27 November 2008
Eclipse Aviation, the manufacturer of the Eclipse 500 VLJ (Very Light Jet) has applied for Chapter 11 bankruptcy. There have been rumours for some time that the company was in trouble, and recently it was <a href=’http://www.flyer.co.uk/news/newsfeed.php?artnum=815′ target=’_blank’>unable to pay its workforce</a> on time – although they did eventually get their money.
The company is seeking ‘Debtor in Possession’ financing and ‘procedures for for the sale of substantially all of its assets under Section 363 of the U.S. Bankruptcy Code.’ At the same time as applying for bankruptcy, the company also announced an agreement with an affiliate of ETIRC ‘for a sale of its assets for a combination of cash, equity and debt.’ ETIRC Aviation’s chairman, Roel Pieper, has been acting CEO of Eclipse since July. The deal is subject to higher offers from elsewhere.
Eclipse has also been provided with post-petition, debtor-in-possession (DIP) financing from a group of existing Eclipse shareholders, which will give sufficient resources to continue normal business operations. ‘Once approved, this financing along with other relief requested from the Court, will position Eclipse to pay wages and salaries, honor employee benefits, service customer aircraft and continue manufacturing operations throughout the sale period,’ the company says.
On the down side, the company has also written to customers explaining that – among other things – warranties are no longer covered and that anybody who has paid a deposit is an ‘unsecured creditor of Eclipse Aviation’.
