The US District Court of Delaware has agreed to stay a class action suit against Western Global Airlines (KD, Fort Myers Southwest Florida) indefinitely to allow pilots, the airline's shareholders, and an investment company to finalise a proposed settlement. The plaintiffs must file another motion for preliminary approval of the class action settlement before September 13 or state why they have not done so by the deadline, according to the court filings seen by ch-aviation.
Judge Richard G Andrews granted an unopposed motion to this effect on August 8 to the plaintiffs, David Burnett and David Nelson, as representatives of the class action on behalf of the Western Global employee stock ownership plan (ESOP) versus Prudent Fiduciary Services LLC, representatives of the Neff family including James K Neff and Carmit P Neff, Kelly S Neff Trust, Danielle J Neff Trust, Miguel Paredes, and the WGA Trust (Case No. 1 :22-cv-00270-RGA).
The suit claimed that the carrier's fiduciaries and owners violated the US Employee Retirement Income Security Act by selling 37.5% of the airline’s stock, or 370,000 shares, from the Neff family to the ESOP at an inflated price of USD510 million on October 22, 2020. This transaction allegedly harmed staff whose retirement funds are held in the plan. The class action resulted from the consolidation of two separate lawsuits filed in 2021 by pilots Burnett and Nelson. In March 2023, a judge rejected an arbitration bid from the defendants. WGA, which is still active, filed for Chapter 11 bankruptcy protection in August 2023, with debts exceeding USD471 million.
In October 2023, the Neff family asked the US Bankruptcy Court in Delaware to dismiss or reduce to zero claims from the class action suit.
Western Global Airlines emerged from Chapter 11 on December 5, 2023, with support from creditors and less than USD100 million in debt. The restructuring, approved by the Delaware court, cut the airline's debt by about USD460 million and injected new capital, including USD11 million from DKB Partners, controlled by founder and CEO James Neff.
