This is how the Tame EP liquidation process will be

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In this special delivery we review from the legal, What will the liquidation process of the state airline be like? Tame EP after the presidential announcement.

Tame closes a story of more than 57 years and multiple questions have been raised about what the airline's liquidation process will be like., so this special information has been prepared, to understand from a legal perspective what it will be like and how long this process will take.

Through Executive Decree No.. 740 of the 21 April of 2011, The legal nature of the state company TAME Línea Aereas del Ecuador was adapted as a Public Company. This adaptation resulted in the Public Company TAME Línea Aerial del Ecuador “TAME EP”, a legal person under public law, with own assets, endowed with budgetary autonomy, financial, economical, administrative, operational and management, in accordance with the Organic Law of Public Companies.

Post written by: Chester David Salazar del Pozo
Aeronautical Lawyer
Twitter: @chestersdp

The main object of the Public Company TAME Air Line of Ecuador “TAME EP” includes transportation, commercial, air, public, domestic and international passengers, cargo and mail; as well as, in the field of defense and national security; and complementary activities related to the main object.

Process

Through Executive Decree No.. 1061 of the 19 May 2020, the President Lenin Moreno orders the extinction of the Public Company TAME Línea Aerial del Ecuador “TAME EP”¨. in addition, the liquidation of TAME EP is provided under the provisions of the Organic Law of Public Companies, Executive Decree No.. 1061, the provisions of the Board; and, subsidiarily, the company law.

From 19 May 2020 The words “in liquidation” must be added to the name of the Public Company TAME Línea Aerea del Ecuador “TAME EP”, to make known, publicly, liquidation process underway.

In Executive Decree No.. 1061 a maximum period of sixty is established (60) days for the General Manager of TAME EP in coordination with the Coordinating Company of Public Companies (EMCO) carry out the necessary actions for the liquidation.

In a first part, general manager[1] of TAME EP will be in charge of carrying out a pre-liquidation where the reduction of operational structures will be arranged and an agreement plan with favorable conditions must be established with respect to third parties and other creditors..

On Wednesday 20 May 2020, the president of the Coordinating Company of Public Companies (EMCO), Marco Andrés Ávila, indicated in a press conference that the liquidation process of TAME EP will be 60 a 180 days. This period also falls on other public companies to be liquidated..

Once the aforementioned period expires, TAME EP will enter the liquidation process; for which, the TAME EP Board of Directors, within a maximum period of ten (10) days, you must choose, within a list (terns) sent by EMCO, to the liquidator of TAME EP. Once the liquidator is appointed, This will have a maximum term of two hundred and ten (210) days to start the settlement process.

An inventory of the assets and liabilities of TAME EP must be carried out, in order to monetize and quantify them to calculate and cross-reference values. One of the main liabilities of TAME EP will be labor settlements to more than 930 workers[2] de TAME EP.

The president of EMCO indicated that a preliminary calculation has been made regarding the settlements of TAME EP workers, amount that would reach 16 millions of dollars.

Regarding the most important assets of TAME EP, their aircraft are located 2 Embraer 190 and 3 ATR42-500, which will be located, probably, within a panorama hindered by the fact of not finding purchase offers.

Once the Public Company is liquidated, the result or remainder of assets, will pass into the hands of the governing institution of the area of ​​action of the Public Company that created it, in this case the Ministry of Transportation and Public Works (MTOP).

Next, You can view the detailed liquidation process with the corresponding legal regulations:

While the article 54 of the Organic Law of Public Companies, hereinafter “LOEP”, contemplates the possibility of applying the legal concept of both merger and division in application of the rules provided for in the Companies Law, It is important to indicate that President Lenin Moreno's announcement does not contemplate the aforementioned legal figures.. On the contrary, President Moreno announces the legal figure of liquidation, same as that established in the article 55 from LOEP, which indicates:

Art. 55.- ORIGIN.- When a public company has ceased to meet the purposes or objectives for which it was created or its operation is no longer convenient from the point of view of the national economy or public interest and provided that its merger is not possible., The ministry or governing institution of the area of ​​action of the public company or the highest authority of the decentralized autonomous government will propose its Board of Directors to the company's Board of Directors. liquidation or extinction, applying for this purpose the provisions of the previous article. (The underlining belongs to me)

The procedure is established in the article 56 of the same Law, which mentions:

Art. 56.- PROCEDURE.- For the extinction of a public company, the same formalities established for its creation must be observed., owing the executive decree, regional norm or respective ordinance establish the form and terms of its extinction and liquidation.

Through an Executive Decree, the liquidation of the airline must be formally announced with the respective guidelines and corresponding terms..

Until a liquidator is appointed, The officials who have been performing the same duties will continue to be in charge of the administration.; However, Its powers will be limited only to:

1. Represent the Company for the fulfillment of the indicated purposes;
2. Carry out pending operations;
3. Collect the credits; and,
4. Extinguish previously contracted obligations.

In the case of the extinction of the Public Company TAME Línea Aerea del Ecuador “TAME EP”, the Board of Directors will appoint a liquidator. Based on the provisions of Article 58 from LOEP:

Those who do not have civil capacity cannot be liquidators of a Public Company., nor its creditors or debtors, nor its directors when the liquidation of the company has been a consequence of their negligence or fraud.

The liquidator, according to the article 59 of the same legal norm, will have the following powers:

1. Represent the public company, legal, judicially and extrajudicially, for the purposes of liquidation;Sign jointly with the administrator(s) the inventory and the initial liquidation balance of the company, at the time of starting their work;
2. Carry out pending business operations and new ones that are necessary for the liquidation of the company;
3. To receive, keep and guard the books and correspondence of the public company and ensure the integrity of its assets;
4. Request from the Superintendent of Banks the provision that banks and financial entities subject to his control do not carry out any operations or contracts., nor do the former pay checks drawn against the accounts of the company in liquidation if they do not bear the signature of the liquidator, which for this purpose will be registered in said institutions;
5. Demand the administration accounts from the legal representatives and any other person who has managed the company's interests.;
6. Collect and receive the amount of the company's credits, granting the corresponding receipts or settlements;
7. Arrange transactions or enter into agreements with creditors and subject the company to alternative procedures for conflict resolution, when it suits business interests;
8. Pay creditors; and,
9. Yield, at the end of the liquidation, detailed account of its administration to the Company's Board of Directors.

Time

In the same Decree the following times are determined:

• Within a maximum period of up to 60 days you must carry out the necessary actions to have the greatest amount of liquid assets.
• Expiration of the period provided for in the previous article, at maximum 10 days the company must designate the corresponding liquidator.
• Once the liquidator is appointed, This will have a maximum period of 210 days to carry out the settlement process.

In this process, the process for returning the values ​​corresponding to tickets previously purchased by passengers will also be defined..

[1] It will correspond to the General Manager (in charge), once Luis Miguel Reyes Garling resigned from his position on 19 May 2020.

[2] 527 workers are suspended from work, 63 on vacation and 342 with teleworking modality due to the health emergency.

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