Eclipse files Ch 11

Ken Ibold

Ken Ibold

Final Approach
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Ken Ibold
I like how ETIRC has already arranged the sale of Eclipse to ... ETIRC, with the Ch 11 filing just a way to jettison other debt. Maybe these guys will be profitable soon after all!


ALBUQUERQUE, NM - November 25, 2008 - Eclipse Aviation, manufacturer of the world's first very light jet (VLJ), announced today that it is seeking court approval for debtor-in-possession (DIP) financing and procedures for the sale of substantially all of its assets under Section
363 of the U.S. Bankruptcy Code. The proposed sale will enable the business to continue as an industry leader in the manufacture and sale of VLJs with lower costs and reduced debt liabilities.

Eclipse filed for Chapter 11 protection in U.S. Bankruptcy Court in Delaware this morning, simultaneously announcing an agreement for the sale of its assets for a combination of cash, equity and debt to an affiliate of ETIRC Aviation S.a.r.l., Luxembourg, subject to higher and better offers. ETIRC Aviation, a principal driver of the VLJ industry in Europe, is currently Eclipse's largest shareholder. ETIRC Aviation's Chairman Roel Pieper has been the acting CEO of Eclipse since July 2008 and has served as Eclipse's Chairman since January 2008. The proposed sale is subject to competitive bidding through a public auction, which is expected to be completed and a sale finalized in January 2009.

"In the face of unprecedented economic challenges, it is clear that the sale of the Eclipse business through the Chapter 11 process is the right course of action to maximize the value of the business, secure its future and protect the best interests of Eclipse's stakeholders, including customers, suppliers, employees and creditors," said Roel Pieper, CEO of Eclipse Aviation. "The successful sale will position the business for aggressive global expansion, allowing the company to fulfill its promise and solidify its position as the world's leading manufacturer of VLJs."

Also announced today, a group of existing Eclipse shareholders and note holders will provide Eclipse with post-petition, debtor-in-possession
(DIP) financing. This financing will provide Eclipse with sufficient resources to continue normal business operations through the closing of the sale. Eclipse has filed a motion with the Court to approve the financing with a request for an expedited hearing to avoid business interruption. 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.
 
Can't imagine anyone would want to buy a jet from such a troubled manufacturer unless they get a steep discount.
 
Sad day for Albuquerque. I know a few people there, and they're pretty certain they're doomed.

Come on Eclipse, I'm pulling for you!
 
Wow! A bankruptcy filing without a trip to WDC to ask for more money; what are they thinking. Let's see which of the criteria they don't meet:

1. Huge losses.
2. Incompetent management.
3. No business plan.
4. Fly to DC in a jet.
5. Wear $1,000 suit.
6. Too big to fail.
7. Union contracts.
8. Obligations they could never live up to.

Best,

Dave
 
More bad news for Eclipse:

Yesterday the FAA released Airworthiness Directive 2008-24-07 on the Eclipse 500, limiting maximum altitude to 37,000 feet, 4,000 feet lower than the certified maximum altitude. According to the FAA, above 37,000 feet for more than one hour, the VLJ’s PW610F-A engine can form hard carbon deposits, which “may break loose and obstruct one of the high-pressure turbine vane gas path passages, thus decreasing the surge margin to the point where engine surging occurs.” The AD becomes effective December 4.
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"above 37,000 feet for more than one hour, the VLJ’s PW610F-A engine can form hard carbon deposits, which “may break loose and obstruct one of the high-pressure turbine vane gas path passages" That sounds pretty weird. I wonder what mechanism causes this and why it happens in this PW engine and not others. Inquiring minds want to know.
 
I would not be surprised if a non-Fiki Eclipse, yoke-mounted 496 and all, with a warranty claim accidentally fell out of the sky onto the headquarters!
 
Ghery said:
Take a look at Aero-News Network's article today. If Eclipse owes you money, or you own one of their planes, you are in trouble.

http://www.aero-news.net/
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And don't even THINK about warrantee service. You better have some deep pockets there because it's going to cost you. It's up to the new company to extend the warrantee service. Their job to decide if the Eclipse 400 is even in the future.
Not that I have any worries. It might have been on my wish list but not even close to a downpayment on one.
 
I know a couple folks with deposits up that were waiting for their plane. Haven't had the heart to ask them what they'll do yet.

Best,

Dave
 
Sorry but the way that company was managed from the get go borders on corruption. It was an extreme mis-use of deposits and venture capital. None of the management should ever be involved in a start-up again. Venture capitalists expect a certain amount of risk. The wool was pulled over their eyes. Buyers paid on good faith, obviously much more than management warranted.

With Eclipse's actions, the demise of Dayjet might have happen anyway. I'm sure their business model counted on substantial assistance by warranty work for a given period. Add to that the lack of parts availability.
 
I'd like to see the creditor list, just to see how many doofi actually bought the story about putting up the entire amount to preserve the 1.2MM price.

Dave Siciliano said:
I know a couple folks with deposits up that were waiting for their plane. Haven't had the heart to ask them what they'll do yet.

Best,

Dave
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A fella flying two of them says he's very happy with their planes. Plenty of mechanics and parts available now, even through there may not be a warranty. Hope it works out for him.

Best,

Dave
 
Do most people who make a deposit use an escrow service, or would that have helped in this case?
 
Everskyward said:
Do most people who make a deposit use an escrow service, or would that have helped in this case?
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I'm betting there's no escrow involved considering they went to buyers last year and asked for more funds in exchange for a reduced selling price.
 
What would be interesting is seeing how far along there were parallels with Cirrus' early days.

I think I remember Cirrus taking deposits and not delivering for 3 years, during which time the delivered price kept going up. Some depositors sold their positions and got out.

I definitely remember hearing at Oshkosh that the thing would never ship.
 
mikea said:
What would be interesting is seeing how far along there were parallels with Cirrus' early days.

I think I remember Cirrus taking deposits and not delivering for 3 years, during which time the delivered price kept going up. Some depositors sold their positions and got out.

I definitely remember hearing at Oshkosh that the thing would never ship.
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Three years as opposed to... eight to ten years? Slight difference. Did Cirrus beg for bigger deposits while being strapped for cash?
 
Everskyward said:
Do most people who make a deposit use an escrow service, or would that have helped in this case?
Click to expand...

There was a time I was seriously looking at an Eclipse and their escrow/purchase agreement dissuaded me. Early on, when Bruce put down his deposit, it was more balanced. As they began getting large orders it was their way or the highway if you were a single unit purchaser. Send us your money and we'll take care of you.

Best,

Dave
 
At OSH, a friend asked me to review the deposit paperwork for a slot for an Icon (or whatever that LSA amphib thing is called) and I told him to either use an escrow agent (which the company didn't want to do) or just assume he was throwing 5k out the window. He was still mulling it over when I left. Crazy to even think about giving the snake-oil companies any cash.

Dave Siciliano said:
There was a time I was seriously looking at an Eclipse and their escrow/purchase agreement dissuaded me. Early on, when Bruce put down his deposit, it was more balanced. As they began getting large orders it was their way or the highway if you were a single unit purchaser. Send us your money and we'll take care of you.

Best,

Dave
Click to expand...
 
Lance F said:
"above 37,000 feet for more than one hour, the VLJ’s PW610F-A engine can form hard carbon deposits, which “may break loose and obstruct one of the high-pressure turbine vane gas path passages" That sounds pretty weird. I wonder what mechanism causes this and why it happens in this PW engine and not others. Inquiring minds want to know.
Click to expand...

And how'd it get past their certification tests? Did they not operate it for many hours at high altitudes?
 
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