LIAT is expected to pay Allen Stanford US$5 million for his controlling share of Caribbean Star. - Contributed

The Industrial Court in St. John, Antigua has reversed its earlier ruling, and has now paved the way for cash-strapped LIAT to resume negotiations regarding the sale of the regional airline, Caribbean Star.

The court on Wednesday, agreed to reverse an earlier decision handed down last Friday to restrain Caribbean Star from conducting any further discussion with LIAT on purchasing the assets or liabilities of the airline owned by Texan billionaire, Sir Allen Stanford.

LIAT is a minority partner in Caribbean Star, with a 35 per cent share.

The reversal came after an intervention by Antigua and Barbuda Attorney-General, Justin Simon, who asked the court to reconsider its decision based on the potential impact on the travelling public.

"It means that Caribbean Star is now free to continue its discussion with LIAT so we're not interfering with respect to the issue with the employees and Caribbean Star," Simon told the Caribbean Media Corporation (CMC).

"What we were concerned about was the continued negations."

LIAT announced last week that it had scrapped plans for a merger or cashless deal with Caribbean Star, agreeing instead to a US$5 million deal with Stanford.

The shareholder governments of LIAT are seeking a US$60 million loan from the Caribbean Development Bank to recapitalise the flagging carrier, and Noel Lynch, the Barbados tourism and international transport minister, has said the acquisition of Caribbean Star would likely be financed from the loan proceeds.

The court was to have reconvened yesterday to address the outstanding issue of the establishment of a bond to serve as security for any damages that may be awarded to the pilots at the end of their case.

"Because of the situation with the divestment of assets by Caribbean Star, it is entirely possible and probable that the company will be in demise after that with absolutely no assets, so that the pilots would not be able to enforce their judgment," said Gerald Watt, who is representing the former pilots of Caribbean Star.

However, Watt and Caribbean Star attorney, Hugh Marshall Jr. are not in agreement on the bond amount.

Marshall has suggested the bond be EC$1 million (US$ 374,531) while Watt has said that EC$3.5 million (US$ 1,310,861) would be more reasonable.