Commonwealth Ports Authority officials said yesterday that Freedom Air’s filing for Chapter 11 bankruptcy last Friday was not really unexpected. CPA executive director MaryAnn Lizama and board member Benigno M. Sablan said they understand the beleaguered interisland carrier’s decision to enter into Chapter 11.
The move allows Freedom Air to propose a plan for profitability post-bankruptcy, while continuing to operate.
More importantly, its Chapter 11 filing allows Freedom Air to temporarily hold creditors, such as CPA, at bay. It owes the ports authority $1.23 million in aviation charges and facility use.
“We can’t do anything. Usually when there’s bankruptcy filing there’s an automatic stay [on payment demands]. The courts will assign a trustee ad litem through the course of the bankruptcy filing and Freedom Air can continue using our facilities,” said Lizama in a phone interview with the Saipan Tribune.
She disclosed that CPA might have had an inkling about Freedom Air’s decision to file for Chapter 11.
“With regard to whether we knew it was coming or we didn’t, it’s still a process. I have no ill feelings about it. It’s a process they have to go through. We will abide by the process,” added Lizama. “They can continue their operations until the courts say no and other debtors like us can’t do anything about it. We will respect the courts and the process.”
Sablan said that Chapter 11 is part of the democratic process and that CPA has no choice but to respect the courts on the matter of Freedom Air’s decision to file for bankruptcy.
He said the Chapter 11 filing will probably be adjudicated in Honolulu, Hawaii.
Like Lizama, Sablan admitted that he already had an idea that Freedom Air would file for bankruptcy.
Meanwhile, he described as already moot the CPA board’s move on Monday to reverse its earlier decision to give Freedom Air until December to settle its $1.2 million arrears to CPA.
“We wanted three months but I don’t know why they changed it to 30 days when its already moot, extremely moot,” he said considering the carrier’s Chapter 11 filing.
For the record, Sablan said he abstained on the vote, giving Freedom Air only until the end of October to settle its debt with CPA.
As it stands, he said, Freedom Air has 120 days to reorganize itself under Chapter 11. After four months, he expects the CPA board to put down the hammer once again on Freedom Air and require it to pay the full amount it owes the agency or be evicted.
Last Sept. 18, the CPA board gave Freedom Air until Dec. 31, 2013, to settle its unpaid obligations with CPA, especially the passenger facility charges as required by the U.S. Federal Aviation Administration.
The board had said that failure to do would force them to evict the company from CPA premises with finality. That decision was reversed during a special board meeting last Monday.
It was earlier revealed that Freedom Air, on many occasions, was issued termination notices, of which none were actually implemented.