One Aviation Changes Course in Bankruptcy Case

 - August 31, 2020, 11:04 AM

One Aviation's seemingly Sisyphean trek through Chapter 11 may soon be resolved, though not as originally intended. On Friday, the one-time Eclipse 500/550 manufacturer filed an emergency motion with the U.S. Bankruptcy Court to convert the now 22-month-long case to an asset sale to a new buyer.

Citiking International US has served as debtor-in-possession of One Aviation since the October 2018 bankruptcy filing and the company’s presumed owner upon its emergence from Chapter 11. After numerous delays, that exit appeared imminent earlier this year with approval from the Committee on Foreign Investment in the United States (CFIUS) for Chinese-backed Citiking to purchase One Aviation out of bankruptcy.

However, after missed deadlines and trouble securing a new loan from the company’s largest debtholders, it appears time has run out. “Citiking has not provided any of the required exit financing and has told me and senior management of the debtors that it is now unable to do so,” states an August 28 declaration that One Aviation board member James Patrick Carroll filed in conjunction with the emergency motion.

The Albuquerque, New Mexico-based company now aims to sell its assets under Section 363 of the bankruptcy code. While prior sale attempts failed to garner interest, the motion names SEF OA LLC—a Delaware-based entity formed earlier this month—as the buyer, with the sale to close in mid to late October.

“Now, with a willing buyer and lender in hand, the debtors have the opportunity to get back on track with a value-maximizing transaction and avoid the impending and value-destructive [Chapter 7] liquidation option,” the motion states.

One Aviation also petitioned for immediate access to a $1 million bridge loan, without which it "will likely be unable to continue business operations after September 4,” resulting in layoffs of 64 employees. Rulings on the motions are expected this week.