Tahoe Air officials say the company recently filed for Chapter 11 reorganization, with hopes of someday restarting commercial flight service at South Shore.
According to Tahoe Air President and Chief Executive Officer Bruce Wetsel, the company's total debt exceeds $500,000, but there are reserve funds on hold.
More than $170,000 is left over from credit card hold-back, as well as a substantial amount of money from deposits paid to Tahoe Express, that were never drawn from.
"We're hoping to get the power of the bankruptcy courts behind loosening up that money," Wetsel said.
Mayor Tom Davis, director of community marketing at Tahoe Air, said the bankruptcy court will decide how the unused funds will be distributed.
"My priority is that employees get paid back, as well as the city and the vendors," Davis said.
Wetsel said efforts are being made to compensate employees and pay money owed.
"We formed Tahoe Express to try to bring a smaller operation up, while we tried to figure out what to do with Tahoe Air and how to get people paid," Wetsel said. "It's our intent, really, to file a reorganization act with the court and get back up flying again. Investors have agreed to put up additional money. We've presented to our board and to our investors, a revised business plan and they have agreed to pursue that plan."
Davis said he hopes airline service will be restored to South Shore sometime in the near future.
"Bruce (Wetsel) is the one running the show," Davis said. "I have a tremendous amount of respect for him and if anyone can get it going, he can."
Davis said he hopes Allegiant Air will also come back to the lake.
"I would like to see some air service back here as soon as possible," Davis said.
Allegiant Air President Jim Patterson has expressed interest in starting back up at South Shore.
"We need to make a decision, and I believe we will be serving Lake Tahoe in a reasonable amount of time," Patterson said recently. "We are doing everything we can to get that done."
Lake Tahoe Airport Manager Richard Jenkins said he is not sure if Tahoe Air's bankruptcy will affect the airport, but hopes it will be able to start up again.
"I don't know what impact the bankruptcy will have on us," Jenkins said. "They owe us some money and we're trying to collect the money they owe us. It's my understanding that they are still pursuing starting up service. They would like to start service sometime this summer out of here."