HONOLULU — Island Air employees have been told by a bankruptcy judge that there is no guarantee they will receive their final paychecks.
Judge Robert Faris told the employees they are “entitled to the truth,” the Honolulu Star-Advertiser reported .
Faris on Wednesday approved a motion to convert the bankruptcy case to a Chapter 7 liquidation from a Chapter 11 reorganization. A trustee and others have been hired for that process, and Faris said they will be paid before the employees.
“The sad but the true news is that nobody knows right now whether or when those last wages are going to get paid,” Faris said. “The trustee will have to get his or her arms around the case, try to gather as much money as possible. How much money the trustee will be able to gather will be anybody’s guess and the trustee would then distribute that money.”
After the trustee and others are paid, the next priority is to people who are owed money for goods or services provided after Oct. 16 when Island Air filed for Chapter 11 bankruptcy protection. That group would include the employees.
After all assets are sold off for cash, if there is still not enough money to pay creditors, including employees, the creditors may get only a portion of what they are owed or nothing.
“I don’t know if all the other bills got paid,” Faris said. “I do know that aircraft rent apparently did not get paid so there will be quite a few claims to share in whatever money the trustee is able to gather, and nobody knows what those claims are going to be. … So the sad but true answer is that nobody can say whether those wages are going to get paid or how much is going to get paid.”
Island Air ceased operations Nov. 10. The employees have not been paid for the work they did this month.
CEO David Uchiyama said earlier this week that the pay period encompasses about 10 days. He was present at the hearing Wednesday and when asked if he had anything to say, he responded, “I don’t have any comment.”
Island Air’s 423 employees potentially could have to wait years to get paid, if at all, depending how quickly the case winds its way through bankruptcy.
Information from: Honolulu Star-Advertiser, http://www.staradvertiser.com