February 3, 2012 - In September 2009, Pace Airlines filed for Chapter 7 under the U.S. Bankruptcy Code, the process of liquidation. At that time, a number of employees had worked for the company up to six weeks without getting paid and a total of 423 employees were not paid for the time they worked. 

A number of employees reported that continued to work for the company even through they were not getting paid out of fear the company would not approve their unemployment benefits if they quit. 

In September 2009, Pace Airlines CEO, William C. Rodgers was arrested at Piedmont Triad International Airport on charges of knowingly canceling health insurance on employees.

The Department of Labor began an investigation on wage and employee complaints and in August 2010, the North Carolina Department of Labor filed a claim on behalf of the employees for $1.5 million in back wages. 

In August 2009, the owner of the company took out a liability policy for himself and its officers for $5 million. When the company filed for bankruptcy they were entitled to this money. However, because this was in bankruptcy court the court had the final say over the money. 

This week, through mediation, the National Union Fire Insurance Co. of Pittsburgh, bankruptcy trustee, Edwin Allman and the former owner of Pace Airlines, William Rodgers agreed to pay $1 million out of the $5 million liability policy in a settlement to the employees back pay, although the liability policy excludes coverage for claims as the result of unpaid wages. The agreement requires National Union Fire Insurance Co. to cut a check for $1 million by April 1 or within 30 days of approval by the bankruptcy court.