A $12,000 warrant and a web of loans proved who really ran the doomed airline
Hundreds of airline workers found out by email their jobs were gone the next day. They never got their final paychecks.
The Ninth Circuit on September 29 reversed key rulings in the bankruptcy of Hawaii Island Air, broadening who counts as an "employer" under Hawaii's Dislocated Workers Act (DWA) and killing a safe harbor defense that had shielded the airline's former owners.
Island Air flew interisland routes in Hawaii for nearly 21 years. In 2013, an Oracle co-founder's trust acquired the airline through a holding company, Ohana Airline Holdings. It bled money - more than $46 million in losses over three years.
By 2016, the trust had sold a two-thirds stake to entities run by a local businessman. The bleeding did not stop. By mid-2017, the airline was lurching from one payroll crisis to the next.
On November 10, 2017, it shut down. Workers got a single day's warning via email and were never paid their final wages or benefits.
The bankruptcy trustee and two employee unions sued both ownership groups for violating the DWA's 60-day notice requirement and its obligation to pay wages at closing, alongside federal WARN Act claims. A jury awarded nearly $3 million against the majority ownership group for unpaid wages and found them liable for fiduciary breaches.
But the trial court had let the minority side walk, ruling they were not "employers" because Ohana held only a third of the stock.
The Ninth...
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