From left are Scott A. Weisman of BVI Airways, Premier Dr The Hon D. Orlando Smith, Jerry D. Willoughby, the airline's President and CEO, Bruce F. Bradley of BVI Airways and Financial Secretary Neil M. Smith at the launch of the partnership between BVI Airways and the VI Government on January 12, 2016. Photo: VINO/File

BVI Airways has accused legislators of telling lies and that VI Airlink’s petition is baseless, anti-competitive and fraudulent. Photo: BVI Airways

In a sworn court affidavit seen by our newsroom, Willoughby has said that Luke A. Smith, the then President and sole share holder of BV Airways Inc, had misrepresented the shares stock prior to his purchase in March 2014.

Acquisition

In an acquisition Agreement signed between the Tortola based BVI Airways and Colchester Aviation, Smith received 10,000 shares in the new company with an option to purchase an additional 6,000 shares.

Smith also became the Chief Executive Officer, with a two year contract of employment.

According to the affidavit filed in the New York Supreme Court, following the acquisition, Colchester Aviation discovered that the liabilities for the company purchased were materially greater than had been represented by Smith in the Agreement.

Broken Promises

The Colchester Aviation President said, this forced the company to have to expend substantial time and effort to validate, resolve, discharge, and restructure the undisclosed liabilities.

The Affidavit notes that in order to compensate Colchester for the losses, Smith executed two promissory notes in addition to a pledge agreement.

The three new agreements came with a number of new conditions including the repayment by Smith, of all reasonable costs that had to be expended by Colchester.

In October 2014, the company terminated his contract however, as a result of “his fraudulent misrepresentation in connection with Colchester acquisition of BVI Airways and a litany of operational misconduct. 

He also defaulted on the promissory and pledge agreements failing to make good on any of the payment.

Redress

As such, redress was sought in the Court.  

Smith in his affidavit says at various times between 2010 and 2013, the company’s finances fluctuated and while some profit was made at times, he was unable to expand the operations.

He said by April 2013 however, the company had substantial debt, the majority of which was owed to the Corporate Flight Management as a result of the charter operations.

According to Smith in June 2013, he was approached by an investment group—Etico Capital LLC—the principals being Willoughby and Scott Weisman.

The two, he said, represented enough financial backing and experience in the industry and expressed an interest in buying a controlling interest in the company and presented an aggressive expansion plan.

He said the men wanted to move quickly through the initial due diligence process and while still dubious of the men’s claims at the time, “I was also in a difficult financial position.”

Our newsroom will provide more on Smith’s detailed claims of financial mismanagement on the part of the two new business partners leading to the current state of affairs with BVI Airways—including a failed attempted government bail-out of $7.2M of the now foreign owned company.