Source : CH-AVIATION
LIAT (LI, Antigua) has entered into court-appointed administration in Antigua & Barbuda after a high court judge granted a petition for the cash-strapped pan-Caribbean carrier’s reorganisation. The Guyana-born Chairman of BDO Antigua and Barbuda, Cleveland Seaforth, has been appointed LIAT’s administrator for the duration of proceedings.
“It was a petition to begin the process of reorganisation by the appointment of an administrator and a stay of all proceedings against LIAT, civil, liquidation proceedings by the shareholders, creditors …” The administrator appointed by the court will be “able to take a deep look at LIAT and to make recommendations one way or the other,” Senior Counsel Anthony Astaphan told Barbados Today newspaper following the court hearing in St Johns on Friday, July 24.
Antiguan Prime Minister Gaston Browne’s decision to press ahead with placing LIAT into bankruptcy protection comes after Barbados and St. Vincent & the Grenadines, two of the airline’s largest shareholders, voted in favour of liquidating the ailing airline. LIAT’s entry into reorganisation therefore puts plans for a July 31 creditor vote on whether to liquidate the carrier on indefinite hold.
As previously reported, the Government of Antigua & Barbuda has been the biggest proponent of LIAT’s reorganisation given what it has said would be the minisucle returns liquidation proceedings would present to shareholders and creditors alike. To that end, the country added business rehabilitation provisions to its Companies Act earlier this month and has even incorporated a NewCo, LIAT 2020 Ltd., to ensure the airline’s continuity.
“The next step would be the Administrator assuming control of the assets and management of LIAT, and to begin the exercise imposed on him by the legislation of the amendments that were made recently,” Astaphan added.
“It is a very, very important step because it gives the Prime Minister the opportunity to be able to work with the Administrator, and for the administrator to take a look at everything to be able to come to the conclusion whether LIAT 1974 Ltd, of one sort of the other, would be able to be reorganized and to be back in the sky.”
Antigua has put the cost of restructuring LIAT at XCD108 million East Caribbean dollars (USD39.96 million) of which 50% will come from the Antiguan government with the remainder expected to come via other shareholder governments or even private investors.
Following a meeting last week of the airline’s shareholders, Browne said that both Barbados and St Vincent & the Grenadines have agreed to transfer their shares to Antigua and Barbuda which will now assume control of the airline.
“One of the interesting things coming out of the meeting is that both Barbados and St Vincent and the Grenadines have agreed to transfer their shares to Antigua and Barbuda for the sum of XCD1 (USD0.36) each. The aggregate shares that would be transferred to Antigua and Barbuda would be around 60 percent between the two governments, so I think that’s a responsible proposition,” he said.
To help raise funds, LIAT’s shareholders agreed last week to sell and presumably lease-back the three ATR42-600s it owns but which are held by the Caribbean Development Bank.
“We came to the consensus that we should sell the three planes that are owned by LIAT and charged to the Caribbean Development Bank. What that will do, that will help eliminate the debt from LIAT’s books for those planes and in addition, the proceeds will be utilised to pay down the loan even though there would be residual value. The governments will continue to make a payment on the residual value after the proceeds of the planes are applied to the loans at the Caribbean Development Bank,” Browne added.