The Retirement Systems of the City of Detroit is alleging breach of contract in a federal lawsuit filed in Detroit over repayment of a $30 million loan made to Donald V. Watkins Jr., CEO of Watkins Aviation. The Police & Fire Retirement System and the General Retirement System each lent $15 million to Mr. Watkins in February to purchase cargo airline TradeWinds Airlines. The two pension funds, with total assets of $8 billion, seek full repayment of the loan plus interest from June 13 as well as legal expenses from Mr. Watkins and Watkins Aviation, according to court filings.
Walter Stampor, executive secretary of the Detroit Retirement Systems, said board trustees hope the matter can be resolved before it has to go to court.
Mr. Watkins could not be reached for comment. But in a statement issued today, Mr. Watkins maintained that the pension fund boards had not notified him in a timely manner about the amount of the interest payment TradeWinds was to make. Mr. Watkins said he has offered to buy the funds loan notes and equity position in the airline but has not received a response. We are in a bad business marriage with incompatible business partners. We are working hard to get the pension boards out of TradeWinds, Mr. Watkins said in his statement.