Friday, April 06, 2012

Seeing Red As Pinnacle Moves To Get Back In The Black

BUFFALO, NY - Outrage continues over Pinnacle Airlines awarding pay raises to top executives, right before it filed for bankruptcy earlier this week.

It's an issue that hits especially close to home because Pinnacle owns Colgan Air, which operated the ill fated Flight 34-07 before it crashed in Clarence Center three years ago.

The six figure salary increases were given to Pinnacle's Chief Executive Officer, and its Chief Operating Officer, just two weeks before the bankruptcy filing.

Among those outraged is Jennifer West, whose husband died in the 3407 crash, leaving her as the sole provider for a young daughter.

In its bankruptcy filing, Pinnacle claimed the raises were due the top executives because they'd taken on additional duties, after the former CEO left (and got a $1.7 million severance package). 

"When they (Pinnacle) killed my husband, I had to take on the work of paying bills, making sure we have food on the table, paying college when (my daughter is) old enough. And nobody gave me a raise!" West said.

The raises also raised the consternation of Congresswoman Kathy Hochul, who fired off a letter of protest to Pinnacle which was also signed by other members of Western New York's Congressional Delegation as well as both of New York State's U.S. Senators.

"I sent the letter to that company saying how unconscionable it was that they would consider giving bonuses and extra a time when they were obviously contemplating bankruptcy," Hochul told WGRZ-TV. 

In an e-mail,  Pinnacle spokesman Joe Williams told WGRZ:

"We don't have an immediate comment, but we will prepare a response to the members of the delegation who signed the letter."

West, who is one of the remaining survivors of a crash victim yet to settle a lawsuit, also worries about the how the bankruptcy might affect her case.

"That could take away my punitive damages...which are at the heart of the case," she said.

John Ninfo III, a recently retired Federal Bankruptcy Judge, confirmed West and others who have yet to settle their cases could have something to worry about. This would be especially true, if Pinnacle fails to emerge from under Chapter 11 of the US Bankruptcy law which allows for protection from creditors while re-organizing.

"Those plaintiffs could actually have a judgment in their lawsuit, and and if in the end the company is liquidated and the only people that get paid are secured creditors in unsecured creditors, they're still not going to get paid because there's no assets left to pay them with," Ninfo said, while noting plaintiffs in pending lawsuits are not considered secured creditors under bankruptcy laws.

Ninfo also predicted all parties involved in the Pinnacle bankruptcy case, including the judge, the court appointed trustee, and the creditors themselves, will be closely scrutinizing the raises, particularly in relation to the timing of when they were granted.

Click on the video player to watch our story from 2 On Your Side Reporter Dave McKinley and Photojournalist Andy DeSantis.

Click here to read Dave McKinley's blogs.


No comments:

Post a Comment