Frontier Airlines Files Chapter 11 - Blames Credit Card Processor
Frontier Airlines this morning announced it had voluntarily filed to reorganize under Chapter 11 of the U.S. Bankruptcy Code late last night. The airline is continuing normal flight operations today.
According to a letter to employees of the airline published by Channel 7 News in Denver, the airline said that it had been notified by its credit card processor, First Data, that as of today they intended to start withholding 50 percent of the funds received from the sale of Frontier tickets. In its press release, the airline said its decision to file resulted from "an unexpected attempt by its principal credit card processor to substantially increase a “holdback” of customer receipts, which threatened to severely impact Frontier’s liquidity." Frontier went on to say that "the automatic stay provision of the bankruptcy code prohibits the credit card processor from increasing its holdback, and we are prepared to litigate this issue if necessary."
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