Kiwi International Air Lines said Tuesday that it was grounding itself and will shut down next week if it doesn't find an investor to keep it running through bankruptcy reorganization.
The airline had slashed its work force and schedule since entering Chapter 11 bankruptcy court protection Sept. 30. It twice staved off a shutdown this month as it struggled to arrange a multimillion-dollar infusion of cash.
U.S. Bankruptcy Court Judge Rosemary Gambardella had been set to consider Tuesday whether the ailing carrier could continue to put cash that was pledged for debts toward its operations. But at midday, the airline announced it would suspend service. The carrier's last flight was Tuesday night.
Gambardella set a hearing for next Tuesday at which Kiwi will present a plan to dispose of the company's assets.
"It may be that someone will appear in the next few days," said Kiwi's lawyer, Howard S. Greenberg. He said the airline has about $35 million in assets and $55 million in liabilities.
Since the beginning of the month, Newark, N.J.-based Kiwi had furloughed 500 of its 1,200 employees and cut back from 65 to 24 flights a day. It was using eight of its 15 jets to continue flights among Newark, Chicago and Atlanta. It had dropped service to Las Vegas; Bermuda; and Orlando, Tampa and West Palm Beach, Fla.
All workers at the employee-owned airline are to get their last paychecks, Kiwi spokesman Rob Kulat said, but he acknowledged that their investments--which ranged up to $50,000--are probably gone.
One financing plan had been proposed by Victor Kiam, chairman of Remington Products Inc. Kiam and financier Wilbur L. Ross Jr., senior managing director at the investment bank Rothschild Inc., wanted to invest $2 million in Kiwi.
It wasn't immediately clear Tuesday what happened with that offer. A message left for Ross was not returned, and Kiam was not in his New York office or Remington's headquarters in Bridgeport, Conn.