A key air carrier serving Southwest Alaska will sell off some of its assets, as the company continues through a Chapter 11 bankruptcy.

Public radio station KUCB reported Friday that a federal judge in the case scheduled an auction of PenAir assets for early October, in the wake of a motion by a bankruptcy trustee appointed for the airline. Airline officials weren’t available for comment, but service to Unalaska was expected to be unaffected during the sale.

In a Wednesday filing before Judge Gary Spraker, the trustee – Gerald McHale – argues for a rapid sale of “substantially all of [PenAir’s] assets,” before the company accumulates further debt.

“The Chapter 11 trustee submits that this expedited sale schedule is appropriate based on the amount of time the debtor has been in bankruptcy (almost exactly one year) and the debtor’s quickly deteriorating cash position,” wrote. “The Chapter 11 trustee must sell the acquired assets before entering the debtor’s slow season to prevent the debtor from running out of cash.”

PenAir had expanded to the western U.S. in 2011, but subsequently shut down routes in Portland, Oregon and Denver, Colo. Since declaring bankruptcy in August of 2017, PenAir sought an additional $1 million loan from one of its creditors in January, although it already owes $10 million to $50 million.

In a court audio recording of a hearing this week, Spraker tells parties in the bankruptcy that he plans to hear more about the case in October, pending the formal filing of a motion for sale of the assets.

Editor's note: A headline which initially referred to PenAir liquidating its assets has been changed.

Rhonda McBride contributed information to this story.

Copyright 2018 KTVA. All rights reserved.

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