Coughing it up…

Now that ATA Holdings (ATAHQ.PK) has announced that founder J. George Mikelsons is stepping down as president and CEO, it will be interesting to see if part of his parachute includes forgiveness of money he owes the bankrupt airline for an uncertain number of “domestic employees” and five members of a yacht crew. According to the filings, Mikelsons was supposed to reimburse ATA for the cost of the employees, but his payment history according to the K filed back in March was “inconsistent”. Regular readers of will remember that I first wrote about this strange deal in April 2004, when ATA’s stock was trading at around $8 a share, instead of the 80 cents it’s now trading at.

At the end of last year, Mikelsons owed ATA $653K and was required to pay $19,403 a month through October 2009. The airlines’ monthly bankruptcy schedule shows that Mikelsons was making $42K a month as president and CEO. Filings since then haven’t documented what kind of progress Mikelsons has made on the debt, but it’s pretty common for companies to forgive loans when top brass steps down.

Place your bets now. Will ATA require Mikelsons to cough up the money or not?

UPDATE On 8/18, ATA filed an 8-K that says Mikelsons will receive $650K in severance and loan forgiveness of $400K, provided that he signs a three-year non-compete agreement.