"Canadian airports want carrier liquidated to recoup cash"

Monday, March 14, 2005

Airports want Jetsgo liquidated to recoup cash
Say no advantage in allowing carrier to reap benefits of bankruptcy
protection
By SIMON TUCK 
Canada - The Globe and Mail


OTTAWA -- Some of Canada's largest airports may ask a bankruptcy judge in
the coming days to liquidate Jetsgo Corp. in a bid to get some of the money
they're owed by the airline.

About a half-dozen of the country's largest airports held a conference call
yesterday to discuss the matter and concluded that there's likely no
advantage in allowing Jetsgo to continue to enjoy the benefits of bankruptcy
protection.

The airports, which are among Jetsgo's many creditors, believe they'll
likely be better off trying to get as much money as they can right away
because it's highly unlikely that the airline will ever again return to
business.

"That's being actively looked at," said a senior airport official about a
court petition. "They can't come back after everything that's happened."
 
The group of airports, which excludes Toronto's Pearson International
Airport, the country's largest airport, has hired Langlois, Kronström,
Desjardins of Montreal as legal representatives.

Stanley Kershman, an Ottawa bankruptcy lawyer, said creditors such as the
airports stand a good chance of liquidating Jetsgo if that path is pursued.
"If some of the creditors get aggressive enough, it will happen."

But Mr. Kershman said airports would have to stand in line with other
unsecured creditors behind parties such as the trustees and lawyers involved
in the case, employees, municipal governments owed taxes, and landlords.
"People are going to get peanuts."

As part of the legal proceedings, $4-million has been set aside from
Jetsgo's assets to ensure that the monitor and various lawyers representing
the monitor and Jetsgo get paid. In the coming days, the monitor will send a
notice to "known creditors" having a claim of at least $5,000 against
Jetsgo, advising them of the court proceedings.

As well, "retention payments or bonuses" for Jetsgo management are in the
cards as part of efforts to "settle the claims of customers and suppliers
that are in dispute," the court filing said. 

The airports, as well as air-traffic controller Nav Canada and many other
creditors are owed millions of dollars.

Montreal-based Jetsgo jumped into bankruptcy protection early Friday
morning, after taking passenger bookings up to an hour before shutting down
the business.

Court documents filed last week in Montreal show the airline has lost
$55-million since June 30, including an estimated $10-million last month. In
the end, Jetsgo could not overcome the challenges of an aging fleet,
aggressive expansion, heavy price discounting, and a competitor, WestJet
Airlines Ltd., that it has alleged in a lawsuit had illegal access to its
internal records.

The court-appointed monitor is RSM Richter Inc. and Jetsgo is being
represented by Louis Gouin and Sylvain Rigaud of Montreal law firm Ogilvy
Renault LLP.


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