding Procedures. 12 h. Bid Deadline. Regardless of when a party becomes an Approved Bidder, the 13 following parties must receive a Bid in writing, on or before September ___, 2018 at ______. 14 (Alaska time) (the "Bid Deadline"): 15 (1) the Trustee, Gerard A. McHale, Jr., McHale, P.A., 1601 Jackson Street, Suite 200, Fort Myers, Florida 33901, jerrym@thereceiver.net; 16 (2) the Trustee's counsel, Michael C. Markham, Johnson Pope Bokor Ruppel 17 & Burns, LLP, 401 East Jackson Street, Suite 3100, Tampa, Florida 33602, mikem@jpfirm.com; 18 A Bid will not be considered as qualified for the Auction if the Bid is not received by the Trustee 19 in writing by the Bid Deadline. 20 4. Amount of Bid. A Bid must specify the total consideration the Bidder will pay, which 21 must include, at a minimum, $5,500,000 in cash (which can include application of the Good 22 Faith Deposit), without set-off, holdback, or any other deduction. If the proposed consideration Case 17-00282 Doc 435 Filed 08/15/18 Entered 08/15/18 13:53:50 Desc Main Document Page 17 of 20 1 includes the assumption of liabilities of the Debtor, the liabilities to be assumed shall be 2 identified with sufficient detail to enable the Trustee to determine the value of those liabilities. 3 5. Adequate Assurance of Future Performance. Each Bid shall be accompanied by evidence 4 that the Bidder can provide adequate assurance of future performance (the "Adequate Assurance 5 Information"), including (a) information about the Bidder's financial condition, such as federal 6 tax returns for the immediately preceding two years, a current financial statement, or bank 7 account statements, (b) information demonstrating (in the Trustee's reasonable business 8 judgment) that the Bidder has the financial capacity to consummate the Proposed Transaction, 9 (c) evidence that the Bidder has obtained authorization or approval from its board of directors (or 10 comparable governing body) with respect to the submission of its Bid, (d) the identity and exact 11 name of the Bidder (including any equity holder or other financial backer if the Bidder is an 12 entity formed for the purpose of consummating the Proposed Transaction), (e) evidence 13 satisfactory to the Trustee that the Bidder is qualified to own and operate a Part 121 air carrier 14 pursuant to applicable law, and (f) such additional information regarding the Bidder as the 15 Bidder may elect to include. By submitting a Bid, Bidders agree that the Trustee may 16 disseminate their Adequate Assurance Information to counterparties to contracts and leases 17 affected by the Bid. 18 6. The Trustee will review each Bid to determine, in his discretion, whether it meets the 19 requirements set forth above. A Bid received from a Bidder before the Bid Deadline that meets 20 the above requirements, as determined by the Trustee, shall constitute a "Qualified Bid," and the 21 Bidder will be a "Qualified Bidder." The Trustee shall inform Bidders whether or not their Bids 22 have been designated as Qualified Bids no later than 24 hours after such Bids are received and Case 17-00282 Doc 435 Filed 08/15/18 Entered 08/15/18 13:53:50 Desc Main Document Page 18 of 20 1 shall contemporaneously provide copies of all Qualified Bids to all Qualified Bidders by 2 electronic means. 3 B. Auction. 4 7. If only one Qualified Bid is received by the Bid Deadline, the Trustee will not conduct an 5 auction. The Bidder that submitted the Bid will be the Successful Bidder, and the provisions of 6 paragraph D.2 below shall not apply. 7 8. If more than one Qualified Bid is received by the Bid Deadline, the Trustee will conduct 8 an auction (the "Auction") to determine the highest and best Qualified Bid using the following 9 procedures: 10 (a) Only Qualified Bidders may participate in the Auction. 11 (b) Before the Auction, the Trustee shall provide copies of all Qualified Bids to all Qualified Bidders. 12 (c) Each Qualified Bidder participating in the Auction must confirm that it 13 has not engaged in collusion with respect to the bidding or sale of the Assets. 14 (d) The Auction shall take place on ______________, 2018 at 10:00 a.m. 15 (Alaska time) at ________________________, or such other place and time as the Trustee may choose. 16 (e) The Trustee and his professionals shall direct and preside over the 17 Auction. At the start of the Auction, the Trustee shall announce the Qualified Bid that is deemed to be the highest and best (the "Auction 18 Baseline Bid"). 19 (f) Only the Trustee, the Debtor, Qualified Bidders, Wexford Capital and Alaska Airlines, along with their representatives, shall attend the Auction 20 in person, and only Qualified Bidders will be entitled to make any Bids at the Auction. 21 (g) An "Overbid" is any bid made at the Auction after the Trustee's 22 announcement of an Auction Baseline Bid. To submit an Overbid, a Bidder must satisfy the following conditions: 23 (i) Any Overbid after the Auction Baseline Bid shall be made in Case 17-00282 Doc 435 Filed 08/15/18 Entered 08/15/18 13:53:50 Desc Main Document Page 19 of 20 1 increments valued at not less than $200,000 as determined by the Trustee. Additional consideration in excess of the amount set forth 2 in an Auction Baseline Bid may include cash or non-cash consideration. 3 (ii) An Overbid must comply with the conditions for a Qualified Bid 4 set forth above, except that the Bid Deadline shall not apply. Any Overbid must remain open and binding on the Bidder until and 5 unless the Trustee accepts a higher Overbid. 6 (h) The Trustee may announce at the Auction additional procedural rules that are reasonable under the circumstances (e.g., the amount of time to make 7 subsequent Overbids) for conducting the Auction so long as those rules are not inconsistent with these Bidding Procedures or the Form APA. 8 (i) The Auction shall continue until the Trustee determines in his reasonable 9 business judgment that there is a highest and best Qualified Bid at the Auction for all of the Assets (each, a "Successful Bid") and each Bidder 10 submitting such Successful Bid, a "Successful Bidder"). The Auction shall not close unless and until all Bidders that have submitted Qualified Bids 11 have been given a reasonable opportunity to submit an Overbid at the Auction to the then-prevailing Overbids and the Successful Bidder has 12 submitted a fully executed purchase agreement memorializing the terms of the Successful Bid. Within 24 hours after the end of the Auction, the 13 Trustee shall file a notice with the Court identifying (with specificity) the Successful Bidder for the Assets. The Trustee shall not consider any Bids 14 submitted after the conclusion of the Auction and any and all such Bids shall be deemed untimely and shall under no circumstances constitute a 15 Qualified Bid. 16 (j) All Qualified Bidders at the Auction shall be deemed to have consented to the jurisdiction of the Court and waived any right to a jury trial in 17 connection with any disputes relating to these Bidding Procedures, the Form APA, the Auction, or the construction and enforcement of any 18 documents related to a Proposed Transaction. 19 (k) Wexford Capital and Alaska Airlines, may each attend the Auction even if it is not a Qualified Bidder, but may not bid at the Auction unless it 20 submitted a Qualified Bid by the Bid Deadline. 21 9. Sale Hearing. A hearing to approve a sale (the "Sale Hearing") based on Successful Bid 22 shall take place on October ___, 2018 at __:__ _.m. Alaska Time in Courtroom ___, on the Case 17-00282 Doc 435 Filed 08/15/18 Entered 08/15/18 13:53:50 Desc Main Document Page 20 of 20 1 [_____] floor of the United States Courthouse, 222 West Seventh Avenue, Anchorage, Alaska 2 99513. 3 10. Deadline to Object to Sale. All objections to the proposed sale must be filed [2] days 4 before the Sale Hearing. 5 11. Return of Deposits. The Good Faith Deposits of all Bidders shall be held by the Trustee 6 in a segregated account, and will not become part of the Debtor's estate. Within three business 7 days after the conclusion of the Sale Hearing, the Trustee shall return the Good Faith Deposits of 8 all Bidders that were not determined to be the Successful Bidder. 9 Event Date 10 Hearing re: Motion for Bidding Procedures August ___, 2018 11 Service of Bidding Procedures Order [2] days from entry of Order 12 Bid Deadline September ___, 2018 13 Assumption/Assignment and Cure Notice [14] days before Sale Hearing 14 Cure Objection Deadline [7] days before Sale Hearing 15 Sale Objection Deadline [2] days before Sale Hearing 16 Auction [__] days before Sale Hearing 17 Sale Hearing October ____, 2018 18 Adequate Assurance Objection [2] days before Sale Hearing 19 20 21 22 23 24

Proceeding Memo

Case 17-00282 Doc 436 Filed 08/16/18 Entered 08/17/18 11:42:47 Desc Main Document Page 1 of 3 PROCEEDING MEMORANDUM Thursday Anchorage, Alaska August 16, 2018 TIME CASE NUMBER, NAME, and CHAPTER TYPE OF PROCEEDING and COUNSEL 2:00 p.m. Case No. A17-00282-GS, In re PENINSULA AIRWAYS, INC., d/b/a PENAIR, Debtor. Ch 11. A) Status Conference (DE# 421); B) Hearing on Application of Chapter 11 Trustee To Employ Attorney (Johnson Pope Bokor Ruppel & Burns, LLP) (DE# 419); C) Hearing on Application of Chapter 11 Trustee to Employ McHale, PA as Accountant and Claims Administrator To Chapter 11 Trustee (DE# 420); D) Hearing on Chapter 11 Trustee's Motion To Approve Continued Use Of Debtor-In-Possession Bank Accounts (DE# 426). TELEPHONIC / VIDEO Michael Markham at (813)225-2500 for Gerard McHale, Jr., Chapter 11 Trustee at (239)337-0808; Cabot Christianson for the Debtor; Kathryn Perkins (VTC) for the U.S. Trustee; Alan Smith at (206)359-8410 for Jetstream Lessors; Joshua Wolfshohl and Shane Johnson at (713)226- 6695 for Wexford Capital LP; Andrea Handel at (202)307-0358 for DOJ/United States; Andre Jakubowski at (407)491-0952 for Wexford Capital LP; Erik LeRoy at (907)570-7474 for the Unsecured Creditors Committee; Cecily Dumas at (415)832-9426; Regan Powers at (206)757-8123 for Alaska Airlines; Rob Schmidt at (907)317-4545 for the State of Alaska; Arthur Amron at (914)275-1429 for Wexford Capital; Adjourned to: WED, AUGUST 29, 2018 at 12:00 p.m. for: Hearing on Bid Procedure calendar Case 17-00282 Doc 436 Filed 08/16/18 Entered 08/17/18 11:42:47 Desc Main Document Page 2 of 3 APPEARANCES: Michael Markham - for the Ch 11 Trustee Gerard McHale - Ch 11 Trustee Kathryn Perkins - United States Trustee Cabot Christianson - for the debtor Michael Mills - SAAB Defense Shane Kanady - SAAB Defense **see the telephonic list above for all other appearances* SWORN AND EXAMINED: Time on record 2:01:41 - Time off Record 3:26:00 NOTES AND/OR ORDERS OF BANKRUPTCY JUDGE: XX A lodged order will be submitted by Michael Markham, item A, B and C A) Status Conference (DE# 421). The Ch 11 Trustee and his counsel updated the court on their efforts with this case and will pursue a 363 sale. The next step will be to get approval of bid procedures. After lengthy discussion, the court agreed to hold a hearing on the trustee's bid procedure motion Wednesday, August 29, 2018 at 12:00pm (noon) Alaska time on this issue. Mr. Markham will file a shortened time motion so this matter can be heard. Mr. Markham will also be filing his motion for sale and the court will tentatively keep time open on October 5 for this hearing, with an auction happening sometime earlier that week. B) Hearing on Application of Chapter 11 Trustee To Employ Attorney (Johnson Pope Bokor Ruppel & Burns, LLP) (DE# 419). There were no objections, the court will approve the application to employ. Mr. Markham will submit a proposed order. C) Hearing on Application of Chapter 11 Trustee to Employ McHale, PA as Accountant and Claims Administrator To Chapter 11 Trustee (DE# 420). Counsel for the UST asked that the request for a claims agent be removed, and that separate time records be kept for the trustee and accountant, with those two caveats the UST has no objections. There were no other objections, the motion will be granted. Mr. Markham will submit a proposed order. Case 17-00282 Doc 436 Filed 08/16/18 Entered 08/17/18 11:42:47 Desc Main Document Page 3 of 3 D) Hearing on Chapter 11 Trustee's Motion To Approve Continued Use Of Debtor-In-Possession Bank Accounts (DE# 426). The motion will be granted. Mr. Markham will submit a proposed order. /s/ Gary Spraker BANKRUPTCY JUDGE Calendar

Hearing

Case 17-00282 Doc 446 Filed 08/23/18 Entered 08/23/18 06:31:43 Desc Main Document Page 1 of 2 1 Michael C. Markham Angelina E. Lim 2 Johnson Pope Bokor Ruppel & Burns, LLP 401 East Jackson Street, Suite 3100 3 Tampa, FL 33602 Telephone: (813) 225-2500 4 Facsimile: (813) 223-7118 5 Attorneys for Gerard A. McHale, Jr. Chapter 11 Trustee 6 7 8 UNITED STATES BANKRUPTCY COURT DISTRICT OF ALASKA (ANCHORAGE) 9 In re) 10) Case No. 17-00282 PENINSULA AIRWAYS INC., D/B/A PENAIR,) Chapter 11 11) Debtor.) 12 __________________________________________) 13 NOTICE OF HEARING ON CHAPTER 11 TRUSTEE'S AMENDED EMERGENCY MOTION (A) FOR ENTRY OF AN ORDER APPROVING AUCTION AND BID 14 PROCEDURES, (B) AUTHORIZING AND SCHEDULING AN AUCTION FOR THE SALE OF THE DEBTOR'S ASSETS, AND (C) GRANTING RELATED RELIEF 15 16 NOTICE IS HEREBY GIVEN THAT a hearing will be held at 12:00 o'clock p.m. on 17 August 29, 2018, at Herbert A. Ross Historic Courtroom, Old Federal Building, 605 West Fourth 18 Avenue, Anchorage, Alaska. If you cannot attend the hearing in person, you may call the U.S. 19 Bankruptcy Court In-Court Deputy Clerk at (907) 271-2640, at least two (2) business days in 20 advance of the hearing to request telephonic attendance. 21 Your rights may be affected. You should read these papers carefully and discuss them 22 with your attorney, if you have one in this bankruptcy. (If you do not have an attorney, you may 23 wish to consult one.) 24 Case 17-00282 Doc 446 Filed 08/23/18 Entered 08/23/18 06:31:43 Desc Main Document Page 2 of 2 1 1. The hearing is for the purpose of the Court considering entry of an ORDER 2 Approving Auction and Bid Procedures, Authorizing and Scheduling an Auction for the Sale of 3 the Debtor's Assets and for Related Relief. 4 2. The basis for the proposed ORDER is to (a) Approve Auction and Bid Procedures, 5 (b) Authorize and Schedule an Auction for the Sale of the Debtor's Assets and (c) Grant Related 6 Relief. 7 The motion or application may be examined at the Office of the Clerk of the Bankruptcy 8 Court, Suite 138, Old Federal Building, 605 West Fourth Avenue, Anchorage, Alaska or at the 9 office of the undersigned. 10 3. FURTHER TAKE NOTICE THAT should you wish to OBJECT to the entry of the 11 above described order you must file with the Office of the Clerk of the above-entitled court at 605 12 West Fourth Avenue, Suite 138, Anchorage, Alaska 99501-2296 an objection in writing and serve 13 a copy on the undersigned on or before the time above set for the hearing. 14 4. SHOULD YOU FAIL TO SO OBJECT OR ATTEND THE HEARING THE 15 COURT MAY ENTER THE ORDER WITHOUT FURTHER NOTICE. 16 Dated: August 23, 2018 17 JOHNSON, POPE, BOKOR RUPPEL & BURNS, LLP 18 Attorney for Gerard A. McHale, 19 Chapter 11 Trustee 20 By: /s/ Michael C. Markham Michael C. Markham 21 401 E. Jackson Street, Suite 3100 Tampa, FL 33602 22 Telephone: (813) 225-2500 Facsimile: (813) 223-7118 23 4771095_1

Motion / Application (To Set Obj Deadline)

Case 17-00282 Doc 448 Filed 08/23/18 Entered 08/23/18 11:24:37 Desc Main Document Page 1 of 3 1 Robert E. Cohn, Esq. Hogan Lovells US LLP 2 555 13th Street, NW 3 Washington, DC 20004 Phone (202) 637-4999 4 robert.cohn@hoganlovells.com 5 Special Counsel to Debtor 6 7 IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF ALASKA 8 In re:)) 9 PENINSULA AIRWAYS, INC., dba PENAIR,) Case No.: 17-00282 GS) 10 Debtor.) Chapter 11 11) 12 NOTICE OF MOTION TO WITHDRAW AS SPECIAL COUNSEL [Proposed Objection Deadline: August 30, 2018] 13 NOTICE IS HEREBY GIVEN that Hogan Lovells US LLP ("Hogan Lovells") has moved 14 15 to withdraw as special counsel for Debtor. 16 Pursuant to Local Bankruptcy Rule 9010-1(d)(1), undersigned states as follows: 17 A. Debtor's address for the purposes of this case is as follows: 18 Peninsula Airways, Inc., dba PenAir 19 6100 Boeing Air Anchorage, AK 99502 20 B. Undersigned intends to withdraw immediately after the Order granting the Motion 21 to Withdraw has been entered on the Court's docket. 22 C. An order permitting the withdrawal may be entered unless an objection to the 23 withdrawal is filed on or before August 30, 2018, subject to the Court's approval of Hogan 24 Lovells' accompanying Motion to Shorten. 25 PLEASE FURTHER TAKE NOTICE that if you object to the entry of an order 26 granting the Motion to Withdraw, you must object in writing on or before August 30, 2018, 27 subject to Court approval of such deadline. Your objection must be filed in the Office of the 28 H OGAN L OVEL LS US LLP ATTO RNEY S AT LAW NOTICE OF MOTION TO WITHDRAW AS COUNSEL WAS HI NG TO N, DC CASE NO: 17-00282 GS Case 17-00282 Doc 448 Filed 08/23/18 Entered 08/23/18 11:24:37 Desc Main Document Page 2 of 3 1 Bankruptcy Clerk at 605 W. 4th Avenue, Suite 138, Anchorage, Alaska and a copy served on the 2 undersigned on or before said date. 3 The Motion to Withdraw is available for inspection at the Office of the Clerk, 605 W. 4th 4 Ave., Suite 138, Anchorage, Alaska, or at the office of the undersigned. 5 Should you fail to so object or having objected fail to timely request a hearing, be further 6 advised that the court may grant the Motion to Withdraw described above without further notice 7 to you. 8 DATED August 23, 2018. 9 10 11 Robert E. Cohn, Esq. HOGAN LOVELLS US LLP 12 555 13th Street, NW 13 Washington, DC 20004 Phone (202) 637-4999 14 robert.cohn@hoganlovells.com 15 Special Counsel to Debtor 16 17 18 19 20 21 22 23 24 25 26 27 28 H OGAN L OVEL LS US LLP ATTO RNEY S AT LAW -2- NOTICE OF MOTION TO WITHDRAW AS COUNSEL WAS HI NG TO N, DC CASE NO: 17-00282 GS Case 17-00282 Doc 448 Filed 08/23/18 Entered 08/23/18 11:24:37 Desc Main Document Page 3 of 3 1 CERTIFICATE OF SERVICE 2 The undersigned hereby certifies that on August 23, 2018, a true and correct copy of this Notice was served by electronic means through the ECF system as indicated on the Notice of Electronic 3 Filing. 4 5 By: 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 H OGAN L OVEL LS US LLP ATTO RNEY S AT LAW -3- NOTICE OF MOTION TO WITHDRAW AS COUNSEL WAS HI NG TO N, DC CASE NO: 17-00282 GS

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Datesort arrow up
Description
doc
05/23/2018
Generic Motion / Application
doc
05/23/2018
Affidavit
doc
05/25/2018
Appear Pro Hac Vice
doc
05/25/2018
Appoint Examiner (CM05)
doc
05/25/2018
Shorten Time
doc
05/25/2018
Shorten Time
doc
05/25/2018
Amended Order (SA)
doc
05/29/2018
Appear pro hac vice
doc
05/29/2018
Objection / Opposition (Generic - use when specific objection event not listed)
doc
05/29/2018
Objection / Opposition (Generic - use when specific objection event not listed)
05/29/2018
QC Remark (generic) (Text entry; no document attached.)
doc
05/31/2018
Proceeding Memo
doc
06/01/2018
Audio File (Active Event)
371
06/06/2018
Monthly Operating Report
372
06/07/2018
Relief from Stay (Fee) (CM03)
06/07/2018
Auto-Docket of Credit Card/Debit Card (Text entry; no document attached.)
373
06/07/2018
Amended Application / Motion
374
06/07/2018
Shorten Time
375
06/07/2018
Shorten Time
376
06/08/2018
Generic Notice (NOT to be used if setting a deadline)
377
06/08/2018
Certificate of Service
06/11/2018
Update Deadline (Satisfy or Set Hearings) (Text entry; no document attached.)
06/11/2018
Order Due (Sets and Removes Order Due Flags and Deadlines) (Text entry; no document attached.)
378
06/11/2018
Certificate of Service
379
06/11/2018
Response / Reply (Generic - use when specific response event not listed)
380
06/12/2018
Extend Time
381
06/12/2018
Objection / Opposition (Generic - use when specific objection event not listed)
382
06/12/2018
Extend Time
383
06/13/2018
Objection / Opposition (Generic - use when specific objection event not listed)
384
06/13/2018
Appoint Trustee (CM05)
385
06/13/2018
Generic Motion / Application
06/14/2018
Terminate Deadline (Text entry; no document attached.)
386
06/14/2018
Response / Reply (Generic - use when specific response event not listed)
387
06/14/2018
Memorandum in Support
388
06/18/2018
Objection / Opposition (Generic - use when specific objection event not listed)
389
06/18/2018
Proceeding Memo
390
06/18/2018
Withdrawal of Attorney
06/18/2018
Terminate Attorney (Text entry; no document attached.)
391
06/18/2018
Audio File (Active Event)
392
06/21/2018
Memorandum in Support
393
06/21/2018
Joinder
394
06/21/2018
Objection / Opposition (Generic - use when specific objection event not listed)
395
06/21/2018
Response / Reply (Generic - use when specific response event not listed)
396
06/25/2018
Response / Reply (Generic - use when specific response event not listed)
397
06/25/2018
Response / Reply (Generic - use when specific response event not listed)
398
06/26/2018
Response / Reply (Generic - use when specific response event not listed)
399
06/28/2018
Monthly Operating Report
400
06/29/2018
Memorandum in Support
401
06/29/2018
Generic Notice (NOT to be used if setting a deadline)
402
07/03/2018
Audio File (Active Event)
403
07/03/2018
Audio File (Active Event)
404
07/05/2018
Proceeding Memo
405
07/05/2018
Proceeding Memo
406
07/06/2018
Convert Case From Chapter 11 to Chapter 7 (BKCONV01)
407
07/06/2018
Audio File (Active Event)
408
07/06/2018
Proceeding Memo
409
07/08/2018
BNC Certificate of Notice
410
07/09/2018
Appoint Trustee (CM05)
411
07/09/2018
Declaration
412
07/09/2018
Appointing Trustee
413
07/10/2018
Appear Pro Hac Vice
414
07/11/2018
Appear pro hac vice
415
07/11/2018
Appear Pro Hac Vice
416
07/11/2018
Appear pro hac vice
417
07/17/2018
Bond
418
07/19/2018
Compensation / Professional Fees
419
07/24/2018
Employ (CM41)
420
07/24/2018
Employ (CM41)
421
07/30/2018
Setting Hearing (SA)
422
07/30/2018
Setting Hearing (SA)
423
07/30/2018
Setting Hearing (SA)
07/30/2018
Update Deadline (Initial Deadlines / Schedules & Statements) (Text entry; no document attached.)
424
07/31/2018
Employ (CM41)
425
07/31/2018
Hearing
426
07/31/2018
Generic Motion / Application
427
08/03/2018
Hearing
428
08/03/2018
Motion / Application (To Set Obj Deadline)
08/07/2018
QC Remark Re: Official Matrix (Text entry; no document attached.)
429
08/07/2018
Corrective Entry (File Correct Image ONLY - No Changes to Document)
430
08/07/2018
Appear Pro Hac Vice
431
08/08/2018
Employ (CM41)
432
08/09/2018
Monthly Operating Report
433
08/09/2018
Affidavit of Service
434
08/09/2018
Appear pro hac vice
08/10/2018
Terminate Deadline (Text entry; no document attached.)
435
08/15/2018
Generic Motion / Application
436
08/17/2018
Proceeding Memo
437
08/17/2018
Audio File (Active Event)
438
08/21/2018
Response / Reply (Generic - use when specific response event not listed)
439
08/21/2018
Employ
440
08/21/2018
Generic Motion
08/21/2018
Terminate Document / Motion (Text entry; no document attached.)
441
08/21/2018
Appear Pro Hac Vice
08/21/2018
Add Party (Text entry; no document attached.)
442
08/21/2018
Employ
443
08/22/2018
Response / Reply (Generic - use when specific response event not listed)
444
08/22/2018
Shorten Time
445
08/22/2018
Shorten Time
446
08/23/2018
Hearing
08/23/2018
Update Deadline (Objections - all types) (Text entry; no document attached.)
447
08/23/2018
Withdraw As Attorney (MUST be Titled MOTION & submit an order - if not see Notice events)
448
08/23/2018
Motion / Application (To Set Obj Deadline)
449
08/23/2018
Shorten Time
450
08/23/2018
Monthly Operating Report
451
08/23/2018
BNC Certificate of Notice
452
08/24/2018
Response / Reply (Generic - use when specific response event not listed)
453
08/24/2018
Shorten Time
454
08/24/2018
Appear pro hac vice
455
08/24/2018
Motion / Application (To Set Obj Deadline)
456
08/24/2018
Response / Reply (Generic - use when specific response event not listed)
08/27/2018
Terminate Deadline (Text entry; no document attached.)
457
08/27/2018
Affidavit of Service
458
08/27/2018
Generic Notice (NOT to be used if setting a deadline)
459
08/27/2018
Generic Motion / Application
460
08/28/2018
Objection / Opposition (Generic - use when specific objection event not listed)
461
08/29/2018
Objection / Opposition (Generic - use when specific objection event not listed)
462
08/29/2018
Objection / Opposition (Generic - use when specific objection event not listed)
08/29/2018
QC Remark Re: Official Matrix (Text entry; no document attached.)
463
08/29/2018
Non-Opposition
464
08/29/2018
Assume / Reject Lease or Executory Contract (CM06 or CM19)
465
08/29/2018
Generic Notice (NOT to be used if setting a deadline)
466
08/30/2018
Setting Hearing (SA)
467
08/30/2018
Order (Generic) (SA)
468
08/31/2018
Certificate of No Objection
469
08/31/2018
Affidavit of Service
470
08/31/2018
Proceeding Memo
471
08/31/2018
Proceeding Memo
472
08/31/2018
Generic Motion
473
08/31/2018
Assume / Reject Lease or Executory Contract
08/31/2018
Update Deadline (Satisfy or Set Hearings) (Text entry; no document attached.)
08/31/2018
Update Deadline (Satisfy or Set Hearings) (Text entry; no document attached.)
474
09/01/2018
BNC Certificate of Notice
475
09/04/2018
Assume / Reject Lease or Executory Contract (CM06 or CM19)
476
09/04/2018
Hearing
477
09/04/2018
Affidavit of Service
478
09/04/2018
Audio File (Active Event)
479
09/04/2018
Audio File (Active Event)
480
09/05/2018
Affidavit of Service
488
09/10/2018
Certificate of Service
490
09/12/2018
Generic Notice (NOT to be used if setting a deadline)
491
09/12/2018
Sell Free and Clear of Liens (Hrg Rqd, Under 363(f)) (Fee) (CM21)
09/12/2018
Auto-Docket of Credit Card/Debit Card (Text entry; no document attached.)
492
09/12/2018
Stipulation
493
09/14/2018
Affidavit of Service
494
09/14/2018
Proceeding Memo
495
09/17/2018
Objection / Opposition (Generic - use when specific objection event not listed)
496
09/17/2018
Audio File (Active Event)
497
09/19/2018
Objection / Opposition (Generic - use when specific objection event not listed)
498
09/20/2018
Stipulation
499
09/21/2018
Objection / Opposition (Generic - use when specific objection event not listed)
500
09/21/2018
Objection / Opposition (Generic - use when specific objection event not listed)
501
09/21/2018
Objection / Opposition (Generic - use when specific objection event not listed)
502
09/21/2018
Declaration
503
09/21/2018
Declaration
09/24/2018
Terminate Deadline (Text entry; no document attached.)
09/24/2018
QC Remark Re: Signature Required (Text entry; no document attached.)
504
09/24/2018
Stipulation
505
09/24/2018
Declaration
506
09/25/2018
Generic Notice (NOT to be used if setting a deadline)
507
09/25/2018
Administrative Expenses
508
09/26/2018
Case Status Report
509
09/26/2018
Response / Reply (Generic - use when specific response event not listed)
510
09/26/2018
Motion / Application (To Set Obj Deadline)
511
09/26/2018
Audio File (Active Event)
512
09/27/2018
Generic Notice (NOT to be used if setting a deadline)
513
09/27/2018
Expedite Hearing
514
09/27/2018
Certificate of No Objection
515
09/28/2018
Generic Motion / Application
516
09/28/2018
Stipulation
517
09/28/2018
Affidavit of Service
518
09/28/2018
Proceeding Memo
519
09/28/2018
Generic Notice (NOT to be used if setting a deadline)
520
09/28/2018
Expedite Hearing
09/28/2018
QC Remark (generic) (Text entry; no document attached.)
521
10/01/2018
Shorten Time
522
10/01/2018
Response / Reply (Generic - use when specific response event not listed)
523
10/01/2018
Shorten Time
524
10/02/2018
Hearing
525
10/02/2018
Proceeding Memo
526
10/02/2018
Approving Stipulation (SA)
527
10/02/2018
Response / Reply (Generic - use when specific response event not listed)
528
10/03/2018
Response / Reply (Generic - use when specific response event not listed)
529
10/03/2018
Generic Motion
530
10/03/2018
Proceeding Memo
531
10/04/2018
Generic Notice (NOT to be used if setting a deadline)
532
10/04/2018
Objection / Opposition (Generic - use when specific objection event not listed)
533
10/05/2018
Response / Reply (Generic - use when specific response event not listed)
534
10/05/2018
Response / Reply (Generic - use when specific response event not listed)
535
10/05/2018
Generic Notice (NOT to be used if setting a deadline)
536
10/05/2018
Generic Notice (NOT to be used if setting a deadline)
537
10/08/2018
Change of Address
10/09/2018
Update Matrix (Text entry; no document attached.)
538
10/09/2018
Proceeding Memo
539
10/09/2018
Audio File (Active Event)
540
10/10/2018
Hearing
541
10/10/2018
Sell Free and Clear of Liens
542
10/10/2018
Audio File (Active Event)
543
10/10/2018
Audio File (Active Event)
10/11/2018
Terminate Deadline (Text entry; no document attached.)
544
10/13/2018
Relief from Stay (Fee) (CM03)
10/13/2018
Auto-Docket of Credit Card/Debit Card (Text entry; no document attached.)
545
10/13/2018
Generic Motion / Application
546
10/15/2018
Affidavit of Service
547
10/15/2018
Generic Motion
548
10/16/2018
Generic Notice (NOT to be used if setting a deadline)
549
10/17/2018
Generic Motion / Application
550
10/17/2018
Generic Motion / Application
551
10/17/2018
Objection / Opposition (Generic - use when specific objection event not listed)
552
10/17/2018
Setting Hearing (SA)
10/18/2018
Terminate Deadline (Text entry; no document attached.)
553
10/19/2018
Proceeding Memo
554
10/19/2018
Generic Motion
10/19/2018
Update Deadline (Initial Deadlines / Schedules & Statements) (Text entry; no document attached.)
555
10/19/2018
Setting Hearing (SA)
556
10/19/2018
Audio File (Active Event)
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