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[Antigua] REDjet gets breather from creditors

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[Antigua] REDjet gets breather from creditors

Unread post by bimjim » Sat Jun 09, 2012


[Antigua] REDjet gets breather from creditors
Saturday, June 9th, 2012.

St. John’s Antigua

Tourism and Civil Aviation Minister John Maginley has expressed scepticism of a re-emergence of regional low-cost carrier REDjet which Friday declared that it has applied for insolvency protection from its creditors, a day after dismissing its 94 workers.

His first concern however was for the affected employees. “I’m very sorry that anybody is going home at this very crucial time in all our Caribbean economies,” he said.

When asked if he foresees the airline taking to the regional skies again, Maginley responded, “I don’t see it, since we had Caribbean Star and Caribbean Sun and all these airlines that were much better funded and they weren’t able to stay afloat.”

The minister acknowledged that many people were banking on REDjet “working out” even though its business model had already been tried unsuccessfully in this part of the world.

“It didn’t work out and that is very disappointing for a Caribbean business group … but it is a business venture and not every business venture works,” he reasoned.

Earlier this week, Prime Minister Baldwin Spencer said Antigua & Barbuda would not be extending financial help to the carrier that had suspended it regional operations in March saying it was seeking the “assistance given to other carriers.”

It has now bought breathing space for at least a month by using the Bankruptcy and Insolvency Act of Barbados, where it is based. Under the legislation, REDjet comes under the administration of a trustee, blocking any legal proceedings to reclaim debts for at least 30 days.

“Immediately upon filing, all proceedings against it are stayed which means that no creditor can take any action to recover debt owed as of June 5 this year,” the year-old carrier said in a press release.

The Barbados experience has left a sour taste in REDjet’s mouth. The airline has suspended “all operations there” saying it had “no future” in that country and claiming that the host government had “failed to deliver on promised support.”

The airline said it believed it had secured Barbados’s “full aero-political support” and that this “turn of events could have been avoided” if it had gained access to all markets as the island’s designated national carrier.

REDjet had promised to reimburse ticket holders within three weeks of applying for a refund in writing but three months later, several would-be travellers said they had not been repaid.

But the airline said on Friday that “the trustee will at the appropriate time invite creditors of amounts of $250 and more, including passengers who have purchased tickets with the airline but who have yet to apply for a refund, to prove their debts as required by the Act and also call a meeting of creditors for the purpose of considering and approving the company’s proposal.”

The stay of proceedings does not apply to debts owed for services rendered to the company after Friday’s filing date, REDjet said, adding that these debts “will be dealt with in the ordinary way.”

The stay will be in place for 30 days initially but the court will entertain reasonable applications for extension of the stay to permit a proposal to creditors to be completed, the carrier said.

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