Addendum — Alert Memorandum: Caribbean Sun Airlines Survey Non-Response (SIGPR-A-21-001-1)

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Summary

An addendum dated August 12, 2021 from the Office of the Special Inspector General for Pandemic Recovery, Office of Audits, to its alert memorandum on Caribbean Sun Airlines, Inc., Report Number SIGPR-A-21-001-1. The addendum states that the August 2, 2021 memorandum recommended Treasury require Caribbean Sun to answer SIGPR's Direct Loan Program survey, and that Treasury responded on August 3, 2021 with a Notice of Non-compliance, which SIGPR finds acceptable. Enclosure 1 reproduces the memorandum, which reports that Caribbean Sun obtained a $6,768,749 Direct Loan Program loan on December 7, 2020 and did not respond to the survey issued March 25, 2021. Enclosure 2 is Chief Recovery Officer Jacob Leibenluft's reply and the notice, which requires a cure by September 2, 2021 or an Event of Default under Section 7.01(d).

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SIGPR-A-21-001-1 
 
 
Office of the Special Inspector General for 
Pandemic Recovery 
Office of Audits 
 
August 12, 2021 
 
Addendum to Alert Memorandum: Caribbean Sun Airlines, Inc. Has Not Responded 
to SIGPR’s Direct Loan Program Survey (Report Number: SIGPR-A-21-001-1) 
 
On August 2, 2021, we issued Alert Memorandum: Caribbean Sun Airlines, Inc. Has Not 
Responded to SIGPR’s Direct Loan Program Survey (Enclosure 1). The alert 
memorandum discussed that Caribbean Sun Airlines, Inc. (Caribbean Sun) had not 
responded to a survey issued by SIGPR during our ongoing audit of the Department of 
the Treasury’s (Treasury) Direct Loan Program. 
 
The alert memorandum recommended Treasury take immediate action, under the 
authority provided for in §5.02 or §10.07 of the Loan and Guarantee Agreement and 
require Caribbean Sun to submit to SIGPR its response to the survey within 30 days of 
Treasury’s request to respond. 
 
On August 3, 2021, Treasury provided its immediate response stating that Caribbean Sun 
was issued a Notice of Non-compliance with the Loan and Guarantee Agreement 
(Enclosure 2). Specifically, Treasury stated that Caribbean Sun was not in compliance 
with §10.07, regarding SIGPR’s timely and unrestricted access to records, documents, 
and personnel related to the loan. The notice further warned that failure to cure the non-
compliance would constitute an Event of Default under the terms of the agreement. 
 
We appreciate the timely response from Treasury and find Treasury’s notification to 
Caribbean Sun acceptable. 
 
 

SIGPR-A-21-001-1 
 
 
Office of the Special Inspector General for 
Pandemic Recovery 
Office of Audits 
 
 
 
 
 
 
 
 
 
 
 
 
ENCLOSURE 1 

SIGPR-A-21-001-1 
 
 
Office of the Special Inspector General for 
Pandemic Recovery 
Office of Audits 
 
 
 
 
Alert Memorandum: 
Caribbean Sun Airlines, Inc. Has Not 
Responded to SIGPR’S Direct Loan 
Program Survey 
Report Number: SIGPR-A-21-001-1 
August 2, 2021 
 
 

SIGPR-A-21-001-1 
1 
 
August 2, 2021 
 
 
TO: 
Jacob D. Leibenluft, 
Chief Recovery Officer 
U.S. Department of the Treasury 
 
FROM: 
Theodore R. Stehney 
Assistant Inspector General for Auditing 
Special Inspector General for Pandemic Recovery (SIGPR) 
 
SUBJECT: 
Alert Memorandum: Caribbean Sun Airlines, Inc. has not 
Responded to SIGPR’s Direct Loan Program Survey 
Memorandum Number: SIGPR-A-21-001-1 
 
 
The purpose of this memorandum is to notify you that Caribbean Sun Airlines, Inc. 
(“Caribbean Sun”) has not responded to SIGPR’s Direct Loan Program survey. 
Accordingly, the Department of the Treasury (“Treasury”) should take immediate action 
to address this matter. 
 
Background 
 
Section 4003, Division A, Title IV, Subtitle A of the Coronavirus Aid, Relief, and 
Economic Security Act of 2020 (“CARES Act”) authorizes the Treasury to make loans, 
loan guarantees, and other investments to provide liquidity to eligible businesses related 
to losses incurred as a result of the coronavirus pandemic. Sections 4003(b)(1)-(3), 
commonly referred to as the Direct Loan Program, appropriated $46 billion to help 
stabilize the airline industry and businesses critical to maintaining national security. 
SIGPR is tasked to provide oversight of CARES Act programs. 
 
On December 7, 2020, Caribbean Sun obtained a loan from the Treasury under the 
Direct Loan Program for $6,768,749. Pertinent provisions of Caribbean Sun’s Loan and 
Guarantee Agreement (“Agreement”) state: 
 
Treasury Access. The Borrower Eligible Business and its Affiliates will provide 
Treasury, the Treasury Inspector General, the Special Inspector General for 
Pandemic Recovery, and such other entities as authorized by Treasury timely 
and unrestricted access to all documents, papers, or other records, including 
electronic records, of the Borrower related to the Loans, to enable Treasury, the 
Treasury Inspector General, and the Special Inspector General for Pandemic 
Recovery to make audits, examinations, and otherwise evaluate the Borrower’s 
compliance with the terms of this Agreement. This right also includes timely and 
reasonable access to the Borrower’s and its Affiliates’ personnel for the 
purpose of interview and discussion related to such documents. 
Agreement, §10.07. 

SIGPR-A-21-001-1 
2 
 
Certificates; Other Information. The Parent will deliver to the Administrative 
Agent and each Lender … promptly following any request therefor, (i) such 
other information regarding the operations, business, properties, liabilities 
(actual or contingent), condition (financial or otherwise) or prospects of any 
Credit Party or any Subsidiary, or compliance with the terms of the Loan 
Documents (including Section 6.16), as the Administrative Agent, the Initial 
Lender or any other Lender (acting through the Administrative Agent) may from 
time to time request …. 
Agreement, §5.02. 
 
On March 25, 2021, we issued a survey (Appendix B) to each of the 35 Direct Loan 
Program recipients as part of our ongoing audit of Treasury’s implementation of the loan 
program. The survey requested a response from each recipient within 30 days. 
 
Specific Concern 
 
One Direct Loan Program recipient, Caribbean Sun, did not respond to our survey or 
many of our attempts to contact the company official identified in the Agreement to 
receive notices. 
 
Our audit team made several attempts to contact Caribbean Sun, consistent with the 
terms of the Agreement. We sent emails on April 12th (prior to the survey deadline) and 
April 27th to the Caribbean Sun official identified in the Agreement. On April 27th, we 
called that company official and left a voice mail message to please respond to us. We 
then sent a follow-up email on May 26th inquiring as to the status of the company’s 
survey response. 
 
On June 1st, the Caribbean Sun official responded via email stating that Caribbean Sun 
would “work on getting it completed as soon as possible.” On June 28th, we followed up 
with an email inquiring as to the survey response. However, as of the date of this report, 
there has been no further response from Caribbean Sun. 
 
Conclusion 
 
Caribbean Sun’s lack of response to our survey hinders our ability to fully and 
accurately evaluate Treasury’s administration of the Direct Loan Program, which 
includes monitoring loan recipients’ compliance with the terms of their loans. Under 
§10.07 of the Agreement, we consider our survey an acceptable mechanism to obtain 
Caribbean Sun personnel’s viewpoint on the Direct Loan Program. 

SIGPR-A-21-001-1 
3 
 
 
Recommendation 
 
The Special Inspector General for Pandemic Recovery recommends that Treasury take 
immediate action, under the authority provided for in §5.02 or §10.07 of the Agreement, 
and require Caribbean Sun to submit to SIGPR its response to our survey within 30 
days of Treasury’s request to respond. 
 
Please provide a response to this recommendation along with any proposed corrective 
action. 
 
Compliance Statement 
 
This audit is being conducted in accordance with generally accepted government 
auditing standards (GAGAS) which provides that during an audit, auditors may provide 
interim reports of significant matters to appropriate entity and oversight officials. Such 
communications alert officials to matters needing immediate attention and allows them 
to take corrective action before the final report is completed. 
 
The related ongoing audit, when completed, will comply with GAGAS. The associated 
performance audit report that will be issued in the future will incorporate the issues 
discussed in this alert memorandum. 
 
Audit Team 
 
This audit was managed and conducted by the individuals listed below: 
 
Michael Sinclair 
Audit Manager 
Reynaldo Gonzales 
Auditor-In-Charge 
Renata Malionek 
Auditor 

SIGPR-A-21-001-1 
A-1 
 
 
 
Appendix A – Memorandum Distribution 
 
 
Chief Recovery Officer – U.S. Department of the Treasury 
Office of General Counsel – U.S. Department of the Treasury 
Inspector General – Special Inspector General for Pandemic Recovery 
 
Office of General Counsel – Special Inspector General for Pandemic Recovery 

SIGPR-A-21-001-1 
B-1 
 
 
Appendix B – Direct Loan Program Survey 
 
 
 
 

SIGPR-A-21-001-1 
B-2 
 
 
 
 
 
 
 

SIGPR-A-21-001-1 
B-3 
 
 
 
 
 
 
 

SIGPR-A-21-001-1 
B-4 
 
 
 
 
 
 
 

SIGPR-A-21-001-1 
B-5 
 
 
 
 
 
 
 

SIGPR-A-21-001-1 
B-6 
 
 
 
 
 
 
 

SIGPR-A-21-001-1 
B-7 
 
 
 
 
 
 
 

SIGPR-A-21-001-1 
B-8 
 
 
 
 
 
 
 

 
Office of the Special Inspector General for 
Pandemic Recovery 
Office of Audits 
 
 
 
 
 
 
 
 
 
 
 
ENCLOSURE 2 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SIGPR-A-21-001-1 

 
 
 
DEPARTMENT OF THE TREASURY 
WASHINGTON, D.C.  20220 
 
 
August 3, 2021 
 
Theodore R. Stehney 
Assistant Inspector General for Auditing 
Special Inspector General 
for Pandemic Recovery 
2051 Jamieson Ave., Suite 600 
Alexandria, VA 22314 
 
Re: “Alert Memorandum: Caribbean Sun Airlines, Inc. has not Responded to SIGPR’s 
Direct Loan Program Survey” 
 
 
Dear Mr. Stehney: 
 
I write in response to the above-titled Special Inspector General for Pandemic Recovery (SIGPR) 
Alert Memorandum, dated August 2, 2021 (the Alert Memo), which states that Caribbean Sun 
Airlines, Inc. (Caribbean Sun) has not responded to a SIGPR survey or many of SIGPR’s related 
attempts to contact the company. The Alert Memo recommends that Treasury take immediate 
action under the Loan and Guarantee Agreement (the Loan Agreement) between Treasury and 
Caribbean Sun and require Caribbean Sun to respond to SIGPR’s survey. 
 
Treasury expects all of its borrowers to comply fully with their obligations under their loan 
agreements. Therefore, on August 3, 2021, Treasury implemented SIGPR’s recommendation 
and sent the attached notice to Caribbean Sun. The notice warns Caribbean Sun that its failure to 
respond to SIGPR’s survey constitutes non-compliance with the terms and conditions of the 
Loan Agreement and that it must cure this violation within 30 days. The notice further warns 
that failure to cure this violation would constitute an Event of Default (as defined in the Loan 
Agreement), and that if the violation is not cured Treasury may pursue any and all available 
remedies under the Loan Agreement. 
 
We look forward to continuing our constructive engagement with SIGPR. 
 
 
Sincerely, 
 
 
Jacob Leibenluft 
Chief Recovery Officer 
 
 
Attachment 
• 

NOTICE OF NON-COMPLIANCE - SIGPR DIRECT LOAN PROGRAM SURVEY 
 
 
August 3, 2021 
 
Subject: Notice of Non-compliance with the US Treasury Aviation Loan and Guarantee 
Agreement 
 
Caribbean Sun Airlines, Inc. 
6355 NW 36th Street, 100 
Virginia Gardens, FL 33166 
 
Dear Tomas Romero: 
 
We are writing regarding the loan that the U.S. Department of the Treasury (Treasury) made 
to Caribbean Sun Airlines, Inc. (Caribbean Sun) under Section 4003 of the Coronavirus Aid, 
Relief and Economic Security Act (CARES Act). 
 
Caribbean Sun is not currently compliant with the Loan and Guarantee Agreement, dated as 
of November 5, 2020 (Loan Agreement), among Caribbean Sun, Treasury, and The Bank of 
New York Mellon (BNYM). Pursuant to Section 10.07 of the Loan Agreement regarding 
Treasury Access, Caribbean Sun must provide Treasury, the Treasury Inspector General, and 
the Special Inspector General for Pandemic Recovery (SIGPR) timely and unrestricted 
access to records, documents, and personnel related to the loan. Caribbean Sun has not 
responded to the SIGPR survey, issued on March 25, 2021. 
 
Caribbean Sun must cure this violation by September 2, 2021, which is 30 calendar days 
from the date of this letter, by submitting the survey response to SIGPR. Failure to cure this 
violation by September 2, 2021 will constitute an Event of Default under Section 7.01(d) of 
the Loan Agreement. Treasury may pursue remedies under the Loan Agreement, including 
declaring the Loan immediately due and payable in whole or in part. 
 
Please contact Treasury’s Office of Recovery Programs at CARESActCompliance@treasury.gov 
if you have any questions. 
 
Thank you 
 
 
U.S. Department of the Treasury 
Office of Recovery Programs, CARES Act Compliance

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