Eclipse 500 owner Mike Press and deposit-holder Mason Holland on Friday launched a new company called Eclipse Jet to bid on assets of bankrupt Eclipse Aviation, restore Eclipse 500 product support and eventually return the very light jet to production. “Many of the owners are my personal friends, whom I’ve introduced to Eclipse and sold them their aircraft,” said Press.
UT Finance has asked the bankruptcy court overseeing the liquidation of the assets of Eclipse Aviation to allow it to take possession of the 28 Eclipse 500 very light jets that were operated by bankrupt air-taxi operator DayJet. UT Finance–a division of United Technologies and sister company of engine manufacturer Pratt & Whitney Canada–along with Eclipse and Bank of Utah loaned money to DayJet Leasing to buy the 28 jets.
Yesterday a judge verbally approved the motion to convert Eclipse Aviation’s bankruptcy from Chapter 11 to Chapter 7, which means the company’s assets will likely be auctioned to the highest bidder. Phil Friedman, CEO of Wichita-based Harlow Aerostructures, has formed New Eclipse Acquisition to bid on the assets and, if successful, work with suppliers to provide maintenance support and avionics and other upgrades.
Addressing the question of what happens when a manufacturer goes bankrupt, the FAA has issued a Special Airworthiness Information Bulletin (CE-09-14) that examines support issues for the 259 Eclipse 500 very light jets in the field. A hearing today will decide on the petition filed last week to move the bankruptcy from Chapter 11 to Chapter 7 liquidation.
As happens in every significant downturn, corporate squeamishness about owning business jets climbs while used aircraft languish on brokers’ ramps. Already during this recession, the stigma against the perceived appropriateness of traveling by business jet has forced companies to cancel new jet orders, sell jets and even close entire flight departments.
With VLJ manufacturer Eclipse Aviation facing Chapter 7 liquidation proceedings, an organization is needed to provide support to owners of the 259 Eclipse 500 jets in the field.
In a letter sent to employees on Tuesday, Eclipse Aviation general manager Michael McConnell and CFO Mark Borseth wrote that “our company is out of time and money” and that the company’s senior secured creditors filed a motion in bankruptcy court for Chapter 7 liquidation. The plan by Eclipse’s largest shareholder, Etirc Aviation, to buy the company’s assets and eventually restart production of the Eclipse 500 VLJ has failed, they said.
On February 18, Eclipse Aviation’s board of directors elected to furlough most of the remaining 800 employees to conserve cash and allow more time to complete the bankruptcy court-approved sale of Eclipse Aviation to EclipseJet International. The latter is an affiliate of Eclipse Aviation CEO Roel Pieper’s company Etirc Aviation, which is Eclipse’s largest shareholder. The bankruptcy judge approved the Chapter 11 sale
Although the bankruptcy court approved the sale of Eclipse Aviation to EclipseJet International on January 20, the financing to complete the sale has yet to be finalized.
Judge Mary Walrath of the U.S. Bankruptcy Court for the District of Delaware on January 20 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 15-percent equity to preferred shareholders.