February 26, 2009
By Alton K. Marsh
Eclipse Aviation closed its doors for good Feb. 24, awaiting a sale of its assets under Chapter 7 of the federal bankruptcy code. Hundreds of employees at the Albuquerque, N.M., plant learned in a final e-mail that they will not get their March 5 paycheck and no accrued vacation pay is available.
Eclipse was in Chapter 11 bankruptcy awaiting a purchase of the company by ETIRC Aviation, but the deal was dependent on financing from a Russian bank. Despite a bailout of the troubled bank, funding to complete the purchase of Eclipse by ETIRC did not materialize.
As of Feb. 24 there were only five or six employees remaining in the facility. They were crafting a press release to be released soon. A former employee said there were four main investment companies in New York that had the power to ask the United States Bankruptcy Court for the District of Delaware for Chapter 7 proceedings, and apparently, their patience ran out. They were the largest secured note holders in the bankruptcy proceeding. The deal was to have been completed Jan. 30.
The e-mail sent to employees states: “We are very sad to report unexpected news today. Despite the efforts of many people at EclipseJet Aviation and ETIRC to obtain necessary funding to close the purchase of the assets of Eclipse Aviation, the closing of the sale transaction has stalled and our company is out of time and money. Given the dire circumstances in today’s global marketplace and the lack of additional debtor-in-possession funding, the senior secured creditors of the Company filed a motion today in U.S. Bankruptcy Court in Delaware to convert the Chapter 11 case to a Chapter 7 liquidation. This action, under the circumstances, is being supported by the directors of Eclipse.”
A Chapter 7 trustee will be appointed in 30 days to sell the assets. The assets could be sold together to one investor, and Eclipse could find new life. Or, they could be sold piecemeal, meaning an end to the Eclipse Aviation venture to become the largest very light jet manufacturer in the world. The company had the support of the Russian government and had hoped to open a plant to serve European customers.
By Alton K. Marsh
Eclipse Aviation’s abrupt Chapter 7 bankruptcy filing has attracted a bidding group formed by charter operator Linear Air of Concord, Mass., that wants to provide service for the fleet of 250 to 260 Eclipse jets now in service.
Linear Air plans to form a co-op of owners that will raise funding to bid on parts and the intellectual property rights for service and support of Eclipse aircraft. Linear Air owns and maintains Eclipse aircraft for its charter operation. The bid will be made to the federal bankruptcy court after a trustee is appointed in March.
The news of the formation of Linear Air’s Eclipse Services and Support LLC comes shortly after employees discussed forming a similar group. A meeting is planned Feb. 28 in Albuquerque, N.M., to discuss the venture, which is not related to the Linear Air plans.
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