Friday, December 26, 2008

A bit of Holiday Cheer....

Vern spoke at the VLJ Forum in November and dispensed the Raburn brand of wisdom to an attentive audience. In this holiday season, the world is troubled in so many ways. If only we could sit at the feet of the master to receive more revealed truth. Civilization is blessed in that Raburn is the gift that keeps on giving.

Vern is speaking in February at a seminar held by the Journal of Air Law and Commerce. The Journal is the oldest scholarly periodical in the English language devoted primarily to the legal and economic problems affecting aviation and space; it has a worldwide circulation with more than 2,300 subscribers in 54 countries.

We are lucky to have received an advance copy of Vern’s prepared remarks:

“Good morning, ladies and gentlemen, dudes and dudettes. My name is Vern Raburn. Some have called me the Father of the Very Light Jet – I’m not sure about that but I would certainly be named in any paternity suit. Others have identified me as the Grand Panjandrum or Exalted Vizier of the VLJ Revolution. I accept this with my characteristic modesty and note that I received the Collier Trophy and Cabot Award.

The name of the Journal contains the words Air, Law and Commerce and I’d like to address each of these topics. I’ve had a lot of experience with air, especially heating it to temperatures well above ambient. I have considerable involvement with the law… in fact my legacy is keeping a whole herd of lawyers busy in Delaware and elsewhere.

It is commerce that I would like to address in detail. Some have questioned our success during my tenure at Eclipse Aviation. We did spend quite a bit of money. In fact our spending would exceed the gross domestic product of some small countries. But these funds were invested wisely. The list of technical advances incorporated in the Eclipse 500 is awesome: cutting-edge avionics, brakes, tires, windows, pitot tubes, trim tabs, throttle quadrants, digital engine controls, bleed air systems, environmental controls and novel metal welding techniques.

However in spite of brilliant design and execution, our company was laid low by the global economic crisis. It is clear now that Eclipse Aviation was the miner’s canary in the worldwide financial meltdown. We were the recession’s earliest victim and the skies would be darkened with VLJs had we not encountered these impossible conditions. I expect that MBAs for generations to come will study our business case.

I am heartened by the financial bailout package just announced for two of the big three automobile makers. I have an appointment with President Obama about Eclipse Aviation – the company may not be too big to fail, but it is too important to let slide. I have soap in my hole; er no, no. I have hope in my soul that Barrack Obama will listen to my appeal. After all the Eclipse 500 is the greenest jet out there and the only one able to sequester carbon as it flies.

Thank you, and now I will take a few questions."

As usual, I'll remind our readers Black Tulip is our resident satirist, and that the tulip mania peaked in the Netherlands during the 1630s. The black tulip was the most sought after, until found to be biologically impossible. 

Saturday, December 20, 2008

A call to arms

I got this two days ago, from within the group formed to represent the '10%' depositors, who had requested refunds. Since it's hard to get any good news out of EAC these days, I thought the following deserved greater visibility, and requested permission to make a headline out of it. For those of you to whom it is addressed, I can only recommend you follow the advice given, as there seems little alternative at this stage. However, you are all adults, so must make your own decisions. I provide this platform willingly, in a sincere effort to help, not hinder, the E5C efforts to coordinate the response by owners and others affected by the EAC Chapter 11.


Fellow Eclipse Deposit Refund Seekers 

During a conference call which occurred last Friday, December 12, 2008, legal options were discussed as how to proceed with the Eclipse Aviation Bankruptcy. A firm with experience advanced a "Constructive Trust" theory. For the group's benefit we sought out opinions with three additional law firms. The three law firms were presented with the facts, contracts, refund information and associated emails. The three law firms firmly believed that the Constructive Trust theory had no legal basis and no chance of success. The phrase bandied around was "throwing good money after bad money."

The other legal option would be to become an unsecured creditor. With the amount of liabilities versus expected assets the likelihood is the unsecured creditors would not see a single cent from the sale of the assets.

This leads to the question to what is the best option available for those seeking refunds. After much consultation it appears that the least financially damaging option would be to seek reinstatement to a depositor status (withdrawing the refund request). This would allow the depositor seeking refund to join the ranks of the depositors not seeking refunds, 60% depositors and aircraft owners, which would be most likely considered executory contract holders. The Newco would then have the option of denying the executor contracts, accepting them as is or accepting them with new terms.

Being treated as a depositor would allow you to have more options to realize value if ETIRC or another asset purchaser is successful. The recent EASA certification may also create value for position holders.

The E5C board has been working diligently to pre-negotiate the status of those contracts which are likely to be considered executory contracts. E5C has created an Ad-Hoc committee which has representation of those individuals seeking refunds.

If you have not joined the E5C you should do so immediately: The individuals that have 60% deposits and aircrafts have much more to lose financially than those with 10% deposits. The 60% depositors and aircraft owners have been asked to contribute $4500 to the group for legal/financial representation. This new group is called the Ad Hoc Customers Committee. Those of us that have 10% deposits (both seeking refunds and not seeking refunds) have been asked to contribute $2250 towards the fund. Since this would appear to be the best legal option you are urged to join the club and contribute towards the legal fund. The Ad Hoc Customers Committee is committed to protecting all our interests.


Alex Amor

Wednesday, December 10, 2008

Light at the end of the tunnel?

I got this from a 'reliable source' during today (Thursday 11th) and pass it on. As always, it's nice to have a first hand account of these events, in a timely manner.

Thursday 11th 18.15 GMT

Formation of the Unsecured Creditors Committee
A very interesting day, with a few unexpected surprises.

Per procedure, on Monday December 8th the US Trustee sponsored the formation of the "Official Committee of Unsecured Creditors". There were about 50 people in the conference room when I slipped among those standing in the back. The group was probably 25% creditors or proxies, 50% attorneys and accountants looking to get hired by the committee, and 25% interested gawkers.

The Debtors Team (saying Debtor is so much more apt that saying Eclipse) and the Trial Attorney and Analyst from the US Trustee's office took their place at head table. The Trial Attorney provided a brief introduction on process, and then the Debtors were asked to provide a statement.

To set the scene, Mark Borseth (Debtor CEO) and Bruce Castle (Debtor "In"-House Counsel) were flanked by their hired guns from Allen & Overy ("Out"-House counsel from NYC) and Young Conaway (local counsel). Borseth looked like it was an imposition that he had to be there, and slouched in his seat like my 6th grader. Castle had that deer in the headlights look as he surveyed the standing room crowd. Such a struggle to fly first class from Albuquerque and stay at the Four Seasons with your $700 per hour lawyers.

The Debtors' attorneys feigned having a stack of briefs but in reality had nothing prepared. They spoke maybe 75-100 words TOTAL, lasting maybe 30-45 seconds. The only question pertained the Debtors' requested deadline for objections to their proposed Sale Procedures. Trying to appear magnanimous, the Debtors' Council agreed to another day or day and a half. But in reality he came off as even more arrogant.

At that point, the Debtors Team was asked to leave the room, and the Trial Attorney set out to form the committee. Present were a few big creditors (Hampson, Precision Aerostructures, Pratt & Whitney) and maybe one or two smaller ones. Represented by lawyers/proxy were a few more big creditors (DayJet, LeBarge, etc.) and possibly a few owners.

Notably absent were any actual owners or depositors of any denomination. More notably absent was any significant response to the questionnaire sent to the 20 largest creditors, but available to all. The guys who have made noise for years, and are clammoring to get what is owed them couldn't be bothered to make a day trip to Wilmington.

The Trial Attorney spent a little over 2 hours interviewing the creditors that showed up in person, and calling those that responded to the questionnaire. The Trial Attorney and Debtors Team returned around 2:00 pm, Borseth resumed his slump, and the committee members were announced.

The rest of us were kicked out of the room while the committee had a chance to ask questions of the Debtors. Must have been really grueling, as the Debtors were coming out the door after maybe 3 minutes.

At that point, the committee set about interviewing the law firms and accountancy firms that came in search of work. Kind of like ambulance chasers for the bankruptcy crowd. We all waited in the hallway while each of seven or eight firms made their pitch. In the end, and at around 4:30 pm, the committee chose Morrison-Foerester (attorneys) and Chanin Capital (accountants).

The discussion in the hallway was quite spirited and informative. Remember that except for us few lurkers, they were all lawyers, CPAs, etc.

>> Why didn't any owners or depositors show up? Possibly they felt that Tuesday's hearing on forming separate committees for owners, depositors, etc. would be successful. In the end, the Trustee selected three owners and/or depositors, but none of them were present, much less active in the fight for standing and ultimate recovery. The opinion was that the vocal owners and depositors could have had BOTH three seats on the basic committee AND the opportunity for successful motions the next day.

>> Did everyone see that the Debtors' filings completely ignored the Unsecured Creditors Committee? How could they do that? The UCC is standard, especially in this type of case. Arrogance pure and simple! The Debtors spent pages detailing how warrantee claimants, depositors, JetComplete subscribers, and even recent employees were now considered unsecured creditors, but didn't even mention that group in the filings.

>> What is with the Debtors' proposed timeline? They want to close the sale in 26 business days from the filing, a period that includes three federal holidays and two extended religious holidays. They also claim to be aggressively marketing the company. Yeah right. Every lawyer in the hallway had a stack of objections in hand. All vowed to make that farce get a serious shake up.

>> Who really believes that Pieper and Mann are disassociated, arms length, buyers? While most didn't have the depth of knowledge yet, they all knew about Roel and his son at ETIRC, Roel and his partner on the Eclipse BoD, the play of Al Mann over the years, the Russians, the supposed Spaniards, the basketball team, etc. The discussions of his forcing the company into bankruptcy just to get the assets at the firs sale were rampant. They all knew of the recent EASA certification, and its greater value in Europe than in the US.

>> Who devised the financing schemes used over the years? Looks like Al Mann put money in, and then took lots of money out over the years. Looks like Roel Pieper had convertible debt, which converted again, and again. Maybe the secured creditors are not so secure. If there were note conversions for some, should it have applied to all? Plus, the supposed $28M offered by EclipseJet was felt to be funny money. Debtors expect to get the $20M in DIP returned, along with $1M in expenses, a $4M break-up fee, and $3M+ in other shenanigans. Offer $28M in cash and list $28M in refunds in the same filing, now that is arrogant and stupid.

>> Who was the "other bidder" that everyone has heard exists? It supposedly is lead by a former Eclipse executive.

In the end, the opinion among the lawyers and accountants waiting in the hallway was that for anyone to get anything, the company must be sold and reorganized, and not allowed to drift into liquidation. There is money in the mix, likely money to recover from the coffers of Al Mann and other Board members, the Russian money, the ETIRC resources, etc.

The only thing needed to unravel the whole mess is time. The Debtors know that and are trying to ram the process through and get out of town (aka the USA) before the law comes a calling. The creditors know that and are trying to slow down the train so that sunshine may prevail.

Best legal opinion we overheard was to petition the Court for a Post Hoc valuation and settlement. Allow the sale to go through, escrow the cash purchase amount (so it isn't useable to immediately pay RP's moving trucks), value the company after the "substantial outside investment" closes, and pay off all of the creditors and owners.

It just might work.

That was from yet another 'friend of the blog', which I'm sure you all will join me in expressing our thanks.

The (now second) item reached me during the 'night' of Wednesday 10th December. I'm not in a position to recommend any course of action, especially to those of you who've hired a lawyer, but this chap seems to offer hope. He's also had contact from several of you, especially readers of the blog, who may have struggled to find a US based firm to take on your case. 

And he says nice things about me!

A small note for those of you tempted to rely on email. In this spam filled era, it might be an idea to send a fax or make a phone call, as this process is very time critical and you don't want to get lost in the crowd.

So, if you are a '10% depositor who requested a refund', give Tim a whirl. After all, you've nothing to lose at this stage....

Now, if there are other groups out there who are representing suppliers, staff or anyone else with an interest in EAC, feel free to contact the blog.

I'll be happy to help, if I can.  Just remember I live in Ireland (in the GMT zone), and I travel a fair bit....

07.45 GMT Thursday 11th December 2008

Eclipse 10 Percent Deposit Holders Have the Opportunity to Recoup Funds

We would like to thank Shane Price for posting our prior message and giving the motion to appoint a refund creditor's committee the best chance of success possible. The size of this blog's readership was plainly apparent from the many email responses to that message, a number of which spanned the globe. We hope Shane will post this further message.

As most of you know, the Judge was unwilling to appoint a committee of refund deposit holders at the expense of the bankruptcy estate. However, the Judge appeared receptive to our argument that Eclipse held the refunded deposits in trust for the 10% deposit holders. Simply put, our legal theory is that once the deposit holder timely elected a refund of his or her money in response to the June 2008 letter from Eclipse, that money no longer belonged to Eclipse and Eclipse could not spend it. We argue that those funds should not have been spent on operating expenses and should have been segregated and returned. We believe the theory to be a sound one and therefore, we have decided to proceed and see if there is suitable interest on the part of the 10% deposit holders to collectively pool their resources to file a complaint against Eclipse based upon our constructive trust theory and various other claims. At this juncture, we have indications of interest from about 40 refund deposit holders. Further support would be extremely helpful. If you are an individual that made a timely election for a refund of your deposit in response to the June 6, 2008 letter from Vern Raburn, which provided you with that option, yet you did not receive those funds, we would like to present an avenue for you to recoup those funds. Please email me at for further information as soon as possible.

Once again, we thank Shane Price for allowing us a voice on his widely read forum.


Timothy McCulloch/ Senior Counsel
Gordon & Rees LLP
111 W. Monroe Street, Suite 1111
Phoenix, AZ 85003
info: my vCard
Main Phone: (602) 794-2460
Direct Phone: (602) 794-2467
Mobile: (602) 568-5291
Fax: (602) 265-4716

Thursday, December 4, 2008

Time to reflect

UPDATED SUNDAY 7th December 00.23 GMT

Eclipse Refunds: For The Ten-Percent Deposit Holders

To anyone who placed a 10 percent deposit on an Eclipse 500, and timely elected to receive a refund in response to Eclipse Aviation Corp.’s June 6, 2008 letter, yet never received a refund before the company declared bankruptcy on Nov. 25, 2008: On Tuesday, Dec. 9, 2008, the court overseeing Eclipse’s bankruptcy will consider motions to appoint an “Official Committee of Refund Deposit Holders.” Deposit holders Bill Hewitt, Bradley Investments Inc. and Don Buttrum, all of whom timely elected but never received refunds, with assistance from the law firm Gordon & Rees LLP, will seek the appointment of a committee to represent those individuals/entities that placed a 10 percent deposit.

It’s the ad hoc committee's opinion: individuals or entities that placed a 10 percent deposit on an Eclipse 500 have different legal rights and remedies, separately from the other creditors and deposit holders. An independent committee made up of representatives from those who placed a 10 percent deposit should be created to ensure that those interests are protected. If you're an individual or an entity that placed a 10 percent deposit but didn’t receive the requested refund, e-mail Timothy McCulloch for additional information.

December 2008
will be a pivotal month in the history of Eclipse Aviation. The recent past has seen a radical decline in deliveries, with only two FPJ's finding victims, sorry, customers in November. Clearly the Chapter 11 declaration at the end of last month was a long predicted outcome and is clearly designed by the BoD to shed the onerous parts of the business at the lowest possible cost. Another Airworthiness Directive comes into effect on the fourth of this month and a string of suppliers are in serious trouble having relied on now worthless promises of payment. The good people of New Mexico are down $19 million, and the rest of the original investors have been fleeced for in excess of (self confessed) one BILLION dollars. Owners are on record as having paid almost $300 million for product that can only be worth a third of that. Depositors are in the hole for sums between $150,000 and $1,000,000 each and former employees have been cut off with no recourse. The list goes on, but life is too short....

So let's tally the 'good vibes'
It's possible that Roel Peipers' plan might work, leading to a  restart of production in ABQ in the early part of 2009. But only IF his plans get past the bankruptcy judge AND the key suppliers stay on board. He also needs to prove there are enough orders at what will clearly need to be an even higher list price and finally, he has to avoid someone else putting in a spoiler bid. It's possible that one of the existing vendors might do a 'Beech Starship' and simply close the whole show down in an effort to avoid future liabilities. And don't forget, Wedge is lurking. If he won the bidding auction in January this would surely destroy whatever remains of the 'goodwill' stakeholders still have in the project.

There are still a group of depositors who are 'pot committed' and will hang in for anything that they can get. Remember, some of these guys have been waiting for up to 8 years, so what's another couple of months? Likewise the owners who've already got one (or more) and know that the possibility of selling on is negligible until the situation is clearer. These two groups have slightly different agenda's but are likely to continue passive support, as long as it's not costing them more money.

Speaking of money, those of you owners who've not paid your CPI or Jet Complete yet are in for a rude shock. While Chapter 11's principle purpose is to protect a company from it's creditors, those who owe it money are in for the cattle prod treatment until they stump up what's been invoiced. Better hire good lawyers, boys and girls. OK, so this is not 'good news' for those owners affected, but it's positive for the company.

First, an appeal
It appears that there is a willingness to support the depositor/owner group from within the blog. While I laud this sentiment, I would remind ALL of you that one man stood up for this blog when we were threatened by EAC in April of this year. I should also remind you that an EAC employee who's only failing was to speak the truth was also picked on by Wedge at the same time. I speak of course of Brian Skupa. If anyone wishes to make a contribution to any of the above causes, please route it though Gunner
Rich Lucibella
SWAT Magazine
5011 N. Ocean Blvd
Suite 5
Ocean Ridge, FL 33435
Tel: 800.665.7928 Ext 704
Tel/Fax: 561.337.1551

This gentleman has demonstrated with his own hard earned cash, an excellent lawyer (thanks again, Norman) and the belief in doing the right thing, that he can be trusted to distribute any monies in an appropriate manner.

Update for creditors
Second is the unsecured creditors meeting but you better get a move on. It's on Monday next, December 8, 2008 @ 11:00 a.m. in Room 5209 of the J. Caleb Boggs Federal Building on 844 King Street, Wilmington, Delaware 19801. Remember, if you're not in, you can't win, so get yourself represented if you can't make it in person. I'm quite sure that comments posted will keep us up to date with 'progress'.

The latest AD
We know the AD for the 'carbon build up' issue (effective 4th December 2008) limits the FPJ to FL370, even with both engines running. What people should really be aware of is the limits imposed by the AFM for 'One Engine Inoperative - Service Ceiling'. Since the problem which the AD is addressing is exactly that situation, I thought it valid to share with you the relevant data from the FPJ's AFM. At ISA -20C, with 5, 760lbs on board, the service ceiling is 23,250' on one engine. Better be carful in warmer spots, as at ISA +20C you're only good to 7,750'. At those sort of FL's you're in traffic and lots of weather. Where's the fun in that?

Ex employees of the company
There are a number of ex employees who've been left as unsecured creditors, a few of whom have contacted the blog email seeking like minded people. If you are in this position and want to make contact with others, one of those affected has set up the following email address, as a 'rally point'. Please use it to get together, as we know from our experiences here that acting in unison works better than individual responses. Ask the Wedge, who must still be regretting suing the blog.

An eBay auction
FPJ owners are trying anything to raise a few dollars on the back of their purchase. How about bidding for a ride in a FPJ.? Be careful about this, you might win...

The 'mythical' s/n 266
On the 26th of July 2008, an 'Experimental CoA' was issued to EAC for this aircraft. This was well out of sequence. For example, the 'last' FPJ (delivered on the 21st of November) was s/n 259 and that only appeared on the FAA database for the first time on the 18th of August. The importance attached to '266' is twofold. First, it's been used by EAC to show off the 'final' configuration to customers and suppliers in a effort to drum up support. Second, as the self declared first 'completed' aircraft it was going to be the benchmark for all upgrades as well as the reference configuration for all future production. What will happen to this orphan now? Will it be dumbed down to lower people's expectations, or simply vanish in the fog of war created by Chapter 11? I suspect we will be 'surprised' by it's departure to 'Russia' in the near future...

A personal observation
Clearly, I could go on. And on, and on. But I won't. Last week we saw reaction from suppliers, customers, staff and the owner/depositor to the main event, and the subsequent debate on the blog. As predicted, once cash ran out, the merry go round came to a screeching halt. Smaller suppliers are in a bad way, staff are in a no win position, depositors have been formally notified of their losses and owners have a aircraft worth a lot less than they thought, with an uncertain future looming for all. Events this month will determine if the proposed bail out stands up to scrutiny. I hope that everyone 'escapes' from this mess with the best outcome possible.

And finally (for this post)
On Tuesday 11th April 2006, Stan Blankenship started this off with a comprehensive post detailing the obvious flaws in the 'story' being sold by EAC. You can review it here, but for me, one key line stands out:-

"The obvious conclusion is that this program can only pay off with delivery rates unprecedented in the industry."

How true that statement turned out to be. Indeed it will still apply to EAC V 2.0, if that gets going next year. One thing is pretty certain though. Whatever happens, this blog will continue to keep a close eye on things, and will probably be accurate in predicting the final outcome.


Tuesday, November 25, 2008

The 11th Chapter

It's a fine bright day here in Ireland, and I thought it appropriate to post this little greeting on the blog. I know things have been somewhat gloomy recently, so enjoy this uniquely American holiday with your friends and family.
Best wishes to one and all.

UPDATED Wednesday 26th
Just so everyone is clear that customers, suppliers, depositors and yes, staff, are indeed 'skewered' by Chapter 11, herewith the email circulated by Mike McConnell yesterday:-

"Today, Eclipse Aviation started a new era in its relatively (feels like forever, ed) short existence. Eclipse filed for protection in a Delaware court under Chapter 11 of the U. S. Bankruptcy Code. The company is using Section 363 of the U.S. code to sell its assets and a lead bidder, an affiliate of ETIRC Aviation, has filed an offer to purchase the business out of reorganization. As part of this filing, there is sufficient debtor-in-possession (DIP) financing to allow the company to operate until the sale is finalized in January 2009. The process allows for the current company operating under protection to continue the manufacture and support of the Eclipse 500.
While this is an extraordinarily difficult thing to face, (NOT if you've planned it for a long time, ed) it was the best possible choice before the Board of Directors, the senior lenders and the executive management team.
The implications of this action are many and certainly complicated for everyone involved. While we have modeled many different scenarios, at this time, until the sale is finalized, the old company cannot disclose the final plans for things like production, suppliers and deliveries in 2008 and 2009.
This letter will attempt to outline the immediate scenarios for each constituency amongst the customer groups.

Customers who have taken delivery of their aircraft:
During the sale process, the new company intends to operate as a going concern to support the Continued Airworthiness of the fleet. However, there is a different path of interaction between customers and the company operating in reorganization.
Warranty - Warranties are no longer covered by the new company, post petition. Any and all maintenance work performed on aircraft will be on a time and materials basis during debtor-in-possession operations. The new company must decide if it will honor any part of past warranties. Any outstanding warranty claims submitted pre-petition will not be honored by Eclipse or the new company.
If your aircraft is currently in an Eclipse service center for maintenance, the new company will continue to work on it and return it to service, on a time and materials payment basis.
JetComplete® - JetComplete contract obligations are no longer being honored in this phase. It is too early to tell if a new aftermarket product will be offered by the new company. This means that Jeppessen and XM services (for the Garmin 496) will no longer be offered and paid by Eclipse on your behalf once your current subscriptions expire. Iridium services will be maintained by the new company for DSU purposes. Customers will be able to go directly to Jeppesen for service coverage so they are not grounded by out of date databases.
Pratt & Whitney Canada - Those with engine coverage as part of JetComplete will no longer have coverage through JetComplete or PWC under JetComplete. Please contact PWC for coverage in the Eagle Service Plan (ESP).
Spare parts - Debtor-in-possession financing will allow for spare parts to be supplied for continued airworthiness, providing the supplier is willing to continue providing parts to Eclipse while in reorganization. In the event a supplier is not willing to supply parts, the new company will be forced to find an alternate source.
Eclipse service centers - All Eclipse service centers will continue to operate while in debtor-in-possession for service, maintenance events and continued airworthiness.
Authorized service centers - At this time, Eclipse Aviation does not have any authorized service centers although a new service model could be implemented by the new company.
Post Delivery Commitments including modifications - Modification plans at the expense of Eclipse will not be honored in this phase of operations. Eclipse intends to sell services and/or the parts kits to all customers who request to have the final configuration installed on their aircraft. The new company will determine how to provide these mod services to the customer base after the sale.
The third party service centers that were intended to perform these mods will be given every chance to fulfill that opportunity for the new company and the Eclipse 500 customers.
Flight Training and maintenance training - Flight training will continue as planned including recurrency training but while in the debtor-in-possession phase, it is no longer part of the purchase price of the aircraft. The new company must determine what type of structure and inclusion in the delivered price can be maintained. Because JetComplete contracts are no longer valid, those requiring and scheduling recurrent training will pay the retail price of that service. Maintenance training classes will continue as required or requested.
TRANSLATION = You're shafted

Customers who have paid any deposit including the 60% deposit:
Those customers who have paid a deposit for an Eclipse 500 are unsecured creditors of Eclipse Aviation. If there is a way to offer consideration to those affected depositors, it will be reviewed for consideration but it is not known at this time if it will be assumed by the new company.
TRANSLATION = You're in bottom corner

Customer who have asked for a refund:
Customers who have asked for a refund are now an unsecured creditor of Eclipse Aviation.
TRANSLATION = You're toast

Eclipse 400 customers:
Customers who have asked for a refund are now an unsecured creditor of Eclipse Aviation.
Those customers that have not asked for a 400 refund are an unsecured creditor of Eclipse Aviation and must wait until the new company decides whether to honor those deposits. The new company will determine if the Single Engine Jet Concept is a viable aircraft for today’s market.
TRANLATION = You're were mugged, get over it

We truly understand that these are tremendously difficult times for you and for our employees. However, please be aware that there is not anything we are holding back from this communication so additional facts or answers will not be available from the teams staffing the phones.
The new company will continue the customer call events to update all customers on status and progress. The next one will be scheduled by the Customer care team.
Michael McConnell
Eclipse Aviation Corporation
President & General Manager
Customer Division

Filing details, thanks to Dave:-

Eclipse Aviation Corporation
Pronto Aircraft Corporation
2503 Clark Carr Loop, SE
Albuquerque, NM
a Corporation (including LLC and LLP)
Petition for Chapter 11

Estimated number of creditors, between 5,001 and 10,000
Estimated Assets, between $100,000,001 and $500 million
Estimated Liabilities (consolidated, book value), more than $1 billion

The petition is signed by Roel Peiper as CEO and dated today, 25th November 2008

Other details from the form include:-
1. There is a bankruptcy case concerning debtor's affiliate, general partner, or partnership pending in the District (Delaware)
2. The lawyers are Young Conaway Stargett & Taylor LLP of Wilmington DE.
3. The largest creditor, listed at $92.3 million, is Kings Road Investments Ltd. of Madision Ave. New York.
4. The total amount owed to bond holders (including Kings Road) is listed at $494.9 million.
5. The total amount owed to larger trade creditors ($2 million plus) is listed at $164.8 million.
6. The total amount owed to customers ($2 million plus) is listed at $29.7 million.

That's the 'topline' information, which I post to advise the widest possible audience.

Peg has left, and ETRIC have made the first bid to purchase the assets. The sale will need to complete in January of 2009, subject to other, higher bids. I'm sure we'll find out what ETRIC have offered, and where the funds are coming from to support the bid.

Al Mann and ETRIC have provided DIP (Debtor in Possession) financing of $12 million, with a facility up to $20 million.

The 'top three' for bond holders, trade creditors and customers (expressed in millions) are as follows:-
Bond holders
1. Kings Road Investments of Madison Ave New York for $92.3
2. KBK Master Fund of Crescent Court, Dallas for $84.9
3. Citadel Horizons of South Dearborn, Chicago for $53.4
Trade Creditors
1. Fuji Heavy Industries, Tochigi-ken, Japan for $31.8
2. Hampson Aerospace, Grand Prairie, Texas for $31.3, although we know the history here.
3. Pratt & Whitney Canada, Quebec, for $30.1
1. DayJet, Boca Raton, for $6.2, even though we'll never get to the bottom of this...
2. ATASAY-MyJet Aviation, Turkey, for $5.0
3. Triac, Nicosia, Cyprus for $4.3
Sundry amounts (above $2 million)
1. UT Finance, East Hart, CT, for $13.5 million, which is linked to DayJet
2. Irell & Manella LLP, Avenue of the Stars, Los Angeles, for $3.2 million of 'legal services'

Grand total
$706.1 million, and counting. Clearly there is a lot more to uncover. But it's a start.

Press Releases issued by EAC today

Eclipse Aviation Seeks Court Approval for Restructuring under 363 Sale
Procedures and Debtor in Possession Financing

Affiliate of ETIRC Aviation, VLJ maker's largest shareholder, announces
offer to purchase Eclipse

ALBUQUERQUE, NM - November 25, 2008 - Eclipse Aviation(r), 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.

New York-based Greenhill & Co., Inc., a leading independent investment
bank with proven expertise in mergers, acquisitions and restructurings,
has been retained as financial advisor to Eclipse Aviation. Inquiries
into the Eclipse Aviation sale process can be directed to Brad Robins,
Greenhill & Co., Inc. at 212-389-1567 or


Eclipse Aviation Announces Departure of Peg Billson

VLJ leader activates search for new head of manufacturing

ALBUQUERQUE, NM - November 25, 2008 - Eclipse Aviation, manufacturer of
the world's first very light jet (VLJ), today announced that Peg Billson
has voluntarily left her position as president and general manager of
the company's Manufacturing Division to pursue other career

"We thank Peg for her contributions to Eclipse, and wish her the best as
she takes on new challenges," said Roel Pieper, CEO of Eclipse Aviation.

Ms. Billson's position will be replaced with interim manufacturing
oversight provided by Eclipse's senior supply chain, engineering,
production and flight operations leaders.

Clearly, this is going to be expanded as more information reaches the blog.


Thursday, November 20, 2008

A nuclear winter looms

The Wedge was at the VLJ Forum in West Palm Beach, FL, on Tuesday 11th November. He provided the ‘closing comments’ that day, and I’m happy to share with you a fuller transcript than has heretofore appeared in the media. Originally I had intended to run with the entire, but some of what he said was so indistinct it didn’t make the recording and parts were also rambling, to put it politely. I’m sure you will all find it most ‘amusing’.

“I’m surprised you’re all here. I had heard the VLJ revolution was over. I’m happy to be here.”

“A couple weeks ago, 10 days ago, I was in Amelia Island. I flew an Eclipse there. I was invited to Edsel Ford’s 60th birthday. Edsel said to me “This is the challenge. Our business depends on one thing--scale. It’s not about the car we build, it’s that we build it on a large enough scale. We have to get to that level that we break even. We know we’re making the right trucks. We know we got a great product in Europe. But for us to bring one of those cars to the States, we can’t just shut a factory down and start making Fiestas. It would be multi-billion dollar investment. Overnight we saw attitudes in America change. We've sold pickups for 60 years, and now we think we've lost all the customers who don’t use pickups for a living.”

He then moved onto what the transcript describes as being the ‘key discussion’ during the day.

“This is a business of scale and capital formation. I’m really good at that. I'm probably the only person in this room who has raised $1 billion in capital. Don’t know if that’s good or bad, but it’s a fact. How do you do this? Not a lot of ways right now. There's a lot of discussion about organic growth--that's a fancy way of saying you fund it yourself. I don’t want to take a drug from a drug company that used organic growth to develop that drug. This industry is time intensive, it's regulatory intensive, it's capital intensive. And it can’t be done by raising a million from family and friends. Piper said they can build a jet for $150 million. At Eclipse, we had to build the whole infrastructure from scratch. About half a billion was spent getting the aircraft through cert. Half of that, $250 million, was because we had to start over a couple times. There was the failure of the Williams engine. I praise P&W. I’ve been criticized in the media for saying the problems were due to vendors. I’ve never said that. If one vendor--in a chain--fails, that’s a big problem. Ask Boeing (about the 787).”

There you have it. He’s actually boasting about blowing a BILLION dollars of other people’s money, and now tries to rub their noses in it by saying he had to ‘start over’ several times. There were several remarks about Williams, and P&W. Needless to say, they were self serving and no longer relevant. The Wedge then moved back to his core premise:-

“This is a business of scale. If you say we’re going to produce 30 a year, that’s going to drive capability, cost. The thesis here that I’d like to explore is that it's time to change the definition of VLJ: Value Light Jet. That's the real theme. Now were finally talking about facts, not database speculation. We have real facts. "We have seen the dogs eat the dog food." Ed proved it this morning. Bill [Herp] talked about it. It is happening. The underlining theme is one thing: it’s about value. Most of their customers are not coming out of NetJets or the airlines. They're coming off the highways. How do you get these people off the highway? Offer them a better value. Offer a different set of values: time, convenience, safety. It will be different for every consumer. Truly on demand and customized.”

The only thing that Ed proved was how to go bankrupt in under a year. Mind you, he did have help from his ‘friends’ at EAC, so it was not a solo effort. Despite the visible proof that there is no ‘air taxi’ market of sufficient size to drive real volume, The Wedge refuses to drop the shovel he’s using to dig the hole he’s in and continues.

“I’d like to see VLJs and air taxis---VLJs are an enabler. Any one of a number of airplanes will work. VLJs bring a new dimension. Here’s a little secret the Eclispe 500 is the airplane I wanted. A ‘turbofan’ Duke. What I wanted was a jet that was like a Duke. That’s what the Eclipse started out as. The ultimate owner pilot aircraft. It is still the core of who Eclipse is selling to, especially since the demise of DayJet. Don’t associate air taxi and VLJs. Air taxi can thrive and succeed without VLJ, and VLJs can survive without air taxis.”

Drivel, pure drivel. I can’t make sense of what he’s saying, and I don’t think he can either. Is it that DayJet shows you can’t run a small scale taxi operation, or that the whole idea is a distraction and the real market is the ‘owner pilot’? And then, for no reason I can fathom, he is recorded as saying next:-

“I was involved in early stages of development of PowerPoint: I have made 2 promises to myself: I quit shaving. I don’t use PowerPoint anymore.”

I don’t know why he said this, or the link between facial hair and presenting ideas, but he said it. As usual, he can’t avoid a direct lie. PowerPoint was bought by Microsoft from a Macintosh developer in 1987. The Wedge left Microsoft in 1982…

“We were convinced (old partner, college roommate) we could sell computers to people just like Pacific Stereos sells to people. Thought it would take 6 months. It took 10 years. That industry is 12 times faster than aviation industry. I look at the VLJ industry and say it’s not going as fast as I would have liked. I want things to happen 10 faster than physics says it can. We’ve got 400 airplanes 260 Eclipse. Cessna 250. The safety record is phenomenal. People said, “It’s going to be the next doctor killer, the next Bonanza.” They say to the owner-pilot, “You’re a good pilot, except you’re not professional. Screw you asshole.” Cirrus killed lots of people. After 2 years Eclipse has 2 accidents, both runway overruns. Cessna and Eclipse take a different attitude toward training. I think we’re doing pretty good. People out there don’t want us to succeed. This is an industry that eats its young. Capital formation very difficult. It’s difficult because it requires a lot. It can’t be done in your garage. It requires lots of capital, lots of patience. It’s fraught with people whose comment to anything new is “It can’t be done. It hasn’t been done, so it shouldn’t be done” or “Well if it could have been done, we would have used King Airs.” Bullshit. The airplane doesn’t make a flip bit of difference.”

Now now, lets keep the language clean around here. The Wedge gets back into paranoid mode:-

“It’s a willingness to take risks. Entrepreneurship. This industry has lost its spirit of entrepreneurship, and it’s phenomenally sad. This is an industry, if it doesn’t change attitude, its approach to innovation, disruption [is in real trouble] Early 2001, Russ Meyer--who I admire, he made Cessna what it is---Russ is a great man. Russ sought out two off my largest investors to tell them it was stupid of them to invest. “It won’t work” It didn’t help my cause, someone of his magnitude, credibility, stature, to seek out investors and board members to say don’t do this. That’s what I’m talking about.”

See, everyone was out to ‘get’ him, all them dinosaurs from the existing aviation community. There are evil men everywhere, bent on browbeating a saint who never lifted a feather to any of his competitors. Shame on them. The problem with his views on these matters is very simple, and may indeed indicate a deeper psychosis. Everyone else is wrong, because The Wedge is always right. There are a range of medical conditions and personality disorders which we could consider, but this is an aviation blog, not a medical one.

“What am I going to do next? I don’t know. I’m an entrepreneur. I know how to take risks and I’m proud of that. It’s not the first failure in my life, and probably won’t be the last. But we need capital, and the future of capital is pretty bleak. I think we’re in for a tough period. We’ve been drunk on credit for a decade. But that’s a free economy. This isn’t new news.”

Probably the most sensible thing he said for a long time. Are you listening Roel? This chap claims to know more about the market than anyone else, and he says the future is bleak.

“We have never had financial global systems so completely interwoven. It’s really scary. Problem is that we have an increasingly uneducated electorate. I still think the best comment: Warren Buffet---time to be fearful when everyone’s greedy, be greedy when everyone else is fearful. Intense fear right now. I’m very concerned about attitudes. I don’t share Ed’s pessimistic view. We’ll emerge differently, but not necessarily right away.”

Ed was clearly better informed than The Wedge. If anything the short term outlook is getting worse.

“Where will I end up? Where the capital takes me. Green tech is very hot right now. Am I going to start a nuclear power company? That has it’s own set of regulatory complications. I don’t know. When I do, I’ll let you know.”

There you go. Watch out fellas, he is thinking of going nuclear. Clear out those old bomb shelters and lay in a stock of food. The Wedge wants to go out in a real blaze of glory.

“People have asked me if I’m going to be the next Secretary of Transportation. No way in all of God’s green earth. If I were to go to DC, I only wonder how long it would be before I blew up and went postal. No. I’m not politically connected enough. I didn’t vote for Obama. One article said I was a member of Obama’s aviation staff. No. I feel like Sarah Plain. No I’m not going to be the Secretary of Transportation or the next FAA administrator. I’m not going to be involved in government. I’ve watched that town suck the life out of [people]. Not a good place. It is a profoundly and decidedly negative place to exist.”

As far as I remember, the only one promoting The Wedge for Washington was Black Tulip! Does he not have one nice thing to say of your national capital? I think the monuments are quite nice, and I understand some of the food can be very pleasant. But no, he’s feeling negative about it. I wonder if it’s because of the FAA? Ah, here we go, a fully fledged rant:-

“We are in for a tough haul with the FAA. We’re going into the dark ages. It is all politically motivated. 100 percent political. The Congressional hearings on Eclipse had to do with unions. I am the only one who has the courage to stand up and say this. They’ve had it out [in - ed?] for Hickey and Sabatini. Their cronies, led by Oberstar, sucked up to them. They planted stories with USA Today. It’s all politics. The FAA is unfortunately subject to this. One way to describe it, there are people in government that think the government is the only one capable of doing what’s right and correct. They believe that from a regulatory standpoint, the only people who can truly enforce are government.”

Really? So, EAC were correct and the FAA were wrong? Does that mean that the TC and PC were delivered after political pressure was applied? Lets see how he squares that one.

“We did face challenges with certification. We chose to do a lot of things differently. Eclipse 500 never had an electrical failure. People said we couldn’t build digital electrical system, and now Bombardier is duplicating that system for the Lear 85. John Hickey --who I have more respect for---his comment was to me, “Look Vern, our guys in the field are not the best engineers. We have those people, but you have to remember, the safest word for bureaucrat is no. They’re only good at approving things they’ve seen before.”

So the FAA people in the field have no idea what they are doing. Therefore, they were not qualified to issue the certifications. So the FAA HQ people did it for them. But the FAA are not political. Hang on, The Wedge said they were. I’m confused…

“80 percent of Eclipses are not in air taxi. One of the good things about my departure from the company [I got an Eclipse]. I flew on average 25 hours in the last three months. I just go. Put as much gas in as I can, go as long as I can. The airplane has 300 hours. It just runs. Just get in, start and go. Part of the problem is that I know too much about the airplane. Every time I land somewhere—I was at AOPA talking to Ed Bolen and Phil Boyer--two owners came up to me and thanked me for the airplane. One of the schizophrenic problems that Eclipse has. There is the 5 percent asshole quotient, but owners love them. It does exactly what it says. We screwed up on some things, and some vendors screwed up. There were some problems. But it’s an exceptional airplane. With a good tailwind, you can get 10 miles per gallon. At one airport, an old B17 pilot came up to me and said how the great airplane was. He didn’t know who I was. When I hear things like that, it makes all this worth it.”

This is called MBWA. Steve Jobs did it at Apple before John Scully fired him. It’s short for Management By Walking Around. As far as The Wedge is concerned, everything in the garden is rosy because people he bumps into tell him it is.

(Asked from the floor about the future of Eclipse) “I don’t know. I have zero association with the company today. That is partially their choice, partially my choice. I made decision, some on the board wanted me to stay, I knew it would be like going from captain of the ship to third officer or worse. When I’m not happy, I’m destructive. With my personality, I couldn’t handle that. I’m not good at being Number 2.”

Ask anyone Wedge. You were crap at being ‘Number 1’…

“Why have I been vilified? That’s a tough question. I watched it happen to one of my best friends: Bill Gates. We were playing golf one day, when he was going through all that shit with DOJ. People were saying, “This is a bad, evil person” Bill said to me, “All I thought I was doing was making life easier for people.” I talked to him recently about what happened it to me. The reason I got fired was simple, I pissed off the investors. I stood up to them, didn’t want to do what they wanted to do. When you’re CEO, your job is to lead, to decide. Board approves or disapproves. If they don’t like it, they have one choice: accept it or fire you. I didn’t leave, I got fired. I was going in a direction that the investors didn’t want to go. So they fired me. When it isn’t working, you fire the coach. Why I was vilified? I don’t know. It’s because I’m such a warm, fuzzy person.”

Name dropping was always one of his minor sins, so we’ll let that one go. But false modesty never looks pretty on the Curriculum Vitae.

“I’ve been scoured in the blogosphere, all by people who are “idiots and cowards.” (to quote Sarah Palin) They do it through anonymity. I’ve never shied away from saying “You’re an idiot.” You look at these postings, and they’re all by people who are anonymous. They’re cockroaches trying to hide under rocks.”

Hello, Mr. Wedge, your favorite cockroach here. Are you ‘name calling’ for a reason? Is it because Rich Lucibella stood up to your SLAPP suit and put you back in your box? Do you think, like I do, that the exposure you provided this blog was one of the bad decisions that got you fired? What exactly is your problem with the First Amendment to the Constitution of the United States anyway? I’ve a load of questions, as do a considerable number of reporters I know. Care to answer any of them? Or have you crawled under a rock, grown a beard (it doesn’t suit you, by the way) and hope people forget how you burned a self-confessed ‘billion dollars’ of other peoples’ money? You know where to find me if you want to unburden your tortured soul.

“Eclipse is a FOQA-approved agency. We used that data to identify problems. The Midway throttle problem: massively misreported. It was a failure mode we did not anticipate. When you really slam on the throttles-it took 45 lbs of push. One of the problems Eclipse foisted on itself, engineers happier than a pig in mud that they have so much precision. In the case of the Eclipse, that fault condition--not a failure--latched in 200 milliseconds. We did research turns out on Cessnas FADEC 2 seconds-6 seconds. They latch 50X slower than Eclipse. So the Eclipse did what it was designed to do. Turns into a big deal with NTSB. Emergency press release. By the time it was released--by the way, we had already done that. Sturgell asked Mark R. (NTSB) --WTF?? Mark said, “You know that’s how the game is played.” That’s a direct quote. But when I say it’s all politics, people say I’m a jerk. Personal vilification: something needs to be changed.”

Yes Mr. Wedge, it’s clearly everyone else’s fault. You had no personal responsibility for any of it. People in aviation will be happy to work with you again, I’m sure. As I will, the next time you start to rip people off. And the time after that. And after that. I know you fancy dabbling with nuclear power, but remember that most scientist agree with the following. After you trigger your ‘nuclear winter’ the first life to reappear will be the cockroach.

I’ll be waiting for you.

Shane Price
Proud custodian of Stan’s legacy.
November 2008

Thursday, November 13, 2008

Sadly, it looks like the end.

This is not a post I was looking forward to. I've experienced grief myself recently and know at first hand the pain and loss the staff at EAC, along with suppliers and customers, must feel at this time. My thoughts and best wishes go out to all those affected by todays' events.

First confirmed reports were from KBO-TV reproduced below. 

Eclipse employees unpaid for last two weeks
The employees of Eclipse Aviation learned this morning that they won’t be receiving their paychecks for the last two weeks of labor. Employees at the Albuquerque manufacturing facility say that they were called into a meeting early this morning and told they would not be receiving paychecks. They were handed a sheet of paper with a toll-free phone number to call to see if they would be paid. No reason, apparently, was given for the action.

Employees leaving the early morning meeting expressed anger, frustration and uncertainty before speeding out of the facility's parking lot. Among the concerns they voiced: What would become of their vacation and what would become of their retirement investments.
Employees were told that they could come and go from the workplace throughout the day but many immediately emptied their desks and left. Some employees attending the meeting say that company officials told them that they stayed up into the early morning hours trying to find a way to assure the workers would be paid but were unable to do so.

A critical vendor to EAC has also confirmed to me they are 'pulling the plug'. The knock on effect of this could lead to an early grounding of the remaining FPJ's, and serious efforts will be required to get them flying again. This is a direct consequence of the high level of integration in the design.

A few interesting reactions to the news over the past few hours.:-

1. Peg is clearly relieved that the end has come. The following hit the inbox from a 'reliable source' today:-
"My partner works at a coffee outlet close to the EAC campus. He knows Peg, who was there this morning laughing up a storm, apparently without a care in the world. She was with a guy, but they were acting like teenagers. Public displays of affection and all that. Really weird for a 'professional' woman in her 40s..."

2. Several reputable journalists would like to talk to those of you affected by these events. If you are prepared to go on the record, send your name, a phone number and what relationship you had with EAC to

3. I've been asked the question, several times today, so I want to state that suppliers and customers are welcome to post to the blog or contact me at the above address should you want to establish contact with each other. I've already preformed this service a number of times in the past....

4. All is not lost. I suspect that we will see several operations opening up which will offer services, in a number of ways. The following quote, from William Feather and provided by an 'ex Eclipser' is worth remembering at this time.
"Something that has always puzzled me all my life is why, when I am in special need of help, the good deed is usually done by somebody on whom I have no claim." 

Clearly the situation will evolve rapidly. I'll do my best to keep up with events over the next few days.

UPDATED Friday 14th 21.00hrs GMT

From: Scott Dannenberg
Sent: Friday, November 14, 2008 12:21PM
To: _All Enterprise
Subject: Payroll status update

Fellow Eclipsers,

We are extremely happy to report that funding has been obtained that will allow all past due payroll to be in your bank account no later than Tuesday, November 18, 2008. Money may be deposited in your account on Monday. Please continue to check your bank accounts.

For those that get physical checks, please call the payroll department on Monday to arrange to get your check.

We look forward to all of us returning to work on Monday, November 17.

Employee benefits including health and dental remain intact and available.

Management continues to work diligently on a longer term financial solution for our business.

We sincerely apologize for the distress this has caused you. Thank you for your continued support and loyalty.

Executive Management Team

This was forwarded to my in the past hour. Lets hope that it is genuine and the start of a 'good news' story. As I noted yesterday, I expect this situation to change, rapidly, over the next few days. Stay tuned.....


Tuesday, November 11, 2008

Circling the wagons

First I'm glad to report that Black Tulip has been active again. You can enjoy the latest missive below.

Second a general statement on the 'state of the nation' at EAC. Needless to say I've had multiple inputs, from within and without the company over the past couple of weeks. It's now time to reduce these to a form with we can all discuss.

Finally, I commend those who've stood up for the company on this blog. It's hard to defend the indefensible at the best of times, but with the rather bleak economic outlook right now it must be causing sleepless nights. I sincerely hope that the outcome meets some of your needs, even if I doubt that the structures currently in place will continue.

Current position at EAC
1. Training activity has tailed off. Recently a group were sent home during a course, without convincing explanations being offered. We also know from the Eclipse Flyer that owners are being encouraged to pay for extra pilots.

2. While AvioNG 1.5 has been certified, for all practical purposes it's not available to current owners as it's installation can require extensive works. The 28 ex DayJet aircraft seem to be getting priority in this regard.

3. Significant numbers of senior staff are in the job market, looking for alternative employment. Stop leaving those updated resumes on the printers, please, its' demoralizing the troops. And stop passing your personal cell phone number around 'just in case'. You know who you are, and if you're not sure, contact me and I'll let you know....

4. Last post I mentioned the 'FOQA' software that hides inside Avio and feeds data back to the spooks in EAC. Seems some pilots have been very naughty (acrobatics, anyone...) and have been getting nasty letters from ABQ, which is all in the name of safety you understand. Oh, and stop running into reserve fuel, it's bound to get you a ticking off. Or flying overweight. Or ruining your tires or.... Remember, you are not paranoid, Big Brother IS watching you.

5. I mentioned the following on the last thread, but no one seemed to pay much attention. It's significant in that it's the first time I'm aware of that a customer has sued having already flogged off his FPJ and realized a true loss. Clearly this suit joins those seeking return of their deposit, which also grind their way through the courts.
Atlantic Marina Holdings LLC v. Eclipse Aviation Corporation 11/3/2008
"Unfair Trade Practices. Defendant was negligent in its sale and manufacture of a $1.8 million jet aircraft that was delivered to the plaintiff with several deficiencies that were never adequately resolved. After pouring an additional $128,000 in the aircraft, the plaintiff sold it at a substantial loss."

We move, on a lighter note, to the latest from Black Tulip.


Albuquerque, NM - November 11, 2008 – President-elect Barack Obama met with employees and reporters today at Eclipse Aviation headquarters. In a surprise visit Obama announced, “Eclipse Aviation will be the poster child of my new administration. In the past you may have heard the phrase ‘too big to fail’. From now on that is obsolete. The byword of my Presidency will be ‘too good to fail’.”

“I know a winning business strategy when I see one, and Eclipse has it. If the company had not been unfairly treated and betrayed, it would a powerhouse in New Mexico, providing thousands of good-paying union jobs. I reject the idea that Darwinism has brought Eclipse down. Survival of the fittest is going to be replaced by hope and change for the next four years.”

Obama continued, “It is the robber barons of Wall Street that have denied the wrench twisters of Main Street their well-deserved success. The former will see their assets reallocated, so the latter can succeed. My first act as President will be the creation of the Corporate Restoration Action Program.”

“I intend to spread the Corporate Restoration Action Program far and wide. I will create a new government cabinet to dispense the funds. Note that cabinet heads, formerly called Secretaries, will now be referred to as Ministers. I haven’t picked the Minister of Transportation yet but I know she will have a particular affinity to Eclipse Aviation.”

Obama concluded, “Well, it is time to get back on Air Force Zero Point Nine and head back up North. I want you all to keep the faith. Several hundred million dollars each for Eclipse, DayJet and Pogo should not be a problem.”

As usual, I'll remind our readers that the tulip mania peaked in the Netherlands during the 1630s. The black tulip was the most sought after, until found to be biologically impossible.


Saturday, November 1, 2008

It could all be over by Tuesday!

It's not been a good week for VLJ companies. Adam (Mk II) and Grob are both flatlined, the promised EASA certificate failed to materialize and another forecaster joined the Teal Group in predicting the end for EAC. 'President' Mike continues to fill the ether with the nonsense they call The Eclipse Flyer. Except they can't afford to print it now, so they will only email a PDF in future.

Speaking of that august publication, it has a few interesting titbits in the latest issue. Normally only available to owners or position holders, several public spirited individuals have shared their copies with me. Thanks to one and all...

The first page carries an 'ad'. Since hardly any new owners are taking delivery, the flight simulators are empty. Why not take them up on their offer, as it's probably the last chance you'll get. As a by product, FPJ Inc will collect some cash. Well, if I'm honest, I'm told it's the ONLY source of cash left...

We currently have excess simulator training capacity. If you have a second or third pilot associated with your aircraft who has been unable to attend training due to past training constraints, we can now address these needs through the end of 2008.

The 'spy in the cab' industry-leading Flight Operational Quality Assurance (FOQA) program which was such a hit with owners has now been formally released. It seems that people continue to abuse the FPJ, especially while landing. Read the EAC spin of their 'discoveries' yourself...

We evaluated 13,770 flights from October 2007 to September 2008. Approximately 1,075 events, or only 7.8%, were highlighted during this time. Unstable approaches constitute the largest number of operational risk events, followed by excessive bank angle at low altitude and exceeding maximum ramp weight.

Must be reassuring to know that your every move is being recorded for later download and analysis by those crack people at EAC. No wonder the owners are praying for bankruptcy, to clear the records of how badly they've landed.

Or how overweight their wives are...

But there's more good news! Those "Random Transponder Code changes" and the ever popular "Random Autopilot pre-select changes" join the "Random Comm/Nav Surveillance (CNS) switching" on the 'eliminated' list. Phew, that's a relief, so as soon as the AvioNG 1.5 software/hardware updates are approved, you will all rest easier. Hang on, you need to get these done by EAC. Which will be in an order dictated by the way the wind blows on Saturn in a month with 'z' in it.

Or something like that.

So, keep a careful watch on your transponder, autopilot and all those other 'random' bits that keep your life interesting while aloft in your FPJ.

Finally (from the Flyer, anyway) the following advice, which confirms what several here already knew:-

Static Port Moisture - If you park your plane in rain or high humidity environments, cover your static ports to prevent moisture from accumulating in the static lines. Custom static port covers are on order and will be available at the Company Store in the coming month. Until covers are available, you can use low-adhesive painter’s masking tape to cover the ports. Be sure to remove the tape or covers prior to your next flight.

This statement surely begs the question, why did they locate the ports so badly, in the first place?

Meanwhile, word reaches me that several of the 'senior leadership' continue to hunt for new jobs, which will be hard with EAC on their CV's. The looming cash crisis is made worse by strict bank limits, which could be breached early next week. What this means is that the company has agreements with it's banks, stipulating certain targets. Once, for instance, the minimum cash at the bank is reached, the bank reserves the right to refuse payments. I've got some advice for those of you who's EAC expenses cheques bounced in August. Expect similar treatment next week.

Several owners have contacted me with concerns for the immediate future. A number are in the middle of preparing to file suit (under various headings) in an effort to either a) get their aircraft upgraded or b) their money back. These efforts may lead to something, as I'm aware that Frankenjet depositors have been able to extract cash. However, the long suffering FPJ position holders are being told that nothing will change unless the promised 'UBS funding round' is successful.

Something which seems highly unlikely at this stage.

Keep your eyes open for events at our very own FPJ 'enterprise'. Once your election is out of the way I expect events to move rapidly. I hope, for the sake of the workers, that these 'moves' are positive. Sadly, I think not.


Thursday, October 23, 2008

Sometimes, it pays to be unpopular

Karen Di Piazza has a long history covering EAC. As a matter of routine, EAC refuse to answer questions from her, and Vern (it is said) would swim across a river full of alligators to avoid talking to her.

Myself, I feel the alligators would have crossed a busy highway to avoid Vern, but I digress.

Earlier this week Karen published the following on CharterX. As usual she has hit the central point in her own piece.

The key is safety. If I have to extract one sentence it would be this one.

"All I know is that every time I've had to fly the Eclipse, I'm truly scared."

I would also draw your particular attention to the Teal Group report on EAC. It makes grim reading, especially for any potential investor in the project.

Teal Group's Richard Aboulafia's First Eclipse Aviation Report
By Karen Di Piazza

Before we address the Teal Group's first report on Eclipse Aviation Corp.'s business plan, authored by Richard Aboulafia, vice president of analysis, aviation insiders have said that because Eclipse, manufacturer of the six-place Eclipse 500 very light jet has halted production for 2008 (last aircraft to be produced is serial no. 267, with no. 266 produced a long time ago), awaits funding, they feel it's a no-brainer that the company is doomed to declare bankruptcy.

During recent conference calls with its customers in September and October, Eclipse admitted that unless it gets "funding in October or November," it wouldn't have the funds to refund customer deposits made on the EA500 or its four-place EA400. During conference calls with its customers, Eclipse downplayed numerous lawsuits filed by customers. As of this writing, new lawsuits have been filed against Eclipse. Industry Headline News has requested of Eclipse numerous times to respond to allegations; however, the company refuses to do so.

Cash-strapped Eclipse doesn't have the money for parts needed to fix customers' aircraft, it tells customers during conference calls. Linear Air's CEO William Herp confirmed to Industry Headline News that of the four EA500s managed by Linear Air, "We're operating two Eclipses; we didn't include the EA500s in our recent profits, so we're OK. Yes, we had to let 15 employees go, which is very unfortunate. We wouldn't be surprised if Eclipse filed for bankruptcy." Linear Air ordered 30 EA500s. Herp said that his company is not dependent on the Eclipse 500 for future financial success.

Recently, a corporate pilot who is typed rated in several FAR Part 121 and 135 aircraft as captain, with extensive flight hours, said, "When I have to fly the Eclipse, I am on the edge of my seat waiting for the next disaster to take place. For instance, I've been flying for over 30 years and have never had to go on emergency oxygen, except during routine training. Since flying the Eclipse, I've had to go on emergency oxygen twice now due to fumes in the cockpit and in the cabin. Eclipse seemingly has no idea how to fix these aircraft problems. Flying at 41,000 feet, you don't have much time to deal with these continuous, on-going, very serious issues. All I know is that every time I've had to fly the Eclipse, I'm truly scared."

This is the typical story we hear we hear from experienced, professional pilots.

And then there's DayJet, Eclipse's former star, the largest air taxi operator in the world, which we reported on May 2 had ordered 1,400 Eclipse 500 jets. DayJet has since gone out of business. On Oct. 20, Eclipse sent emails to its customers stating that it was acting as "DayJet's broker," to sell DayJet's fleet of 28 abandoned planes. But the best part of this report is really about
Richard Aboulafia's report on Eclipse.

Thanks Karen, a well thought out piece. You may contact Karen Di Piazza at for any feedback you'd like to send her about her article.

Read the Teal Group report carefully. It's a PDF file, which you can 'save as' and digest in your own time. Here are two snippets for those who need encouragement to make the effort:-
First, commenting on the DOT IG investigation.
The IG stated: “This isn’t about a certification process riddled with flaws…What this case is about is an accommodative approach to a new manufacturer using new technology and a new business model to put a high-speed, high-altitude jet in the hands of relatively inexperienced private pilots.”
Second, the difficulty in predicting what might happen to the company.
Keeping up with this program has become a surreal experience. Irrational investors make forecasting difficult, but socialist governments make it even tougher. The latest post-Soviet five-year plan calls for the Russian government to fund an Eclipse line in Russia. This is not a business decision made by the private sector, and therefore we can’t predict whether it will be provided. We also don’t know when the money will be provided. With numerous lawsuits from suppliers and customers, Eclipse faces the prospect of involuntary or voluntary bankruptcy.

From the 'inbox', which you all know as
We all saw the Teal report here. Richard missed the round of financing that happened in summer of 2007 which was another $275M of debt financing. This is what makes up the total $550M of senior secured debt. That amount, plus another $550 million in private equity, together with sundry other inputs drives the investor funds towards $1.2 billion.
Add what the customers have paid in already (about $320 million) plus the remaining deposits (about $60 million), you can see where this has been a party worth more than $1,500,000,000. Supplier activity is harder to measure, but they must have invested heavily. This could easily drive the TOTAL amount spent close to $2 BILLION plus the involvement of thousands of people's lives. All for 250 odd aircraft delivered so far.
These are expensive jets!

I think we can all agree that this last line is an understatement of historic proportions....

UPDATED FRIDAY 24th October 22.34GMT.
The DayJet birds made headlines again. I sure hope they find a home shortly, as they are in real danger of clogging the market unless they do. My hunch is that FPJ Inc have little choice at this stage and will have to take anything around the $850,000 DayJet agreed to pay originally. The following from AIN Online, which is a great source for business news.

OurPlane Makes Play for Former DayJet Eclipse 500s
By Chad Trautvetter

London, Ontario-based OurPlane–a fractional provider of “new light aircraft,” including Cirrus SR22 piston singles and one Eclipse 500–today made a bid to purchase the entire fleet of 28 Eclipse 500s formerly operated by DayJet. OurPlane, which also has a separate standing order for 21 Eclipse very light jets, said it submitted a “fair offer reflecting the current market value for the Eclipse jets.

Company president and CEO Graham Casson told AIN that the bid is more than JetsAmerica’s previous offer of $500,000 each but less than $1.5 million apiece. If its bid is accepted, OurPlane plans immediately to begin selling quarter shares in the jets for less than $449,000, with the first ones likely to be based at its locations in Southern California and the New York City area.

Additionally, Casson said the very light jets would enter service in the first quarter next year after their interiors are upgraded to the LX version and, at minimum, the DayJet logos are removed from their exteriors. OurPlane, which has 12 locations across the U.S. and Canada, is “confident that Eclipse will follow through in the final modifications and refurbishment that are due on these and all Eclipse aircraft.

And finally (drum roll, clash of symbols, trumpets)

You will remember I posted a fantastic prize offer on this thread. The correct answer to the question 'what would Vern's FPJ have on the tail' is, I'm reliably informed, 'N500VR'. I'm glad to report that I've saved myself a lunch bill, since none of you got it exactly right.

However, since a number of you posted very well thought out 'suggestions' I prepared to offer the following contributors a pint (of Guinness, naturally) in my favorite pub.

N0PE (short for No Hope)

N00NE (pretty clear, I think)

N505TU (Several variants of this one....)

CR-APJET (from the Cape Verde Islands!)

NOTVLJ (Pretty much sums it up)

NYETJET ('Russian' entry)

And last, but not least

0 + 0 = 1+ (our principle 'European' correspondent, and my personal choice)

You all know who you are, and how to contact me. I'll be very happy to pay for the 'prize'.

We look forward now to our long weekend here in Ireland, with lots of fireworks. Come to think of it, some of the 'rumblings' out of New Mexico would suggest that this won't be the only place with the odd explosion over the next few days. Stay tuned...


Wednesday, October 15, 2008

Darkening skies in Albuquerque

Eclipse Aviation, under it's previous 'leadership', boasted that thousands of FPJ's would darken the skies. With production down to one aircraft a week and falling, this boast seems yet another EAC failed promise.

But there is more.

Customers are frustrated.
Not only have EAC failed to produce aircraft at the rate they said themselves was required for the plan to work, they are LOSING customers, some of whom now 'enjoy' the status of unsecured creditors. These are the people who have requested deposit and/or progress payment refunds after the price increase in August. As far as I can tell, only those who had money in the Frankenjet (a.k.a E400) have had cash back from Roel. As a group these people are mad at EAC and have joined forces to seek the refund they are entitled to. One of them sent Mike McConnell (President of all that Peg is NOT President of) an email last week, seeking answers to specific questions. So far, he has not had the good grace to reply. Herewith the list:-

1. It was reported that Eclipse had issue a certain amount of refund checks and those checks were not honored by the bank. Has Eclipse made good on those checks?
2. How many depositors have had their money refunded?
3. Have there been any concessions to those seeking refunds? Partial refund? Aircraft at reduced prices? Etc?
4. What intellectual rights have been transferred, assigned, pledged to ETIRC during the last 12 months?
5. If a cash infusion does not occur within 30/60/90 days what contingency plans does Eclipse have? How long can you operate?
6. Recent releases on “Russian Funding” have been non-cohesive. What is the amount? Have any funds been received? What contingencies are attached to the Russian funding? When is Eclipse “US” expected to receive these funds?
7. Eclipse stated that a majority of vendors are in place to resume production. Yet at least one major vendor (empennage) has closed the facility that manufactures the empennage. How do you plan on handling critical vendors that are no longer willing to provide products to Eclipse?
8. Other than harming the secondary marketplace what financial interest does Eclipse have in the ex-Dayjet fleet?
9. A number of depositors are talking about forcing involuntary bankruptcy. Does Eclipse have contingency plans if this occurs?
10. How many 60% progress payments has Eclipse collected above serial number 266?

Pretty heavy stuff, especially from a customer, I think you will agree. A lot of us would like to know the answers to some of these questions. If anyone 'out there' would like to share their views in confidence, email me at

Staff have doubts
The internal sources on the 505 continue to contradict the public utterances of Mike, Peg and Roel. As is normal in any business, especially one that it trying to restructure, cash is king. Let's examine the 'traditional' sources of EAC funding. Sales of aircraft. Well, the picture here is bleak in the extreme. Activity here has all but ceased. After refund requests are taken out of the picture, EAC have not had a deposit on a single FPJ for 9 months.

Think about that.

It gets worse. Roel and his merry crew have talked about '$200 million' investment required to get to profitability. Currently, creditors (including refund requests) are 'overdue' just over $170 million and total liabilities (including secured lending) exceed $650 million. In the midst of a general liquidity crisis I think it's fair to say that '$200 million' is less than a third of what is actually required.

Internally, politics are causing friction. The senior management have been promised 100% bonuses if the company gets to 'cash flow positive' in Q1 2009. Sales staff are being promoted by Mike, who seems to think he's the 'real' President, and CV's are flying around the industry from specific people. These are the ones you would expect to know the likely short term outcome, but they still appear to be keen to 'jump ship'.

Lets work this through. The Frankenjet is on hold, which is hardly surprising given that the initial burst of under 100 deposits (only $25K, btw) has been decimated by almost 50 refund requests. The FPJ has a remaining order book of 440 units (at best) with a number of those positions for sale in the aftermarket or likely to vanish when buyers can't get the loans they need. The largest single 'order' outstanding is from Roel himself, to provide air taxi services in Turkey, and it's not even properly deposit backed. The company has had to repossess 28 second hand units from DayJet, and carries a significant bad debt as a result of this failure. Plus of course the difficult task of finding buyers for these 'used' FPJ's without further damage to the already fragile order book.

I can't see this mess appealing to another investor myself, can you?

UPDATED Thursday 16th 20.15hrs GMT
Seems someone in ABQ reads the blog and has a problem with the deposit on the Frankenjet. Glad to see they recognize the ConJet for what it is, by the way. Anyway, the FULL deposit on at Oshkosh was $100,000, not $25,000. My fault. They are also in denial about the 'zero orders in 2008' bit, so I told them where to find their own records. Perhaps they will believe me, if they bother to check.

The FAA and that DOT IG saga
A group of FAA stalwarts are surprised that the transcripts of last month's hearing in Washington have not made the appropriate web site yet. So they posted some video on youtube. Have look at one in particular, from a lady called Maryetta Broyles. She gives a first hand account of the pressure the original FAA inspectors were under, to 'get it done' for Eclipse. At a time when the FAA were under severe budget pressure, her group were told that 'money was not a problem' and were instructed to stay at EAC no matter what. There are other people who are worth a look at the same site

This major issue hasn't gone away you know. It's only on hold until after the U.S. Presidential election.

Current spending
You've all read about the $106 mil contract with CSC for IT outsourcing. Well it seems this is just the beginning as there will be another contract signed with IBM for an undisclosed 'small fortune'. The primary objective is to make SAP functional as it is currently, well, broken. I know that some here will be familiar with SAP, but for those of you who are not, it's major claim to fame is 'end to end' integration of all aspects of manufacturing. From this seat, all I know is that a number of 'household names' that my company deal with have thrown it 'under the bus', primarily because they could not understand the software. So, another yet another 'disruptive' idea from EAC. A company that can't sell aircraft uses software no one can understand NOT to build the volume it needs to survive.

I'm reminded of what has to be one of the best one liners in modern cinema, from 'As Good As It Gets' when Jack Nickleson's character, Melvin Udall is approached by the receptionist in his publishers office. She asks "How do you write women so well?" He replies "I think of a man, and I take away reason and accountability"

Owners in contact and possible future direction(s)
As you know, I keep in touch with the different 'groups' with interests in the Eclipse Aviation story. Clearly that starts with those who post here and continues with Eclipse staff and suppliers. I also have regular contact with journalists and, last but not least, owners. One who contacted me recently made several points, most of which agree with what 'we' are doing here. He did suggest that we 'widen' the blog to include discussion of other VLJ's.

My initial reaction, personally, is that I have my hands full keeping up with one company. I also have a sneaking suspicion, voiced here before, that this blog will be the last resource available to owners of FPJ's when EAC closes its' doors for the last time.

The question is a fair one however, and I think it's time to have an open discussion. October was always touted as the month that EAC had to secure it's funding, or shut down. Before that event occurs I would be interested to hear what the blog thinks. Suggestions that have crossed my line of vision include focus on another (jet) aircraft, with names like Honda and Piper floating around, as well as a more general VLJ forum.

Being a blog, it's a discussion we should have 'in the thread'....