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.
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.
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.
The public auction for the assets of bankrupt Eclipse Aviation is scheduled for tomorrow, followed by the bankruptcy court’s selection of the winner on Friday. Some interested parties have visited Eclipse recently, according to an Eclipse spokeswoman.
The market for very light jets (VLJs) is set to dip significantly as recession sweeps across western economies, according to PMI Media’s latest study, The Very Light Jet Market 2008-17: The Impact of the Global Financial Crisis. Some 4,610 VLJs worth $9.54 billion (2008 $) will be delivered during this 10-year period, PMI says.
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.