Zoom Airlines Pre-Bankruptcy Money Transfers Probed by Trustee
By Joe Schneider
Oct. 2 (Bloomberg) -- Zoom Airlines, the closely held Canadian carrier that declared bankruptcy in August, is being probed because of transactions valued at more than C$27 million ($25 million) during the past three years, court records show.
Doyle Salewski Inc., the trustee overseeing the bankruptcy, is ``reviewing these transactions to determine if they were a breach of the fiduciary responsibilities of the directors,'' Paul Salewski, the trustee's vice president, said yesterday in a report to Ontario Superior Court of Justice. ``These reviews are at a preliminary stage.''
Zoom redeemed C$6.1 million of preferred shares from co- founder Hugh Boyle, forgave a C$6 million debt to Go Travel Direct, a Quebec-based travel agency Boyle had set up, and acquired C$14.8 million of preferred shares in Go Travel, according to the report.
Doyle Salewski wrote Go Travel and Boyle demanding repayment of the money, Salewski said in the report.
Boyle said today he was unaware of the report and hadn't received the demand letter from the trustee. He said he would comment after he had read the documents.
Zoom, based in Ottawa and Glasgow, Scotland, ceased operations Aug. 28, blaming high fuel costs and an inability to obtain new financing.
The flight cancellations came without warning and left hundreds of passengers stranded on both sides of the Atlantic Ocean with little time to make alternate plans.
The airline owes about C$200,000 in unpaid wages to its employees, according to the trustee's report. Zoom had 710 employees in Canada and the U.K.
The case is In the matter of the Bankruptcy of Zoom Airlines Inc., CV-08-7752, Ontario Superior Court of Justice (Toronto)..
To contact the reporter on this story: Joe Schneider in Toronto at
[email protected].