GUYANESE-born Cleveland Seaforth, Chairman of BDO Antigua and Barbuda has been appointed by the Courts of Antigua as administrator for the cash-strapped LIAT Airlines.
The decisive legal step was taken on Friday July 24, 2020 by the administration of Antigua Prime Minister, Gaston Brown, as it seeks to reorganise the embattled airline. As a result of Seaforth’s appointment, Julie-Reifer Jones, who functioned as LIAT’s Chief Executive Officer (CEO) is no longer in charge. The appointment also places a stay on all proceedings against LIAT, including a shareholders agreement to liquidate the airline, as well as a scheduled July 31, meeting of creditors.
According to a Caribbean News Service report, the Antigua government successfully petitioned the Eastern Caribbean Supreme Court to appoint an administrator, who will be key in the restricting aspect of the airline.
Senior Counsel Anthony Astaphan, who presented the Antiguan Government’s petition, was quoted as saying “the petition was to begin the process of reorganisation by the appointment of an administrator and a stay on all proceeding on LIAT – civil, liquidation, proceeding by the shareholders, creditors- which would give the administrator, who was also appointed by the court (the power) to take a deep look at LIAT and to make a recommendation one way or the other.
“The next step would be the administrator assuming control and management of the assets of LIAT and to begin the exercise imposed on him by the legislation of amendments that were made recently.
“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 and to be able to come to the conclusion whether LIAT 1974 Ltd, of one sort or the other, would be able to be reorganised and to be back in the sky,” Astaphan added.
LIAT counsel, Stacy Roach, did not object to the petition for the appointment of an administrator, the report stated.
Earlier this month, the Antiguan Prime Minister had, in an open letter, stated, “if the majority shareholding group, which includes, St Vincent and the Grenadines, Barbados and Dominica, is allowed to opportunistically collapse this regional institution and form a new entity without honouring the institutions’ liability to creditors; this will be a form of State banditry.”
Creditors including the staff of LIAT, for decades, provided service and credit to LIAT as an insolvent institution, knowing that they had the backing of the shareholding states. For these states to walk away from their liabilities, is morally reprehensible and perhaps illegal. If shareholders wanted to limit their liability, they should have ceased trading years ago, knowing that the institution was insolvent. From my limited professional studies, I was taught that directors who knowingly operate an insolvent company is liable for wrongful and possibly fraudulent trading. The members of the shareholding board of LIAT participated as directors over the years and presided over most of major decisions of LIAT, including the ill-fated re-fleeting.”
The liquidation of LIAT without settling liabilities should be resisted by creditors and other stakeholders, even as he had hinted about the possibility of legal action and issued a call of the minority shareholders and creditors to call for a reorganisation plan. He said that Antigua and Barbuda stood ready to invest USD$40-$54M in the reorganised LIAT and that there are other governments and private interest that are willing to invest.
Following a meeting of the shareholders on July 20, it was announced that Barbados and St. Vincent & the Grenadines governments had agreed to sell their shares in LIAT, to accommodate a new re-organisational plan outlined by Antigua & Barbuda. Also, that an agreement had been reached to sell three of the aircrafts that had been acquired with funds provided by the Barbados-based Caribbean Development Bank (CDB).
