In 1990, Jeffrey Chodorow, Arthur Cohen, and Scot Spencer formed BNAir Inc., a vehicle specifically used to purchase the assets of Braniff Inc. from three bankruptcy auctions.
[2][5] The new airline did not possess a United States Department of Transportation (USDOT) air operator's certificate and was scrutinized intensely by the USDOT, which made it clear in January 1990 that they did not believe that Braniff's management team, headed by Scot Spencer, was capable of conducting airline operations, based on Spencer's conduct while employed with Braniff Inc. and his criminal history.
[2] On 16 July 1991, Braniff abruptly ended service to Los Angeles International Airport (LAX), citing an unexplained failure to secure permanent passenger handling facilities there: the airline did not have access to a gate or a ticket counter, causing arriving passengers to have trouble finding and boarding their flights.
[11] Braniff CEO Gregory Dix attributed the problems to a lack of cooperation by LAX officials—an allegation denied by the Los Angeles director of airport operations.
[13] On 12 September 1991, Braniff withdrew from Dallas/Fort Worth International Airport (DFW), citing the LAX dispute and problems with an aircraft lessor.
[15] Although still operating under bankruptcy protection, Chodorow announced on 4 December 1991 that the airline had secured sufficient funding to return to DFW, with an ambitious flight schedule to start on 15 January 1992.
An announcement was made the following Tuesday, 7 July 1992, that the beleaguered carrier might refund tickets that were paid for with cash or checks.
Braniff management cited intense competition and fare wars initiated by Northwest Airlines and American as key reasons for the unannounced shutdown.
[18] In early 1992, the Federal Aviation Administration (FAA) and USDOT were informed that Spencer was secretly being paid by Braniff, and that the airline's corporate officers were engaging in a money laundering scheme designed to conceal this from the airline's creditors, the bankruptcy court, and the USDOT, which had secured the earlier affidavits promising Spencer's non-involvement in the company's corporate affairs.