(Bloomberg) -- Aircraft leasing company AeroCentury Corp. filed for Chapter 11 bankruptcy protection in Delaware, citing the dramatic decrease in air travel during the coronavirus pandemic.

The company, which buys used regional aircraft and leases them to domestic and foreign carriers, joins a long list of businesses felled by disruptions related to Covid-19 over the past year. AeroCentury, which will seek to sell aircraft assets during the court restructuring, will continue to operate in bankruptcy.

“Due to the Covid-19 pandemic, the aircraft industry as a whole has experienced a substantial and sustained decrease in air travel,” AeroCentury’s Chief Financial Officer Harold Lyons said in court documents. “This downturn has resulted in lower utilization of the debtors’ aircraft assets, which in turn materially and adversely affected the debtors’ businesses, revenues, financial condition, and results of operations.”

AeroCentury has entered into a so-called stalking horse agreement for Drake Asset Management Jersey, its sole secured lender, to acquire aircraft collateral backing the debt as a means of repayment. The sale is subject to higher and better bids.

Pre-Pandemic Woes

Even before the pandemic, the company faced cash-flow problems, according to court documents. AeroCentury defaulted on its credit line in 2019 and had a deficit on the loan’s borrowing base.

Lenders agreed to forbearance to allow the company time to shore up its finances, but the pandemic upended those efforts with worldwide travel restrictions and lockdowns. By the third quarter, AeroCentury’s revenues had plunged 85% from a year earlier, Lyons said.

The publicly traded company listed assets of about $121 million and debt of almost $125 million as of Sept. 30, according to its bankruptcy petition. The only holder of more than 5% of stock is Chairman Toni Perazzo.

The case is AeroCentury Corp., 21-10636, U.S. Bankruptcy Court for Delaware.

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