Judge Allows ‘Unusual’ One Aviation Sale to Proceed

 - September 4, 2020, 9:35 AM
One Aviation, the manufacturer of the Eclipse 500/550, has been permitted by a U.S. Bankruptcy Court judge to proceed with an expedited sale of its assets to a new buyer, SEF OA LLC. This effectively shuts out previous debtor-in-possession and presumed buyer Citiking International US. (Photo: Chad Trautvetter/AIN)

Albuquerque, New Mexico-based One Aviation can proceed with an expedited sale of its assets to a new buyer, U.S. Bankruptcy Court judge Christopher Sontchi ruled yesterday. This effectively shuts out the previous debtor-in-possession and presumed buyer, Citiking International US.

On August 28, One Aviation filed an emergency motion asserting the Chinese-backed Citiking lacked the financial resources to take the company out of Chapter 11. In his ruling, Sontchi determined those claims were valid and berated Citiking over its failure to carry out its bankruptcy emergence plan after receiving court approval in September 2019.

The judge also bluntly refuted claims repeated in a countermotion filed by Citiking earlier this week that the delay in fulfilling its obligations was due in part to the Covid-19 pandemic. “I think this frankly is an example of Covid being used as an excuse where it lacks merit,” Sontchi said in the teleconferenced September 3 hearing. “The reality is that Citiking has insufficient cash to close [this transaction.] There is no path forward with Citiking.”

That allows SEF OA LLC, a recently-created entity backed by real-estate investment firm SE Falcon, to proceed with the purchase of One Aviation’s assets under a Section 363 sale. The decision also injects new funding in the company, staving off threatened closure of its operations next week.

Sontchi cited “very unusual circumstances” in granting the sale request, noting the alternative was to force the one-time manufacturer of the Eclipse 500/550 into Chapter 7 liquidation after laboring nearly two years to emerge from reorganization under Citiking.

The judge issued his ruling over an objection from Linda Casey with the Office of the U.S. Trustee, who claimed the sale appeared “not fully baked.” Barring further developments, a final hearing on the sale is scheduled for September 29.