Former staff at Bahrain Air will be first in line for compensation if the company files for bankruptcy, according to a senior government official.

Hundreds of staff lost their jobs when the airline went into voluntary liquidation last February, but it has now emerged the carrier is considering bankruptcy proceedings, reported the Gulf Daily News (GDN), our sister publication.

Several ex-employees have gone to court over unpaid settlements and it is understood the airline owes at least BD4 million ($10.5 million) to other companies.

"Bahrain Air has already made partial payments to the staff and agreed to make the rest of the payments once some spare parts it owns are sold," Labour Ministry Under-Secretary for Labour Affairs Dr Mohammed Ali Al Ansari told the GDN.

"Now even if they go into bankruptcy, the process will be very similar as all their assets will still have to be liquidated as part of the normal procedure.

"According to the law workers have priority of payment before anyone else.

"In case it doesn't have enough to cover those costs, the court will decide how to distribute the funds.

"From what I know the spare parts it intends to sell will cover the cost of the workers' wages and more."

A total of 345 people lost their jobs when Bahrain Air announced it was ceasing all operations.

One former employee, who is among those taking legal action against the airline, feared the value of parts owned by the carrier might have depreciated over the past year.

"It is great that we (the workers) will get priority of payment, but I don't think that there will be enough to go around," he said on condition of anonymity.

"The spare parts have expired, which in airline terms means they have not had the standard maintenance carried out every three months.

"So the parts are not worthless, but will have definitely dropped in price.

"In the worst case scenario the parts could have depreciated by about 75 per cent, so let's just hope there is enough to cover the workers' settlements."

A lawyer working close to the case said that if Bahrain Air entered bankruptcy, it would not only have an effect on claims already filed but also on the carrier's board members.

"The initiation of bankruptcy proceedings would mean that all other court cases must be stopped and all claims must be submitted to a single court and judge," said the lawyer, who didn't want to be named.

"The news is shocking because bankruptcy would mean that the directors of Bahrain Air shall be stopped from travelling based on the law.

"It also means that all actions dating as far back as two years will be open for investigation."

The lawyer added that if any misconduct or financial discrepancies were discovered, legal action could be taken against those responsible.

At least 22,000 tickets sold to passengers were rendered worthless when the airline cancelled its operations and customers were instructed to contact the liquidator with any claims. - TradeArabia News Service