Judge Mary Walrath of the U.S. Bankruptcy Court for the District of Delaware on Tuesday approved the sale of bankrupt VLJ manufacturer Eclipse Aviation’s assets to EclipseJet Aviation International, an affiliate of Etirc Aviation. No other bidders surfaced. The court approved the sale of Eclipse’s assets for $28 million in cash, $160 million in promissory notes and equity.
Eclipse Aviation filed for Chapter 11 protection in U.S. bankruptcy court in Delaware on November 25, leaving creditors holding $702.6 million in claims. The move closely followed two major achievements in the company’s history, EASA certification of the Eclipse 500 very light jet and FAA certification of the Avio NG 1.5 avionics system.
A group of Eclipse 500 owners and position holders for the Eclipse 400 and 500 this week formed an ad hoc customer committee to represent their interests during the Eclipse Aviation Chapter 11 bankruptcy proceedings. David Green, also the president of the Eclipse 500 Owners Club, was selected to be the group’s chairman.
Just one day after filing Chapter 11 bankruptcy last Tuesday, a group of investors, including European distributor Etirc Aviation, received court approval to provide interim financing to keep the very light jet manufacturer open and its 954 employees working. The financing is intended to ensure Eclipse Aviation is a viable entity when its assets go up for public auction next month.
Two industry analysts now predict Eclipse Aviation will run out of cash and cease production of the Eclipse 500 very light jet early next year. Connecticut-based Forecast International on Tuesday said it believed Eclipse would not be able to attract the new investment necessary to allow continued aircraft production beyond the first quarter of next year.
On October 21, Eclipse Aviation formally placed defunct charter operator DayJet’s 28 Eclipse 500s on the used airplane market. According to the manufacturer, the airplanes will be sold in “as is” condition.
Since taking the helm at Eclipse Aviation on July 28, chairman, CEO and investor Roel Pieper has worked to turn the manufacturer from a development company into one that can profitably produce the Eclipse 500 very light jet. “Eclipse has to be a profitable business,” Pieper told NBAA Convention News yesterday.
This year has seen some significant changes in the very light jet (VLJ) category, with two manufacturers going bankrupt and another facing serious financial challenges.
Aviation Technology Group was the first of the modern crop of very light jet manufacturers to fold, having filed for liquidation (Chapter 7 bankruptcy) in May.
A little more than two years have passed since the Eclipse 500 very light jet received FAA certification, and since then manufacturer Eclipse Aviation (Booth No. 250) has climbed the dizzying heights of volume business jet production and faced the challenge of insufficient funding to carry out its mission to build thousands of new VLJs.
Despite the recent announcement that the Russian government would build the company a new factory in Ulyanovsk, embattled VLJ maker Eclipse Aviation (Booth No. 250) is continuing its search for operating capital, perhaps as much as $200 million. Meanwhile, the company has slowed its production rate, launched a major company-wide reorganization, laid off 40 percent of its workforce, and continues to conserve cash.