HBC Anticipates Emergence from Bankruptcy in February
Pending revisions to its current plan for reorganization as indicated to bankruptcy judge Stuart Bernstein November 29, Hawker Beechcraft expects to emerge from Chapter 11 in February 2013, as the Beechcraft Corporation.
HBC describes the revisions, not detailed in the hearing, as mostly technical. Following court approval of the changes, the company will solicit approval of the reorganization plan by its creditors.
In the meantime, anger is building among owners and operators of Hawker 4000s over HBC’s announced intent to expedite the sale of approximately 20 in-production, new or used 4000s. An ad hoc committee of Hawker 4000 owners has already gone to Judge Bernstein and succeeded in halting an expedited sale of the airplanes, “for the best price possible under the circumstances, on an ‘as-is-where-is’ basis, with no warranty or support commitments.” The ad hoc committee asserts that the sale would result in dramatic devaluation of Hawker 4000s in service.
Adam Katz, organizer of the ad hoc committee and founder and CEO of charter provider Talon Air, said he expects some of the HBC inventory of 4000s might sell for as little as $3 million for the used airplanes and less than $10 million for the new. The Hawker 4000 originally sold for between $18 million and $23 million. He describes the sale as “a tremendous destruction of equity.”
Equally disturbing, said Katz, is HBC’s announcement of its intent to discontinue the related warranty and support programs.
HBC has asked the court to allow it to “cancel certain warranties and factory-sponsored programs, including our guaranteed maintenance program SupportPlus and the Hawker 4000 Upgrade and Enhancement program.” The company has, however, said it is in negotiations with several third-party companies that could continue service and maintenance for the Hawker 4000, as well as the Premier IA.
Katz and other members of the ad hoc committee operate a total of 33 Hawker 4000s and they are not encouraged. “Twenty airplanes currently in service [have yet] to be upgraded [to meet current fuel-tank flammability standards],” Katz said, “and one of them is mine—one of eight in our charter fleet. It was scheduled to go into Hawker for the upgrade, and they cancelled the appointment. If that upgrade of the fuel system isn’t done by March 2014, the airplane will be grounded, and several other people on the committee are in the same position.
“Our contract called for the block point upgrade, and now Hawker is backing out of its contract obligation.”
Katz said the committee is now studying its options, adding, “We will absolutely do everything and anything to secure and protect our rights in these matters.”
In the meantime, HBC’s march through the bankruptcy restructuring continues, with an omnibus court hearing set for December 11 regarding “an order authorizing the debtors to reject certain aircraft warranty and support obligations related to Hawker 4000 and Premier I and IA jets.”
Also scheduled for December 11 is court consideration of HBC’s motion for an order authorizing it to sell the remaining inventory of Hawker 4000s.
The deadline for formal objections to both requests is next Tuesday, December 4.