Judge Clears Silver Airways for Bankruptcy Asset Auction; $5.8M Bid Sets Floor as Creditors Face Major Losses

A federal bankruptcy judge has approved procedures for the sale of Silver Airways’ business and assets, with an online auction scheduled for May 28 at 10 a.m. and a sale hearing to follow on June 4. The ruling, issued by Judge Peter Russin of the U.S. Bankruptcy Court for the Southern District of Florida, represents a key step in the airline’s attempt to restructure through the Section 363 sale process under the U.S. Bankruptcy Code.

Silver Airways, which filed for Chapter 11 bankruptcy protection in December 2024, has made clear in court filings that it intends to “sell its business and assets through a Sale Transaction pursuant to section 363 of the Bankruptcy Code.” This provision allows for the sale of assets “free and clear” of the company’s debts, enabling a buyer to acquire operational assets without assuming legacy liabilities.

The judge’s May 16 order officially authorizes the company to solicit bids and conduct the auction consistent with §363 guidelines. Importantly, the sale will not include assets belonging to Seaborne Airlines, Silver’s subsidiary, which will be sold through a separate process.

At the center of the auction is a “stalking horse” bid from KIA II LLC, Silver’s debtor-in-possession (DIP) lender, which has submitted a $5.775 million credit bid. This means KIA II is offering to cancel that amount of Silver’s post-petition DIP debt in exchange for acquiring the airline’s assets. The credit bid establishes the minimum price for the auction, and any competing offer must exceed that amount, plus a break-up fee and a minimum bidding increment.

The asset purchase agreement between Silver and KIA II specifically provides that the buyer will acquire substantially all of Silver Airways’ assets without taking on the company’s debts. Instead, all liens, claims, and encumbrances will transfer to the sale proceeds and be addressed separately through the bankruptcy estate, a standard feature of a Section 363 sale.