On Monday, the acting U.S. trustee in the ongoing Chapter 11 bankruptcy case of Albuquerque, New Mexico-based One Aviation motioned to dismiss the company's prepackaged reorganization plan, a course of action that could potentially force the manufacturer of the Eclipse 500/550 light jet into Chapter 7 liquidation.
A hearing on that motion is scheduled for July 1, and One Aviation CEO Alan Klapmeier told AIN the company intends to proceed under Chapter 11 reorganization and continues to examine its best options for moving forward. “I’m disappointed with how long the Chapter 11 process has taken. It’s been very frustrating,” he said. “However, we do believe we will still successfully emerge from bankruptcy.”
Formed in 2015 through the merger of Eclipse Aerospace–which purchased the assets of the original Eclipse Aviation out of Chapter 7 liquidation in August 2009–and Kestrel Aircraft, One Aviation filed for Chapter 11 protection in October 2018. At that time, the company aimed for an expedited journey through the process ending with court approval of a prepackaged bankruptcy plan that would leave Citiking International, a U.S.-based entity backed by Chinese investors, as One Aviation’s new owner.
That approval hearing, initially set for late November 2018, has been rescheduled multiple times over the past eight months as Citiking examined its options for emergence from Chapter 11 and following an objection filed by the unsecured creditors committee (UCC) in the case last year. In the interim, Citiking has continued funding One Aviation’s maintenance and support operations as debtor-in-possession (DIP), and in January proposed a tentative settlement agreement with the UCC, subject to court approval.
However, both the trustee and UCC recently filed objections to Citiking’s request for a second motion to extend its timetable for exclusivity in considering options to exit bankruptcy, asking the court to instead hear such proposals directly. The June 10 court filing paints a picture of both parties losing faith in Citiking’s ability to successfully take One Aviation through the Chapter 11 process.
"The debtors are operating at a substantial loss, even before factoring in the restructuring fees and expenses, [and] have millions of unpaid post-petition expenses and an apparent inability to pay such expenses," read that filing. "The cases appear administratively insolvent. Both the DIP facility and unpaid administrative expenses continue to increase each month that the debtors remain in bankruptcy."
According to Citiking’s monthly operating report (MOR) for the period ending March 31, One Aviation declared incoming funds since the bankruptcy filing of $5,304,588 against expenditures of $10,753,678 over the same period, and a remaining cash balance of $97,786 that the trustee termed "perilously low.”
On June 11, One Aviation submitted a MOR for the period ending April 30, showing the company started that month with $147,786 in cash on hand. Total receipts in April came to $999,608 with disbursements of $945,533, resulting in a net cash flow of $54,075 for the month. Combined with a $250,000 infusion of debtor-in-possession capital, the company stated it ended April with $451,861.