B-130317, APR. 22, 1958

B-130317: Apr 22, 1958

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REVEALS THAT THE FINANCIAL POSITION OF THE CARRIER IS NOT VERY ENCOURAGING. THE CARRIER IS PETITIONING THE CIVIL AERONAUTICS BOARD FOR A TEMPORARY EXEMPTION FROM THE PROVISIONS OF ITS CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY PREVENTING IT FROM RECEIVING SUBSIDY MAIL PAY AND FOR AN ORDER AUTHORIZING TEMPORARY SUSPENSION OF SERVICE FROM FEBRUARY 24. THE REQUESTED SUSPENSION OF SERVICE IS DESCRIBED AS "AN ALTERNATIVE TO LIQUIDATION" OF THE CORPORATION. IN A TELEPHONE CONVERSATION ON APRIL 10TH YOU WERE INFORMED THAT ACTION WAS BEING TAKEN TO REMOVE THE STOP ORDER. WERE REQUESTED ON APRIL 10TH. THE PRESENT TOTAL OF THE UNREFUNDED OVERPAYMENTS IS UNDERSTOOD TO BE APPROXIMATELY $78. WE ARE INFORMED THAT THERE ARE PRESENTLY BEING HELD IN OUR TRANSPORTATION DIVISION CHECKS TOTALING MORE THAN $78.

B-130317, APR. 22, 1958

TO ROBERT J. CORBER, ESQUIRE:

IN YOUR LETTER OF APRIL 3, 1958, YOU REQUEST SUSPENSION OF THE "STOP ORDER" PLACED AGAINST GOVERNMENT PAYMENTS TO SLICK AIRWAYS, INC., PENDING OUR CONSIDERATION AND DISPOSITION OF YOUR REQUEST FOR REVIEW OF VARIOUS TRANSPORTATION ACTIONS OF OVERPAYMENT (FORMS 1003) AND CLAIM SETTLEMENTS ISSUED BY OUR TRANSPORTATION DIVISION. TO SUPPORT THE SUSPENSION REQUEST, WITH YOUR LETTER YOU FURNISHED EVIDENCE OF THE CARRIER'S FUTURE ABILITY TO REFUND THE OVERPAYMENTS.

AN EXAMINATION OF THE EVIDENCE FURNISHED BY YOU, NAMELY, THE CARRIER'S FINANCIAL STATEMENTS, THE AFFIDAVIT OF ROBERT A. COLHOUN, ASSISTANT TO THE EXECUTIVE VICE PRESIDENT OF SLICK AIRWAYS, INC., AND THE VARIOUS PLEADINGS FILED BY THE CARRIER WITH THE CIVIL AERONAUTICS BOARD AND THE COURT OF CLAIMS, REVEALS THAT THE FINANCIAL POSITION OF THE CARRIER IS NOT VERY ENCOURAGING. THE CARRIER IS PETITIONING THE CIVIL AERONAUTICS BOARD FOR A TEMPORARY EXEMPTION FROM THE PROVISIONS OF ITS CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY PREVENTING IT FROM RECEIVING SUBSIDY MAIL PAY AND FOR AN ORDER AUTHORIZING TEMPORARY SUSPENSION OF SERVICE FROM FEBRUARY 24, 1958, TO JANUARY 1, 1959, AT ALL POINTS NAMED IN ITS TEMPORARY CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY. THE REQUESTED SUSPENSION OF SERVICE IS DESCRIBED AS "AN ALTERNATIVE TO LIQUIDATION" OF THE CORPORATION. IN HIS AFFIDAVIT, MR. COLHOUN ESTIMATES THAT THE CARRIER ANTICIPATES RECEIVING SUBSTANTIAL MONTHLY REVENUES FROM ITS OPERATIONS FOR THE MILITARY AIR TRANSPORT SERVICE.

IN A TELEPHONE CONVERSATION ON APRIL 10TH YOU WERE INFORMED THAT ACTION WAS BEING TAKEN TO REMOVE THE STOP ORDER. BOTH THE ARMY AT INDIANAPOLIS, INDIANA, AND THE NAVY AT WASHINGTON, D.C., WERE REQUESTED ON APRIL 10TH, BY TELEPHONE, TO REMOVE THE STOP ORDER ON THIS CARRIER. THE PRESENT TOTAL OF THE UNREFUNDED OVERPAYMENTS IS UNDERSTOOD TO BE APPROXIMATELY $78,000. WE ARE INFORMED THAT THERE ARE PRESENTLY BEING HELD IN OUR TRANSPORTATION DIVISION CHECKS TOTALING MORE THAN $78,000 PAYABLE TO SLICK AIRWAYS ON CURRENT BUSINESS. AS YOU WERE TENTATIVELY ADVISED ON APRIL 10TH WE ARE AGREEABLE TO ANY SATISFACTORY ARRANGEMENT WHICH WILL ADEQUATELY PROTECT THE INTEREST OF THE UNITED STATES IN THE RECOVERY OF THE OVERPAYMENTS STATED AGAINST THE CARRIER. BASED ON THE DATA AND INFORMATION SUBMITTED BY YOU WE WOULD BE WILLING TO CONSIDER FOR EFFECTUATION IN THIS INSTANCE AN AGREEMENT BY YOUR CLIENT TO LIQUIDATE THE OVERPAYMENT DEBT BY VOLUNTARY MONTHLY REMITTANCES IN AMOUNTS SUFFICIENT ENOUGH TO PERMIT FULL SETTLEMENT OF THE OUTSTANDING AMOUNT IN A REASONABLE TIME. THUS, IT WOULD SEEM PROPER UNDER THE CIRCUMSTANCES THAT CONSIDERATION BE GIVEN YOUR CLIENT TO A PROPOSAL TO SETTLE THE PRESENT DEBT BY MONTHLY PAYMENTS OF $6,000, WITH AN IMMEDIATE WITHHOLDING OF $10,000 FROM THE AMOUNT NOW AVAILABLE HERE FOR APPLICATION TOWARD THE LIQUIDATION OF THE OVERPAYMENT DEBT. IF SLICK AIRWAYS OR ITS ATTORNEY WILL SIGNIFY TO US IN WRITING THAT, PENDING DISPOSITION OF THE AUDIT AND SETTLEMENT ACTION TAKEN IN THIS MATTER, IT AGREES TO REMIT $6,000 PER MONTH UNTIL OUR OVERPAYMENT REFUND REQUESTS HAVE BEEN SATISFIED, WE WILL AUTHORIZE RELEASE OF ABOUT $68,000 (THE BALANCE OF THE $78,000 NOW BEING WITHHELD HERE AFTER OFFSET OF $10,000 AS THE INITIAL PAYMENT), AS PROMPTLY AS POSSIBLE. UNDER THIS PROPOSAL SUCCEEDING PAYMENTS OF AT LEAST $6,000 WILL BE DUE ON JUNE 1, 1958, AND ON THE FIRST DAY OF THE SUBSEQUENT MONTHS UNTIL THE ACCOUNT HAS BEEN ADJUSTED. ADDITIONALLY, ANY AMOUNTS THAT MIGHT BE FOUND DUE THE CARRIER ON ANY SUPPLEMENTAL CLAIMS (NOT ORIGINAL BILLINGS) WILL BE USED TO FURTHER REDUCE THE DEBT. HOWEVER, THE ARRANGEMENT WILL BE TERMINATED IF UPON THE CONCLUSION OF OUR REVIEW WE DETERMINE THAT THE AUDIT AND SETTLEMENT ACTION GENERALLY SHOULD BE SUSTAINED.

OUR CONCURRENCE IN THE INDICATED ARRANGEMENT WILL CONTINUE SO LONG AS THE CARRIER MAINTAINS THE REQUIRED PAYMENTS WHEN DUE AND SO LONG AS THE GOVERNMENT'S CHANCES OF RECOVERY ARE NOT JEOPARDIZED BY ANY MATERIAL ADVERSE CHANGES IN THE CARRIER'S FINANCIAL POSITION. WE WILL UNDERTAKE A REVIEW OF THE BASES USED IN OUR STATEMENT OF OVERPAYMENTS ON THE DISPUTED TRANSACTIONS, AND ASSUME THAT YOU WILL SOON REPORT YOUR CLIENT'S VIEWS ON THE ACCEPTABILITY OF THE MONTHLY INSTALLMENT REFUND PROPOSAL AS A CONDITION TO THE RELEASE OF ABOUT $68,000.