Lien to Freedom Air assets in Guam up in the air

Guam airport chief Charles Ada told the Commonwealth Development Authority early this month that their lien on Freedom Air assets at the Guam airport is imperfect, Saipan Tribune learned.

Freedom Air’s Cessna 207, Sherpa Cargo, and Piper airplanes have remained inaccessible to CDA, after a botched inspection of the Cessna plane last February shut CDA, a Freedom Air representative, and a prospective buyer out of the Guam airport hangar.

CDA and the Guam International Airport Authority have been corresponding over a plan for these assets. CDA says they have first-priority lien.

But Ada, it was learned, communicated GIAA’s final position this month.

Essentially, GIAA claims that CDA has not shown that it has perfected its security interest in Freedom Air’s assets.

CDA has not filed a financing statement for these assets with Guam’s Department of Revenue and Taxation, Saipan Tribune learned. The Guam airport claims they are required to do so to perfect their claim.

CDA has offered evidence of how it properly perfected its lien, sharing copies of its security agreement with Freedom Air. This agreement was documented in Guam. They’ve also shared with Guam airport their aircraft security agreements with the Federal Aviation Administration.

But because CDA did not submit a UCC filing in Guam, their filings with the FAA Federal are moot, GIAA explained—because state law determines all priorities.

GIAA now believes it has priority over CDA, and an intention to proceed with the sale of Freedom Air property located within the Guam airport has been communicated, Saipan Tribune learned.

In an interview on Tuesday, CDA executive director Manuel Sablan indicated their position remains the same.

“Our position is we have a first lien…and that either we take possession of it and auction it, or have the Freedom Air sell it with our concurrence and the money comes to CDA,” Sablan said.

According to Sablan, these assets are estimated by CDA—if auctioned—to be enough to cover the outstanding debt plus interest Freedom Air still owes CDA. That amount is some $1.3 million, according to CDA.

The CDA counsel is now communicating with the Guam airport about their rights to those lien assets, Sablan said.

“Essentially, what [GIAA is] saying is they took possession of the premises and inside that premises, you have two sets of assets, one set belonging to Freedom Air without any lien, and those assets that belong to Freedom Air that CDA has a first priority lien… As far as we are concerned, the assets which we have priority lien belongs to CDA if those assets were to be disposed.”

Freedom Air listed $750,000 it owed the GIAA when it filed a bankruptcy petition in 2013. A Guam court dismissed this last year.

Last February, Guam airport officials abruptly halted Skydive Marianas’ inspection of Freedom Air’s Cessna 207 plane.

Parties involved in this botched inspection believe the Guam airport is looking to recover its losses—like when a car is abandoned with past dues in an auto shop and the mechanic collects what he can.

Depending on its condition, a Cessna 207 is estimated to sell around $110,000 to $160,000, it was learned. A Sherpa Cargo plane could sell around $500,000, and Freedom Air’s smaller aircraft could sell around $10,000 to $15,000, it was gathered.

CDA had requested access to Guam airport premises to secure a plan for the liquidation of those assets. They had asked that the Cessna, Sherpa Cargo plane, and any flyable aircraft be removed from the Guam hanger and secured at an approved designated place. Freedom Air employees cannot get into the Guam hangar since they have been evicted.

CDA also requested that they have access to Freedom Air’s company records and operations manual and documents, but it’s unclear if that request has been heeded.

Freedom Air has flown in the CNMI for 37 years, but filed for bankruptcy in 2013. The FAA has issued a proposed revocation of their air carrier certificate since that time. The airline has until today to appeal, according to the FAA.