Frontier blame First Data because they demanded a sudden jump in
collateral, due to the credit crunch, and started taking a large slice
of the 70% of Frontier’s revenues which they controlled; the other 30%
is from cash, cheques, AMEX and Discover.
On April 8th, First
Data not only told Frontier that they wanted to raise Frontier’s
collateral from $55 million to $130 million, but allegedly claimed
withholdings would rise from 45% to 100% by May 1st in order to build
As a result, Frontier declared bankruptcy on April 10th.
First Data … how could you?
Aha … First Data were as surprised as everyone else by this announcement.
Sounds like it could be a bit of brinkmanship between a customer and their processor, especially as Chapter 11 in the USA just means that you don’t pay your suppliers for a while. And you can still book seats on the flights …
even so, declaring bankruptcy is a bit radical just because your card
processor has kicked you in the collaterals so to speak.