LIQUIDATION OF TONGA AIRLINE FALLS SHORT

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NUKU’ALOFA, Tonga (Matangi Tonga, Dec. 22) - Creditors of Tonga's defunct Royal Tongan Airlines are claiming over $16.6 million pa'anga (US$8,518,937) but so far only $2.2 million (US$1.1 million) has been recovered from the sale of the company's assets and other funds, according to the liquidator's second report.

Accounting firm PricewaterhouseCoopers of Auckland, New Zealand, were appointed liquidators of the 19-year-old Royal Tongan Airlines, which was placed into liquidation on June 9.

According to a December 17 report to creditors, Pricewaterhouse had recovered about $2.2 million, including:

The liquidators said they were still processing creditors claims, which now amount to over $16.6 million. This included:

The liquidators noted that only 106 of the 206 employees of Royal Tongan had filed claims and they were encouraging the remaining employees to return their claims as soon as possible.

A Shorts SD3-60 aircraft was operated by agreement with a secured creditor and the liquidators reported that there was insufficient equity in the aircraft that would allow for realizations to be made for the benefit of unsecured creditors.

The hangar facility at the airport and associated assets were still in the process of being sold.

Royal Tongan was founded in 1985 and operated as the national airline of the Kingdom of Tonga, with an international passenger service around the Pacific and a domestic service between the major islands of Tonga. The company's international operations ceased on 23 April 2004 after its leased Boeing 757 was repossessed. By June 2004 the domestic operation had also been suspended due to maintenance requirements on its two aircraft and cash flow difficulties.

December 23, 2004

Matangi Tonga: www.matangitonga.to/nav.html

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