Avantair has roughly two weeks to avoid a crash and respond to a petition seeking to place the aircraft access provider into liquidation.

The company indicated doubt about its ability to continue without liquidating in a June filing with the U.S. Securities and Exchange Commission.

Mike L. Allred, claiming $240,000, Soldier Creek Ranch LLC, claiming 11,250, and Joel Trammell, claiming $1,554, all for breaches of contract, filed an involuntary Chapter 7 liquidation petition on behalf of Avantair on July 25. Avantair has 21 days from the filing date to respond to the petition.

In a July 30 SEC filing, the company says it is investigating the merits of the petition.

Recently the company has had two maintenance-related breaks from business to inspect planes, causing a decrease in cash flow and employee furloughs.

The creditors filed in the U.S. Bankruptcy Court for the Middle District of Florida in Tampa. Court documents filed so far do not list details of why the creditors filed the petition.

Clearwater, Fla.-based Avantair sells access to aircrafts through flight cards for 15, 25, or 50 hours of flying time. The cards allow customers to use an aircraft for a specified amount of hours each year. Cardholders also have the option to purchase a stake in the aircraft.

As of March 31, the company operated 56 aircrafts, the majority of which are owned by Avantair.

Avantair had taken some steps to increase liquidity and save money before the petition was filed, including employee furloughs.  On June 26, the company furloughed employees to address liquidity issues while it seeks alternative financing.

Avantair, which sells access to a fleet of aircrafts, said in a June filing with the Securities and Exchange Commission that in order to continue operations, it needs to raise more cash or borrow money.

In a Form 10-Q filed with the SEC on June 13, the company says there is substantial doubt about its ability to continue as a going concern, or without the threat of liquidation, because it needs additional financing or to increase its revenue to continue opearting

The company had started to raise funds before the involuntary petition was filed. In November, the company issued $2.8 million in notes to members of the board of directors. Then in February, it issued $2.96 million in notes to investors, and in March, it issued one more note worth $1.97 million to an investor.

On June 13, Avantair entered into a forbearance agreement with Midsouth Services Inc. and Clear Aircraft Inc. related to past-due payments for aircrafts leased to the company, but defaulted on the agreement, according to an SEC filing.

The company is late with multiple payments – including lease and vendor payments.

As of March 31, 2013, the company had a deficit of $122 million. In the nine months ended March 31, the company incurred losses of $10.5 million. For the three months ended March 31, Avantair’s revenue declined about 24 percent, compared with the three months ended March 31, 2012, because of a decrease in fractional aircraft shares sold, as well as a decrease in flight hour card purchases.

Avantair has experienced negative cash flow since it was started in 2003, it says in SEC filings.

The company’s expenses include acquiring aircrafts, fuel, repositioning aircrafts to pick up program participants, flight operations, pilot expenses, maintenance, charters and administrative expenses.

A call to Avantair was not immediately returned.

For the last edition of Turnaround Tuesday, see "Chile Mining Needs to Raise More Cash." 

For more struggling companies, see Mergers & Acquisitions' Distressed Company Watch List

Editor's Note: Due to vacation schedules, Turnaround Tuesday will not be published on Aug. 6. Publication will resume on Aug. 13.

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