LIAT owes $94m to its workers

LIAT owes its staff about $94 million in severance and holiday that it is unable to pay, Prime Minister Ralph Gonsalves has said.

Gonsalves, the chair of LIAT shareholder governments made the disclosure while speaking on WE FM on Sunday.
“In  2019, it lost about EC$14 million. Well, that was recovery of sorts from the hole in 2017 and 2018. And then COVID hits in 2020 and over the period with COVID, we have lost about $35 million. It’s a big sum of money.”

“Because even though they laid off about 500 workers, they kept on a staff of about 168 across the network. Then, for maintenance of the aircraft, insurance, repatriation of staff and health insurance coverage and rental of office equipment, utilities, that number comes up to about EC$10.8 million. And then you have about –their paid booking at May 2020, LIAT had paid bookings of US$4.3 million outstanding.

“Now, these are things which the liquidator would have to deal with. But severance payment in total, for all the workers, as per the existing collective agreements, which is not necessarily what the law of Antigua would specify but I am taking the law of Antigua in relation to insolvency, the number may be smaller, but if you are dealing with just the existing collective agreements, you’re looking at 83.9 million in severance payment and there are people who have vacation pay and for all the countries, it’s another $10 million in vacation pay, so you are talking about $93.9, call it $94 million,” Gonsalves said.

“Insolvent, LIAT doesn’t have any assets to pay anybody anything,” he said.

2 Comments

  1. My understanding of insolvency, bankruptcy, and liquidation law tells me that these workers — unsecured creditors — will never get a cent after the airline’s assets — mainly aircraft — are sold. It is the banks that lent money to LIAT to keep it flying with these loans secured by the ability to seize and sell the aircraft and other assets who will get anything in this process.

  2. David this is a very different situation to normal bankruptcy. LIAT should have been closed down years ago because it has been insolvent for years. Every year it had a shortfall in trading capital and the shareholders each put in money to keep it afloat.
    This led to suppliers building up a reliance on always being paid because they knew the shareholders would re-capitalize the company and they would get paid. But trading whilst insolvent if the company ceases to trade has a high price to it. It means that the directors are responsible for the debts made during there knowingly trading an insolvent company. But of course if the directors were instructed to carry on trading by the shareholders, then the shareholders are also liable for the debt to the staff and creditors.
    Ralph Gonsalves was/is the shareholders chairman. There are thousands of statements made by him over the years which I think points directly to the shareholders being fully aware of the insolvent state of LIAT and approved of it continuation to trade, proven by the fact that the shareholders funded LIATS losses on a fairly frequent basis. Now they want to walk away and say sorry to the staff owed wages and salaries, and other payments that they may be due. They want to do the same thing to the other creditors, well I just hope they are all wise enough to get together in groups, appoint lawyers who specialize in such matters and sue them.
    I am not sure individual country leaders can be sued but its worth inquiring about because they allowed the company to trade whilst insolvent.

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