Creditors Oust Helicopter Company’s CEO in Bankruptcy Coup

(Bloomberg) -- PHI Inc.’s unsecured creditors pulled off the bankruptcy equivalent of a palace coup during court-supervised settlement talks.

After just one day of mediation in front of a Texas bankruptcy judge, PHI’s chairman, majority shareholder and chief executive, Al A. Gonsoulin, lost his bid to retain control of the company, which provides helicopters for oil drillers and emergency medical providers.

Under the deal filed last night in federal court in Dallas, the official committee of unsecured creditors will drop its opposition to PHI’s reorganization plan, as well as the panel’s effort to sue company insiders, in exchange for 100% ownership, and Gonsoulin’s retirement.

That leaves a group of minority shareholders as the main opponent left to the reorganization proposal.

“This is a terrific result so far,” U.S. Bankruptcy Judge Harlin Hale said Wednesday during the hearing. “We have another piece of the puzzle with the equity committee, but I could not be more pleased.”

An attorney for Gonsoulin declined to comment.

“This settlement represents a crucial and positive turning point in the case,” Lance Bospflug, PHI’s president and chief operating officer said in an emailed statement. “While we have work to do to satisfy the terms of the agreement, we continue to believe that our Chapter 11 filing and plan of reorganization represent the best course of action to address PHI’s matured debt and strengthen our balance sheet, while positioning the company for continued leadership.”

Unsecured creditors fought PHI for months in bankruptcy court by forcing changes to a management incentive plan that pays millions of dollars to seven executives, accusing insiders of being involved in a loan that was actually a fraudulent transfer and seeking to strip the company of its exclusive right to reorganize.

The breakthrough came after one day in mediation on Friday with U.S. Bankruptcy Judge David Jones, said Dennis Dunne, a lawyer for the unsecured creditor committee.

Before the mediation, PHI had insisted that Gonsoulin be allowed to swap the $130 million loan he made to the company for a new equity stake, which would have allowed him to retain his ownership while his fellow stockholders saw their interest canceled.

Instead, Gonsoulin will be paid $132.5 million in cash and must retire and sign a contract not to compete with PHI or to make any disparaging comments about the company for three years. Gonsoulin’s retirement won’t occur until PHI’s bankruptcy plan takes effect, according to the term sheet.

Unsecured creditors will get ownership of the company and current stockholders, including Gonsoulin, will have their shares canceled.

“We can see a broad path to” ending PHI’s bankruptcy, creditor committee lawyer Dunne said in court.

The case is: PHI Inc., 19-30923, U.S. Bankruptcy Court, Northern District of Texas (Dallas)

To contact the reporters on this story: Steven Church in Wilmington, Delaware at schurch3@bloomberg.net;Jeremy Hill in New York at jhill273@bloomberg.net

To contact the editors responsible for this story: Rick Green at rgreen18@bloomberg.net, Nikolaj Gammeltoft, Christopher DeReza

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