Judge Approves MAXjet Bankruptcy Auction

By Jacqueline Palank, The Associated Press

posted: 04 February 2008 03:55 pm ET

: A Delaware bankruptcy judge has approved a quick auctioning of the assets of MAXjet Airways under terms that have worried the US Trustee appointed to monitor MAXJet's Chapter 11 bankruptcy case. Launched in 2005, MAXjet offered 'all premium' flights between the UK, New York, Las Vegas and Los Angeles but ultimately couldn't compete with airlines with deeper pockets. High fuel prices and an inability to find new investment were also contributing factors to MAXjet stopping flying. Credit: Bryan Correira
: A Delaware bankruptcy judge has approved a quick auctioning of the assets of MAXjet Airways under terms that have worried the US Trustee appointed to monitor MAXJet's Chapter 11 bankruptcy case. Launched in 2005, MAXjet offered 'all premium' flights between the UK, New York, Las Vegas and Los Angeles but ultimately couldn't compete with airlines with deeper pockets. High fuel prices and an inability to find new investment were also contributing factors to MAXjet stopping flying. Credit: Bryan Correira

WASHINGTON (AP) -- A bankruptcy judge has authorized MAXjet Airways Inc. to auction its all-business-class airline under conditions that have worried the federal official monitoring the case.

Judge Peter J. Walsh of the U.S. Bankruptcy Court in Wilmington, Delaware, on Friday signed off on MAXjet's sale procedures and said MAXjet could waive existing terms or impose new terms for bidders as it deemed necessary without the need for further court approval.

Walsh, however, will require the airline to notify U.S. Trustee Kelly Beaudin Stapleton of such changes to give her the chance to object. Last week, Stapleton asked the bankruptcy court to deny the MAXjet proposal, which she said would give the company a "blank check."

Stapleton also objected to the quick timeline of the auction, which she said raised the question of the adequacy of the marketing process.

MAXjet had requested that an auction take place within two weeks of receiving court permission to hold the auction, Walsh scheduled the auction for Feb. 20. Bids will be due Feb. 13, two days later than what MAXjet had proposed.

Currently, MAXjet doesn't have a stalking horse, or leading bidder, lined up to set a floor price for its assets. It reserved the right to designate one before the auction.

After a Christmas Eve bankruptcy filing that stranded hundreds of customers, MAXjet said it intended to pursue a liquidation. But the airline's bidding procedures say that nothing in its proposal would preclude it from deciding to reorganize rather than sell its assets.

MAXJet, based in Dulles, Virginia, operated flights from Stansted Airport in London to Las Vegas, Los Angeles and New York. It filed for Chapter 11 protection in the face of high fuel prices, increased competition and an inability to raise new capital.

Jacqueline Palank is a correspondent of Dow Jones Newswires.