Case 20-10755-BLS Doc 384-3 Filed 06/24/20 Exhibit C Debtors’ Revised Liquidation Analysis 13 146484.01601/123463538v.3 Page 1 of 5 Case 20-10755-BLS Doc 384-3 Filed 06/24/20 Page 2 of 5 A. Introduction and Reservations In connection with the Plan and Disclosure Statement, the following hypothetical liquidation analysis (Liquidation Analysis) has been prepared by Debtors’ management with the assistance of the Debtors’ advisors. This Liquidation Analysis is for all the Debtors on a consolidated basis. Prior to the hearing to approve the Disclosure Statement, the Debtors may replace this Liquidation Analysis with a revised Liquidation Analysis. This Liquidation Analysis should be read in conjunction with the Plan and the Disclosure Statement. The Debtors, with the assistance of their financial advisors, have prepared this Liquidation Analysis for the purpose of evaluating whether the Plan meets the so-called best interests test under section 1129(a)(7) of the Bankruptcy Code. The Liquidation Analysis has been prepared assuming the Debtors current Chapter 11 Cases convert to chapter 7 proceedings under the Bankruptcy Code on June 22, 2020 (Conversion Date) and their assets are liquidated. A chapter 7 trustee (Trustee) would be appointed or elected to commence the liquidation of all of the Debtors assets. The liquidation is assumed to occur over a three-month period (the Wind Down Period). The Liquidation Analysis is based on unaudited book values as of March 31, 2020, and these values, in total, are assumed to be representative of the Debtors’ assets and liabilities as of the Conversion Date. Values associated with Non-Debtor Affiliates are contained within such assets and liabilities. However, the Liquidation Analysis does not include recoveries resulting from any potential preference claims, fraudulent conveyance litigation, or other avoidance actions. Estimating recoveries in any hypothetical chapter 7 liquidation case is an uncertain process due to the number of unknown variables. Thus extensive use of estimates and assumptions has been made that, although considered reasonable by Debtors’ management and their advisors, are inherently subject to significant business, economic and competitive uncertainties and contingencies beyond the control of the Debtors. THE DEBTORS MAKE NO REPRESENTATIONS OR WARRANTIES REGARDING THE ACCURACY OF THE ESTIMATES AND ASSUMPTIONS OR A TRUSTEE’S ABILITY TO ACHIEVE FORECASTED RESULTS. IN THE EVENT THE CHAPTER 11 CASES ARE CONVERTED TO CHAPTER 7, ACTUAL RESULTS MAY VARY MATERIALLY FROM THE ESTIMATES AND PROJECTIONS SET FORTH IN THE LIQUIDATION ANALYSIS. The Liquidation Analysis indicates the estimated values that would be obtained upon disposition of assets pursuant to a hypothetical chapter 7 liquidation. In preparing the Liquidation Analysis, the amount of Allowed Claims have been projected based upon a review of scheduled Claims and all Proofs of Claims associated with pre-petition and post-petition obligations. Additional Claims were estimated to include certain post-petition obligations on account of which Claims have not been asserted, but which would be asserted in a hypothetical chapter 7 liquidation. These potential Claims are primarily comprised of unused tickets, pension and related obligations, and lease and contract rejections including additional Administrative Claims relating to damages for breach of contracts and leases that were assumed during the Chapter 11 Cases. In the event litigation were necessary to resolve Claims asserted in a Case 20-10755-BLS Doc 384-3 Filed 06/24/20 Page 3 of 5 chapter 7 liquidation, the delay could be prolonged and Claims could further increase. The effects of this delay on the value of distributions under the hypothetical liquidation have not been considered. No Order or finding has been entered by the Bankruptcy Court estimating or otherwise fixing the amount of Claims at the estimated amounts set forth in the Liquidation Analysis. THE ESTIMATED AMOUNT OF ALLOWED CLAIMS SET FORTH IN THE LIQUIDATION ANALYSIS SHOULD NOT BE RELIED UPON FOR ANY OTHER PURPOSE, INCLUDING, WITHOUT LIMITATION, ANY DETERMINATION OF THE VALUE OF ANY DISTRIBUTION TO BE MADE ON ACCOUNT OF ALLOWED CLAIMS UNDER THE PLAN. THE ACTUAL AMOUNT OF ALLOWED CLAIMS IN THE CHAPTER 11 CASES COULD MATERIALLY AND SIGNIFICANTLY DIFFER FROM THE AMOUNT OF CLAIMS ESTIMATED IN THE LIQUIDATION ANALYSIS. THE PROJECTED HYPOTHETICAL RECOVERY RANGE IN A CHAPTER 7 LIQUIDATION DESCRIBED HERE IS BASED ON CONSOLIDATED DEBTORS. B. Assumptions and Notes The Liquidation Analysis refers to certain categories of Assets, liquidation costs, and Claims. The following notes describe significant assumptions associated within each category. Assets 1. Cash. This represents remaining cash following repayment of the DIP loan. The Liquidation Analysis assumes no remaining cash as of the Conversion Date. 2. Accounts Receivable. Accounts Receivable represents amounts owed to the Debtors by various parties. The Liquidation Analysis assumes no outstanding receivables as of the Conversion Date. 3. Prepaid Expenses and Other Current Assets. Other Current Assets include items such as deferred income taxes, various prepaid expenses and various deposits. The Liquidation Analysis assumes no recovery for deferred income taxes, prepaid expenses, or deposits. 4. Aircraft and Other Flight Equipment. This includes owned aircraft, engines, and rotables, miscellaneous ground service equipment, as well as aircraft under capital lease. The aggregate estimated recovery is assumed to be between 29% and 39%. 5. Other Property and Equipment. This primarily consists of land, buildings, technology, leasehold improvements, and furniture and fixtures. The analysis estimates between 9% and 14% recovery for other property and equipment. 6. Intangible Assets, net of amortization. This includes trademarks and domain name licenses, customer relationships, goodwill, and airline code share agreements. The Liquidation Analysis assumes no recovery for intangible assets. 7. Other Assets. These include certain long-term investments. The analysis estimates between 75.0% and 100.0% recovery of certain long-term investments. Case 20-10755-BLS Doc 384-3 Filed 06/24/20 Page 4 of 5 Cost of Asset Liquidation 8. Operating Expenses. This includes estimated expenses that would be incurred during the WindDown Period, including wages and benefits for employed personnel, aircraft storage costs, and general overhead costs. 9. Chapter 7 Professional Fees. This includes fees and expenses incurred by the Trustee’s legal and professional counsel associated with the wind-down of the Debtors’ estates. These fees are estimated to be between 2.7% and 3.0% of the gross liquidation proceeds available for distribution. 10. Chapter 7 Trustee Fees. These include fees that would be payable to the Trustee by each Debtor in accordance with the section 326 of the Bankruptcy Code. Trustee Fees are estimated to be 3.0% of the total asset recovery value, excluding Cash. Claims 11. DIP Claims. The Liquidation Analysis assumes the Debtors’ debtor-in-possession lenders would have a senior secured super-priority claim against each of the Debtors for the outstanding balance of the Debtors’ post-petition debtor-in-possession financings. 12. Chapter 11 Administrative Claims. Prior to determining what proceeds would be available for general unsecured creditors under a chapter 7 proceedings, liquidation proceeds would be reduced in order to satisfy Chapter 11 Administrative Claims that are senior to General Unsecured Claims, including any incremental Administrative Claims that may result from the termination of the Debtors’ businesses and the liquidation of their assets. 13. Professional Fee Claims. The Liquidation Analysis assumes allowable Professional Fee Claims incurred during the period from Petition Date through the Conversion Date are paid in full on the Conversion Date. 14. Priority Tax Claims. Includes allowable Priority Tax Claims as defined in the Plan. Case 20-10755-BLS Doc 384-3 Filed 06/24/20 Page 5 of 5 Ravn Air Group, Inc. Chapter 7 Liquidation Analysis June 24, 2020 ($ in millions) Asset Recovery Estimates Cash Accounts Receivable Prepaid Expenses and Other Current Assets Aircraft and Other Flight Equipment Other Property and Equipment Intangible assets, net of amortization Other Assets Estimated Book Value* 0.0 0.0 5.6 89.0 42.1 41.2 1.5 Notes 1 2 3 4 5 6 7 Gross Estimated Liquidation Proceeds Available for Distribution Cost of Asset Liquidation Operating Expenses Chapter 7 Professional Fees Chapter 7 Trustee Fees $ 179.4 8 9 10 Net Estimated Liquidation Proceeds Available for Distribution Administrative Claims, Professional Fee Claims, Priority Tax Claims, DIP Claims DIP Claims Chapter 11 Administrative Claims Professional Fee Claims Priority Tax Claims 11 12 13 14 Class 2 - Other Secured Claims Class 3 - Priority Claims Class 4 - General Unsecured Claims** $ 31.2 $ 43.3 $ $ (7.5) (1.5) (0.9) $ 21.2 $ Estimated Claims Range Low High 36.0 $ 36.0 1.0 2.0 2.9 $ Estimated Claims Range Low High Distribution of Funds by Claims Class Class 1 - Prepetition Secured Creditor Claims $ Recovery Estimate $ Low High $ 26.1 34.8 4.0 7.0 1.1 1.5 $ 68.3 114.5 $ 68.3 $ Recovery Estimate % Low High n/a n/a n/a n/a 0% 0% 29% 39% 9% 17% 0% 0% 75% 100% 17% 24% (7.5) (1.5) (1.3) $ 33.0 Recovery Estimate $ Low High 21.2 $ 33.0 - Recovery Estimate % Low High 59% 92% 0% 0% n/a n/a n/a 0% Recovery Estimate $ Low High Recovery Estimate % Low High - $ 0% 0% - n/a n/a - - n/a 0% - - 0% 0% - - 4.1 140.8 - Class 5 - Subordinated Claims - - - - n/a n/a Class 6 - Equity Interests - - - - n/a n/a n/a n/a n/a n/a $ 21.2 $ 33.0 14% 18% Less: Prepetition Secured Creditor Deficiency Claims Total Proceeds Distributed (68.3) $ 151.5 (68.3) $ 185.8