Mesa’s bond set at $90M
The damages award appeal will be heard in Federal District Court
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A federal Bankruptcy Court judge ruled yesterday that the parent company of interisland carrier go! must put up a $90 million bond by 4 p.m. tomorrow while it appeals a damages award against it in a lawsuit filed by Hawaiian Airlines.
Bankruptcy Judge Robert Faris decided on the $90 million bond by taking into account the $80 million damage award in his Oct. 30 ruling in Hawaiian's lawsuit, plus interest and legal costs and fees for a one-year proceeding in District Court. The amount could be adjusted upward if the case takes longer.
Jonathan Ornstein, chairman and chief executive of go! parent Mesa Air Group, said yesterday that, given the company's current balance sheet, meeting the $90 million obligation by tomorrow will not be a problem.
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Mesa Air Group must put up a $90 million bond by 4 p.m. tomorrow while it appeals a damages award against it in a federal lawsuit filed by Hawaiian Airlines.
The amount of the bond, which includes principal and interest plus legal fees and costs, was decided yesterday by Bankruptcy Judge Robert Faris, who calculated the amount based on the appeal taking one year to decide in federal District Court.
Jonathan Ornstein, chairman and chief executive of Mesa, said yesterday that, given the company's current balance sheet, meeting the $90 million obligation by tomorrow will not be an issue.
Mesa, the parent company of interisland carrier go!, had filed a notice of appeal with the U.S. Bankruptcy Appellate Panel for the Ninth Circuit, but last Friday Hawaiian chose to have the case heard in District Court. Since both sides didn't agree on having the case heard before the Bankruptcy Appellate Panel, the case is required to first go to District Court.
In the meantime, Mesa has a hearing in Bankruptcy Court scheduled for Dec. 13 to hear its motion for a new trial because of new evidence it has uncovered and alleged errors in Faris' ruling.
On Oct. 30, Faris ordered Mesa to pay Hawaiian $80 million in damages, plus interest and attorney fees, after finding that Mesa had used confidential information obtained as a potential investor during Hawaiian's bankruptcy to gain a competitive advantage in entering the Hawaii market. Faris also ruled that since-fired Mesa Chief Financial Officer Peter Murnane had deliberately destroyed potentially relevant evidence that Mesa had a duty to preserve.
Faris decided on the $90 million bond by taking into account the $80 million in principal of the damages award, $4.7 million in legal fees and costs that Hawaiian filed for last week, $3.4 million in interest for a year and $1.9 million to cover additional fees if any are awarded or additional interest if the appeal takes longer than a year.
"There was quite a bit of assumption and estimation that had to be done," Faris said. "No one knows how long it will take."
Hawaiian had sought a $98 million bond, to cover the estimated three years required for an appeal to the Bankruptcy Appellate Panel. Faris said last week during a hearing on the bond amount that the amount would be closer to what Hawaiian was seeking rather than the $85 million Mesa was offering.
But yesterday Faris decided to base the bond amount on the approximately one-year period it would take for the case to be heard in District Court, with any subsequent adjustments to the bond amount to be decided after the District Court makes its ruling.