In what is the final act for PACE Airlines Judge Thomas Waldrep has entered PACE into involuntary Bankruptcy. On December 2, 2009 multiple creditors filed a petition to start the liquidation of PACE Airlines almost a year and half after PACE stopped paying it’s lease agreement with Smith Reynolds Airport. Interesting enough nobody representing PACE Airlines showed up at the December hearing.

We posted back on October 27th that it had been reported that CEO William Rodgers had signed away any interest in the company. What information was available appeared to point to Lee Booth had taken various assets and was likely setting up shop in Burlington however that is about all that was known or maybe rumored would be better. It appears the attorney appointed by the courts to handle this case is as much in the dark as everyone else as he was quoted as saying, “I will examine corporate officers under oath to determine the ownership.” Edwin Allman III who was appointed as Trustee further went on to say if he can recover any assets the legal fees will be paid first then creditors with the 400 or so employees owed back pay “would be pretty high up" the list of creditors”. While I would like to think he is right I have enough experience with things like this to know employee back pay will be considered  unsecured debt while the multiple companies owed $10 million or more will likely be seen as secured debt  and secured debt always gets paid first.

Of course there are still charges against William Rodgers for failure to pay insurance premiums while months later the N.C. Labor Department is still “investigating” the failure to pay wages.

My last comment on this is at what point is the Airport Commission called to the carpet on allowing PACE to go a year without paying it’s lease obligations? Remember the Airport Commission is also in hot water for allowing it’s contractor in charge of runway expansions per a 1997 Grant to not pay it’s subcontractors. I’ve not heard or seen anything else on this and the Journal certainly hasn’t covered this.

The North Carolina Department of Transportation, Office of The Inspector General has informed Smith Reynolds Airport that it is in breach of it’s grant agreement for runway improvements. Smith Reynolds received a grant back in 1997 for those improvements and contracted Mainline Contractors out of Raleigh which reportedly was not keeping up with payments to sub-contractors and subsequently filed for Chapter 11 Bankruptcy.

The airport and it’s Director, Larry Scantlin, were informed of the pending investigation on August 17th with a formal letter from the Department of Transportation in which Richard Walls, Director of Aviation, states:

That notice goes on to state that if the airport cannot address the above issues the “Department will take legal action.” On Tuesday it appears the Office of the Inspector has judged that the airport is at fault and it appears this means the airport will be forced to repay grant money, pay subcontractors for unpaid work or a combination of the two. Tom McKim, the chairman of the Airport Commission of Forsyth County disagrees with the state report and said:

"Obviously we disagree with (the report), and we believe that our contract with Mainline satisfied our obligation under the grant," McKim said. "The efforts we made to monitor what Mainline did with respect to payments were also adequate."  JournalNow

A “Staff Writer” posted an editorial about Smith Reynolds Airport which was so poorly written it almost looked like somebody just grabbed paragraphs from a dozen other articles and pasted them together. Now I will admit I’m no journalism major but I also don’t pretend to be unlike it appears some of those at The Journal are.

Pace owes the airport commission about $890 million in lease payments. The commission is forcing the company to vacate.

Well no they don’t. The number is closer to $900,000.00 for back lease payments of $145,000.00 per month. I guess somebody can’t count zeros but I’m not surprised with the education system. The better comment on the above would have been to question why the Airport Commission allowed PACE to get that far behind without putting in protections to collect on the outstanding balance. Granted Falcon Air is still in the mix and if something is going on behind closed doors to divest PACE Air out of it’s debts to Winston-Salem so Falcon can come in on the cheap and rehire workers are lower wages only time will tell.

Better yet if I remember right it was this same Airport Commission that in 2003 pushed Timco out of it’s space at Smith Reynolds which it was sub-leasing to PACE in order to get PACE to setup permanent camp here. The deal was all about getting a commuter airline back at Smith Reynolds by having PACE run flights from Winston-Salem to Gary, Indiana.

But perhaps an innovative marketing effort, and yes, maybe even some incentives, could attract a regional carrier for business and pleasure flights.

Smith Reynolds Airport is starting a strategic analysis to map its future course, and consideration of bringing back a regional carrier should be part of that effort.

The anonymous poster of this editorial goes on to say both the Airport Commission as well as the City should be looking at bringing a regional carrier to the airport and to do so by even including offer incentives. Well to whom it may concern I think the use of Tax Payer Dollars for private business is a non-starter. Unless the city wants to backdoor another $50 million in private business funding that the public didn’t want or vote for the odds of having a citizen approved incentive is DOA. As far as regional or low cost airlines coming to Smith Reynolds that is just a non-starter and not worth spending a dime on. A quick look at PTIA shows that these types of carriers cannot make a business out of servicing this area. Of course one of the reasons they can’t make a business at it is this area is losing it’s middle class adults who are the ones which could be taking those flights. The chasing after Dell’s scraps cost this area millions both above and under the table yet it has provided little in the way of growth and certainly not the promised growth the Mayor and everyone else was citing to get approval of the incentives.

Winston-Salem’s image is changing. A nationally known biotech research park, a major computer manufacturing plant and a state-of-the-art downtown baseball park — not to mention a dramatically enlivened downtown business and entertainment district — once were the stuff of dreams. Our local leaders chose not to wait for fortune to find them; they went after it.

About all I can say is, If You Say So. You may want to look over my post from September 18 concerning the McKinsey $ Company report that is coming out on Winston-Salem which shows Winston-Salem is not progressing but failing behind similar cities.