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Going for broke: Company's fourth bankruptcy may be a record

Tom Hals
Tuesday, 12 Nov 2013 | 5:13 PM ET

Nov 12 (Reuters) - Global Aviation Holdings Inc may not be a household name, but it should be familiar to bankruptcy lawyers. On Tuesday, the charter air transport firm filed what is likely a record fourth Chapter 11 bankruptcy.

The company is the biggest provider of commercial charter airline services to the U.S. military and it blamed the fourth filing since 2004 on government cutbacks, according to documents filed in the U.S. Bankruptcy Court in Wilmington, Delaware.

Global Aviation or previous incarnations filed bankruptcies in 2004 and 2006 in the Southern District of Indiana and last year in the Eastern District of New York. The second Indiana filing was by a subsidiary, ATA Airlines Inc.

The company did not immediately respond to a request for comment.

Repeat filings are not uncommon.

About one-third of larger companies that file for Chapter 11 find themselves back in bankruptcy court within four years, according to research by Edith Hotchkiss, a professor at Boston College, who described the return debtors as "Chapter 22s."

Rare are those that end up in court a third time. A paper by Edward Altman, a New York University professor, listed 10 companies that shared that unwanted distinction, including Trans World Airlines and retailers Grand Union Co and Levitz Home Furnishings Inc.

But four times appears unprecedented, at least under the current bankruptcy code.

Altman noted one four-timer in his 2009 paper, Trans Texas Gas Corp, but its first filing preceded what is considered the modern era of bankruptcy that began with legal changes in 1978.

Altman also pointed out that Donald Trump has had four bankruptcy filings associated with his entertainment ventures, although the professor excluded them from his research as they relate to different hotels.

Global Aviation's previous bankruptcies were particularly hard on general unsecured creditors, such as suppliers. The best they did was in the company's 2006 bankruptcy, when court records indicate they were expected to get as much as 2.4 percent of what they were owed.

The case is In re: Global Aviation Holdings Inc, U.S. Bankruptcy Court, District of Delaware, No. 13-12945.