The rapid growth that made Silver State Helicopters a Cinderella story to some and a horror story for students, has ended in bankruptcy for the Las Vegas-based flight school and its 33 locations in 17 states.
Doors closed unexpectedly at the schools on 3 February and the business filed for Chapter 7 bankruptcy the following day. Available credit for student loans dried up, the company said, "and resulted in a sharp and sudden downturn in new student enrolment". It adds: "Information for former employees and students will be disseminated as it becomes available."
Some 750 employees are out of work and 2,700 students are scrambling to complain to the Nevada state attorney general. Student loans of up to $70,000 at 15% interest were behind numerous lawsuits settled and pending against the school, with students accusing Silver State of failing to provide sufficient flight time to earn licences and ratings. They complain of insufficient staff and helicopters, and of finding fewer high-paying jobs than they were promised on recruitment.
Ownership of Silver State changed hands in August 2007 when private equity company EOS Partners of New York bought a 60% share for $30 million from founder Jerry Airola, who remained on the board of directors and was the only member to vote against the bankruptcy filing, says EOS.
After founding Silver State in 1999 with one helicopter, Airola expanded it rapidly and the schools achieved revenue of $40.7 million in 2005 and $78.1 million in 2006. He spent $3.5 million in a failed bid to become Clark county sheriff, when lawsuits and settlements alleging shoddy business practices saw him lose by a 2-1 margin.
Silver State's assets are listed at less than $50,000, and more than 5,000 creditors are owed between $10 and $50 million. Creditors have until June to file claims.