CDA to foreclose on Freedom Air property

The Commonwealth Development Authority aims to take from Freedom Air what is owed them.

The CDA board approved yesterday a motion to direct the CDA’s lawyer “to pursue the foreclosure of liens on any and all properties and aircraft” of Freedom Air.

The decision comes amid a renewed push by the Federal Aviation Administration to revoke Freedom Air’s air carrier certificate. Equally, it comes amid competing interest by the Guam International Airport Authority for the airline’s assets in its premises.

The 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.

Board chair Diego Songao indicated in an interview yesterday that CDA’s push for foreclosure would leave it up to a court to decide “who has the rights” to these assets.

Right now, the Guam airport feels CDA has “no jurisdiction” over the chattel mortgage or aircraft and properties sitting on its premises, Songao said.

“But as we proceed with the foreclosure, the judges will make that decision as to whether who has got the right to access or ownership on those mortgages because we have direct lien” on them, he said.

He explained this was a “question of ownership.” And that’s why they will proceed with the foreclosure.

“We want some answers by the court,” he said.

Saipan Tribune earlier revealed that the Guam airport had found CDA’s lien to Freedom Air assets to be imperfect. This was communicated by GIAA executive manager Charles Ada to CDA earlier this month.

GIAA essentially found that CDA had not perfected its security interests in these assets, mainly because CDA did not file a financial statement, or UCC filing, with the Guam Revenue and Tax.

According to GIAA, their failure to do so made CDA’s security filings with FAA moot because state law determines lien priorities. GIAA now believes it has priority over CDA. It was gathered that Ada explicitly stated an intention to proceed with the sale of Freedom Air property located within the Guam airport premises.

On the FAA revocation, Songao indicated that even if the airline aims to appeal the FAA decision, CDA has “to get ready and secure the liens we have.”

Separately, CDA executive director Manuel Sablan said “it’s up to the FAA now.”

“If they yank the license, then there goes the viability of the airline,” he said, also acknowledging this was the context of the board’s decision.

Essentially, there is an assumption that FAA will push for the revocation, he said. “Now CDA has to come in and get after the assets,” he said.

Based on their findings, if CDA were to dispose of these assets, it would be worth more than the outstanding balance of the loan. On top of this, CDA also has other securities, outside the personal security of the owner of Freedom Air like real property, according to the director in an interview last week.