Wages for Island Air employees uncertain
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
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.