James F. Lisowski, Sr., the Chapter 7 Trustee in the Silver State Helicopters, LLC Bankruptcy Case, wants to settle with Jerry Airola and Thomas Pickett and 2 of their companies. Jerry Airola was the founder and CEO of Silver State Helicopters, LLC ("SSH"). Thomas Pickett was the Chief Financial Officer of SSH. On November 3, 2010, Lisowski filed a Motion to Approve Compromise and Settlement Between Trustee and Jerry Airola, Steve Pickett, First American Equity, LLC and Stars and Stripes Heliplex, LLC. The Hearing on the Trustee's Motion is Set for December 8, 2010 at 9:30 am. Former students who attended SSH and who hold Jerry Airola personally reponsible for tens of thousands of dollars in student loans that they are still obligated to repay will be disappointed in the proposed settlement. Those of us waiting for criminal prosecution of Airola and jail time for Airola will not find any comfort in the proposed settlement agreement.
Here are the key terms of the proposed settlement agreement:
1. Commercial property located at 800 South 3110 West Provo, Utah 84601 that is owned by SSH but allegedly subject to a $1,587,049.75 - $1,703,805.48 deed of trust in favor of Jerry Airola will be sold and the proceeds split with 2/3 going to the bankruptcy estate of SSH and 1/3 going to Airola. Several commercial office buildings and hangars are located on the property. The estimated value of the property is approximately $1,500,000.00. The Trustee describes the financial benefit of this and other consideration to be received by the bankruptcy estate as "close to one million dollars." This other consideration to be received by the Trustee includes a $10,000.00 earnest money deposit forfeited by a proposed buyer of the West Provo property and an unsecured, non-priority proof of claim with a face amount of $714,000.00 but no clear value in the bankruptcy of a company called Stars and Stripes, LLC. $1,000,000.00 seems to be a paltry sum compared to the harm done by Airola. Moreover, little or none of this money is likely to go to former students of SSH. The Trustee says in this moving papers that "the likelihood of paying a dividend to unsecured creditors, particularly unsecured creditors, is nonexistent." Former students of SSH who included a priority claim in their proofs of claim, as I did for all of my SSH clients, may or may not fare slightly better.
2. While the Trustee focuses on the close to one million dollars that SSH will receive from the sale of the West Provo property, Airola will personally receive 1/3 of the proceeds from the West Provo property, or approximately $500,000.00. In addition, Airola will be allowed to keep two custom motorcycles manufactured by Orange County Choppers which were the subject of a separate adversary proceeding filed by the Trustee against Airola and Airola will be allowed to keep certain proofs of claim in the SSH bankruptcy.
3. Upon approval of his settlement Motion, the Trustee will dismiss both of his adversary proceedings against Airola.
4. The Settlement agreement provides for a mutual general release of all claims between the Defendants, the Debtor, The Trustee and the Estate. Former SSH CFO Thomas Pickett gets a free ride. He pays nothing to the bankruptcy estate of SSH, but gets a complete release of all claims from the Trustee.