A Direct Air jet taxis at Myrtle Beach International in this file photo. Passengers still owed money by bankrupt Direct Air could see at least some money refunded by the end of the year, according to the trustee handling the bankruptcy case. Photo by Charles Slate. CHARLES SLATE — cslate@thesunnews.com

Bank going after Myrtle Beach-based Direct Air’s former owners for $25 million debt

The Trustee in the Direct Air’s bankruptcy case is seeking permission to  refund hundreds of the charter air carrier’s ticket purchasers for flights that never occurred, the bank that handled credit card payment processing for Direct Air wants to hold the former owners of Direct Air responsible for debts of more than $25 million.

Joseph Baldiga who is the  trustee in Direct Air’s bankruptcy liquidation told The Sun News that he had filed a motion Tuesday that would  distribute $250,000 to about 1,900 ticket purchasers whose flights got cancelled when the Myrtle Beach-based carrier shut down abruptly in March 2012. A judge is expected to approve the distributions that would cover  about one-fourth of those ticket purchasers’ claims. Payments could be made by the end of this year.

There are a total of about  93,000 people who bought tickets for Direct Air flights which never occured. Most of those people had received refunds through a credit card chargeback.

The chargebacks are the focus of a separate federal lawsuit that was filed by  Merrick Bank  a  Utah based bank that settled credit card transaction for Direct Air ticket purchases. Merrick Bank says that Direct Air’s former owners – Judy Tull, Ed Warneck, Kay Ellison and Marshall Ellison – are personally liable for the more than $25 million in chargeback payments as they all signed personal guarantees to cover the debt as part of a 2006 agreement.

The former owners of Direct Air could not be reached for comment on Wednesday  and it is not clear if they are  represented by lawyers in the Merrick Bank lawsuit.

Merrick Bank was authorized to charge Direct Air’s operating and reserve accounts whenever customer chargebacks occurred, but both accounts were frozen when the carrier filed for bankruptcy protection and court records show that both accounts do not have enough cash to help cover the the chargebacks even if the money were available. Merrick Bank said said that without access to that money, it intends to enforce personal guarantees the carrier’s owners signed in 2006.

Merrick Bank lawyer John Hearn stated in the bank’s complaint that “The guarantees absolutely and unconditionally guarantee the payment and performance of all obligations identified in the [Direct Air] merchant agreement including, but not limited to, the payment of any chargebacks incurred as a result of Direct Air’s actions or failures,”

Head on over to The Sun News to read the entire story.