Wages for Is­land Air em­ploy­ees un­cer­tain

Honolulu Star-Advertiser - - BUSINESS - By Dave Se­gal dse­gal@starad­ver­tiser.com

Whether Is­land Air’s 423 em­ploy­ees get paid for their last 10 days of work will be up to a Bank­ruptcy Court trustee.

Hawaii’s sec­ond-largest air­line, which ended a 37year run when it ceased op­er­a­tions Fri­day night, is now mov­ing on to its fi­nal chap­ter as it pre­pares for liq­ui­da­tion.

Ted Pet­tit, an at­tor­ney for Is­land Air, filed a mo­tion with fed­eral Bank­ruptcy Court on Sun­day to con­vert the case to a Chap­ter 7 liq­ui­da­tion from a Chap­ter 11 re­or­ga­ni­za­tion. If the mo­tion is granted as ex­pected, then a trustee will be ap­pointed soon to over­see the com­pany’s af­fairs and de­ter­mine how much money is avail­able to pay em­ploy­ees and cred­i­tors.

A hear­ing on the liq­ui­da­tion mat­ter will be heard be­fore Judge Robert Faris at 10:30 a.m. Wed­nes­day in fed­eral Bank­ruptcy Court.

One of the is­sues that might come up Wed­nes­day will be the fi­nal wages due Is­land Air’s em­ploy­ees. The air­line said in a news re­lease Fri­day that it “hopes to com­pen­sate its em­ploy­ees in full for the work per­formed through Nov. 10; how­ever, the fi­nal de­ter­mi­na­tion will be up to the Bank­ruptcy Court trustee.” The com­pany also said em­ploy­ees’ ex­ist­ing health care in­sur­ance ben­e­fits will ex­pire

Nov. 30 at the ear­li­est.

CEO David Uchiyama said Mon­day the em­ploy­ees are still owed about 10 days’ worth of pay.

Paci­f­i­cap Avi­a­tion Fi­nance, which is man­aged by Jef­frey Au, whose two in­vest­ment-led groups bought two-thirds of the air­line, is listed as a se­cured cred­i­tor with a $2 mil­lion se­nior se­cured claim. Car­bon­view, the com­pany that has a onethird stake in the air­line and is owned by bil­lion­aire Larry El­li­son, has a $2 mil­lion se­nior se­cured claim and a $3.375 mil­lion sub­or­di­nated se­cured loan.

On Satur­day, Is­land Air filed its state­ment of fi­nan­cial af­fairs that showed as of Aug. 31 it had $737,030 in cash. That was down from $1.9 mil­lion at the start of the year. The fil­ing also showed that Is­land Air had to­tal as­sets of $14.3 mil­lion and to­tal li­a­bil­i­ties of

$39.4 mil­lion.

Is­land Air re­ported Oct. 27 in an ab­bre­vi­ated monthly bud­get fil­ing that it had $413,649 in cash near the end of the month.

Is­land Air filed for bank­ruptcy pro­tec­tion Oct. 16 af­ter the owner of its three planes at­tempted to re­pos­sess the air­craft for non­pay­ment. The bank­ruptcy fil­ing blocked the own­ers from tak­ing pos­ses­sion of the planes.

The air­line, which had lost money ev­ery quar­ter for 4-1/2 years, hadn’t made any lease pay­ments since June 30.

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