Tuesday, April 01, 2014

If and when the court decides on the bankruptcy petition filed by Freedom Air, one of the companys creditors, the Commonwealth Development Authority, is confident it would be able to recover any and all obligations of the airline company.

CDA executive director Manuel Sablan said the agency is a secured creditor that would be given priority by the court.

CDA has priority lien on Freedom Airs assets, so were a secured creditor. This means that whatever happens to this [bankruptcy] case, were on the priority list of creditors that must be paid by the company. CDA has to be accommodated, said Sablan.

CDA loaned $900,000 to the airline company in March 2012, with a 7 percent interest per annum.

Sablan disclosed that prior to filing for bankruptcy in September last year, Freedom Air had been paying CDA the monthly interest. Those payments, however, stopped as soon as the carrier sought relief with the bankruptcy court.

Besides CDA, the bankrupt Freedom Air also owes the Commonwealth Ports Authority over $1.2 million in unpaid lease, passenger facility charges, and other fees. CPA, however, is an unsecured creditor, which means it has the lowest claim on the companys assets.

Thats the difference. If you are a secured creditor, your claim has to be paid off before any unsecured creditors, explained Sablan.

Last February, Freedom Air filed in Guams bankruptcy court its opposition to a motion filed by the Office of the U.S. Trustee to dismiss the bankruptcy case. Instead, Freedom Air asked for a Washington, D.C.-based broker to sell the company. Freedom Air, which does business as Aviation Services Inc., also recently filed in court a proposed agreement between the airline and its broker.

The Office of the U.S. Trustee earlier filed a motion to dismiss Freedom Airs Chapter 11 petition, stating that the debtor is suffering from substantial and continuing losses since the start of the case and lacks a reasonable likelihood of being rehabilitated.

Read more:

CDA confident of recovering loan funds from Freedom Air