US Court Suspends Class Action Against Western Global Airlines

The US District Court of Delaware has indefinitely suspended a class action lawsuit against Western Global Airlines (KD, Fort Myers Southwest Florida) to allow for finalization of a proposed settlement involving pilots, the airline’s shareholders, and an investment company. Plaintiffs are required to file a motion for preliminary approval of the settlement by September 13 or explain any delays, according to court documents reviewed by ch-aviation.

On August 8, Judge Richard G. Andrews granted an unopposed motion to stay the case. The lawsuit, led by plaintiffs David Burnett and David Nelson, represents the Western Global employee stock ownership plan (ESOP) against Prudent Fiduciary Services LLC, members of the Neff family, and other parties. The case is identified as Case No. 1:22-cv-00270-RGA.

The suit alleges that Western Global’s fiduciaries and owners violated the US Employee Retirement Income Security Act by selling 37.5% of the airline’s stock—370,000 shares—to the ESOP at an inflated price of USD510 million on October 22, 2020. The plaintiffs argue this transaction adversely affected employees whose retirement funds are managed under the plan. The class action consolidated two lawsuits filed by pilots Burnett and Nelson in 2021. A bid for arbitration by the defendants was rejected in March 2023.

In August 2023, Western Global filed for Chapter 11 bankruptcy protection, reporting debts exceeding USD471 million. By October 2023, the Neff family requested the US Bankruptcy Court in Delaware to dismiss or substantially reduce the claims from the class action suit. Western Global emerged from Chapter 11 on December 5, 2023, with a restructured debt of less than USD100 million and new capital investments, including USD11 million from DKB Partners, controlled by founder and CEO James Neff.

Sources: AirGuide Business airguide.info, bing.com, ch-aviation.com