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Judge Orders Overseer for Kiwi Air

April 1, 1999

NEWARK, N.J. (AP) _ A bankruptcy judge on Thursday ordered a federal trustee to take the helm of grounded Kiwi International Air Lines to assess if the tiny carrier should be liquidated or allowed to fight to fly again.

Kiwi, awash in debt and without planes to fly or permission to fly passengers, consented, telling U.S. Bankruptcy Judge Rosemary Gambardella its efforts to reverse last month’s emergency revocation of its license to fly have failed.

Gambardella said the trustee must examine if it is worthwhile to keep the company alive until mid-April, when Kiwi can appeal the revocation by the Federal Aviation Administration to the National Transportation Safety Board.

Some 500 workers could lose their jobs if the trustee, who was not immediately named, persuades the judge to pull the plug before the hearing. They represent less than half the 1,200-person workforce which owned a controlling share of Kiwi at its peak in the mid-’90s, when the Newark-based airline had 15 leased jets.

The employees lost their ownership stake when a Baltimore surgeon rescued Kiwi from its first bankruptcy in July 1997, but the airline continued on a downward spiral, shedding workers, routes and planes.

The FAA on March 24 stunned Kiwi by immediately revoking the license to fly, asserting the carrier was unable to fly its six-city schedule safely.

The action came a day after the U.S. Department of Transportation threatened to revoke Kiwi’s certificate in two weeks, charging that the airline did not have adequate managers or financing.

That day, Kiwi filed for bankruptcy protection, offering a rescue plan based on a $3 million sale to Pan Am Airways. But shortly after Kiwi lost its flight certificate, Pan Am quit the deal.

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