Employees of insolvent aircraft maintenance company Aveos Fleet Performance will share $6.2-million in unpaid wages and payroll contributions, a Quebec judge ruled Tuesday.
Justice Mark Schrager of the Quebec Superior Court approved the payment by April 21 of $5.8-million in unpaid wages, along with $450,000 in employer payroll contributions for 2,665 retained and terminated employees.
The sums include $199,500 owed to 81 management and 15 union workers who have been retained to oversee the liquidation process.
Each employee will be entitled to a maximum of $2,000.
The payment constitutes the “full and final payment due and payable” to employees of the Montreal-based company which closed and moved to liquidate its Canadian operations.
The April 5 court order says no further priority claims can be asserted against Aveos under the Companies' Creditors Arrangement Act.
In a separate order, Judge Schrager sanctioned an agreement that allows Air Canada to repossess an Airbus A330 aircraft, engines, records and intellectual property held in an Aveos facility. In exchange, the airline would waive $2-million per month in rent and IT access.
At the time of its court filing for creditor protection, the airline had three planes being repaired in Aveos facilities in Montreal and Vancouver. Aveos also had more than 64,000 parts and 54 engines belonging to various customers.
The company owed about $2.6-million in Canada Pension Plan, employment insurance and withheld income taxes, along with unpaid pension payments.
Aveos was formed after Air Canada spun off its technical services division in 2007. It announced plans to liquidate its assets, citing a decline in business from its largest customer.
But the airline's CEO told a Parliamentary committee the heavy maintenance company failed because it was unable to attract customers beyond Air Canada to diversify its revenue stream.
The Quebec government has threatened to sue Air Canada unless it maintains its heavy maintenance operations in the country, as required by a law enacted when the carrier was privatized in 1988.
The country's largest airline says it is in full compliance with the law because it employs 2,400 maintenance employees in Montreal, Toronto, Winnipeg and Vancouver. The airline adds it has had preliminary discussions with several potential operators of Aveos’s business.
The court-appointed chief restructuring officer said about 23 parties had expressed an interest as of April 2 in the Aveos business or assets.
“Interest has been shown by both strategic and financial investors, parties looking for specific assets, and a number of asset liquidation firms,” Jonathan Solursh wrote in a report.
He also met with the union, which would like to see Aveos restarted as soon as possible, and representatives of the Quebec government, which offered support to potential purchasers.
Mr. Solursh said an ideal outcome would be the block sale of one or more of the airframe, engine and components business units to a large financial or strategic player. Given the revenue concentration with Air Canada, a successful sale would have to be acceptable to the airline, he noted.
“We believe there is substantial value in the business, if its customers and other stakeholders work with it; however, to access this value, order and stability must be restored, and one or more sale transactions implemented on an accelerated time frame,” he wrote.