HAPPY THANKSGIVING!
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.
Shane
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.
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.
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.
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.
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 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 brobins@greenhill.com.
and
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
opportunities.
"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.
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
Eclipse Aviation Corporation
and
Pronto Aircraft Corporation
of
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
Customers
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 brobins@greenhill.com.
and
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
opportunities.
"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.
Shane
738 comments:
«Oldest ‹Older 201 – 400 of 738 Newer› Newest»Shane, it was a rhetorical question. I just feel that in this day and age, investors and management are being vilified gratuitously. We are where we are (good or bad) in western civilization (now global) because of people willing to risk a buck to make 10.
We certainly don't want to run these guys out of Dodge.
But thanks for answering - by the way it is share holders, bond holders, and lenders as a group that hold 90% of the liabilities. Not just shareholders.
TBM - valid point. Investors of course were on notice on risk. Vendors and Depositors/Owners, probably also made a risk/reward determination. Employees should have done the same, but many probably did not. Either way, employees should thank the investors for the many years of pay and benefits they got courtesy of the investors' money. Rather than focusing on the fact that money ran out and they will have to find another investor to foot the bill at EAC 2.0 or on their next job.
That's the way a 363 works! The stalking horse has a huge advantage over any other potential bidder for the reasons you state.
But Roel isn't a stalking horse at all if nobody else can bid. The purpose of the auctions is to have competitive bids and if there cant be competitive bids due to self-dealing, that precludes the possibility of maximizing value for the creditors.
He did everything a responsible party would do given the circumstances, namely, cut production, kill the E400, lay off substantial staff, etc. But nothing he could do would change the inevitable failure of the business, which had been locked in by prior management (Wedge).
He can make that argument. Frankly I'd love to hear him explain how Eclipse being the largest sponsor of a Dutch basketball team as either something Vern did or that it was a good use of resources aside from benefiting him personally.
I'm sorry, but which parts have any value outside a going concern???
The property, plant and equipment as well as the various intellectual property rights. I think having the international rights to manufacture the Eclipse 500 could be valuable by themselves. If someone completely new came along in a whole different factory and operating philosophy, I think Eclipse could have a chance. The same also goes for the rights to be a servicer where someone else might see that as a good business to be in separately. I could see three distinct sales with Eclipse selling off various stuff just lying around via an auction, selling manufacturing rights for old aircraft and selling servicing rights for new aircraft. Right now nobody has a real chance to offer bids on part of the business because Roel isn't giving them time to maximize the return for creditors. Also Eclipse's vendor creditors might be willing to work with one buyer to continue manufacturing the Eclipse, but not another. It doesn't have to be an all or nothing sort of thing.
Eclipse selling off various stuff just lying around via an auction, selling manufacturing rights for old aircraft and selling servicing rights for new aircraft.
Reverse where I put old and new.
Dave,
I think you're dreaming to think that there would be any bidders for parts of this fiasco. Also, nothing stops another party from bidding in the 363 sale, even the timing. After all, any interested party has had months to look at the company. No one would suddenly wake up today and think, gosh, now I could bid on Eclipse since they've gone TU. Nor would they think that Roel has some built in advantage they couldn't see coming. He's been driving the truck for months, seeking investors for months, shopping the deal for months. What's the new piece of information?
DI said ... Past performance suggests that the Wilmington court will ignore any artificially imposed deadlines ( such as January 9th ), if any creditor objects.
That is incorrect. In the case where there is ONE and ONLY ONE DIP that says I'll finance this amount through this date and ONE and ONLY ONE BID, the Wilmington court works hard hold the auction and discharge "close" to the date.
If you accept the Blogs premise that Eclipse's assets are worth ZERO and no one else is interested in buying it, then the current DIP and buyout offer is it. Take it or leave it.
Now, IF, as I think Eclipse assets are actually worth $250-$350M, then you can expect other parties to come to the table. I actually think that this is very likely - there will prob be a bit a of a bidding war with a few competing proposals. Which is even better for owners (or less bad, I should say).
As to Dave's comments, RP could care less if this goes Ch7 asset sale liquidation. HE could buy the assets he wants just as well or just walk. Either way he is not the type that is personally and emotionally involved in this.
I think you're dreaming to think that there would be any bidders for parts of this fiasco.
I'm not saying there would be bidders, but rather than there could be bidders if potential bidders are given a reasonable opportunity to assess Eclipse, arrange financing and submit a bid.
Also, nothing stops another party from bidding in the 363 sale, even the timing. After all, any interested party has had months to look at the company.
Outside of BK, Roel doesn't have to let anyone just come by and engage in due diligence. The situation now is different than it was prior to BK.
No one would suddenly wake up today and think, gosh, now I could bid on Eclipse since they've gone TU.
Actually there are those who do in regards to BK business, particularly given how with Eclipse (as with other BKed businesses), you erase some or all of the debts and liabilities that weren't there pre-BK. Businesses can and do emerge from BK under new owners.
The property, plant and equipment as well as the various intellectual property rights. I think having the international rights to manufacture the Eclipse 500 could be valuable by themselves. If someone completely new came along in a whole different factory and operating philosophy, I think Eclipse could have a chance.
But you have been arguing for months that there is a fundamentally flawed business plan, and that manufacturing elsewhere than ABQ makes no sense. How does BK change any of that? The whole idea was bad, not just some small part of it.
The same also goes for the rights to be a servicer where someone else might see that as a good business to be in separately.
The rights to be a servicer? You've got to be kidding. Anyone could service the thing, but no one would pay for the rights to do it on the front end, given all of the other expenses they would have to start such a business.
I could see three distinct sales with Eclipse selling off various stuff just lying around via an auction, selling manufacturing rights for old [new] aircraft and selling servicing rights for new [old] aircraft. Right now nobody has a real chance to offer bids on part of the business because Roel isn't giving them time to maximize the return for creditors.
Look, if you're right, nothing stops somebody from buying the whole thing through 363, and then selling the pieces to make a profit. Such a bidder would get the creditors more than Roel has bid. The creditors themselves could form a bidder to do this. Don't hold your breath waiting for someone to take this view with real money.
Also Eclipse's vendor creditors might be willing to work with one buyer to continue manufacturing the Eclipse, but not another. It doesn't have to be an all or nothing sort of thing.
The blog has been saying for a long time that the cost of manufacturing this aircraft exceeds $2.1M. A higher selling price will equate to zero demand, another point made on the blog. So, now that's not true anymore?
But you have been arguing for months that there is a fundamentally flawed business plan, and that manufacturing elsewhere than ABQ makes no sense.
I agree with your first part, but I have zero recollection of the second part other than to say that Eclipse having two high volume factories (regardless of their locations) was bad. Perhaps you misunderstood or misremember what I was saying as my comments on the second factory were related to volume output required to reach profitability.
The rights to be a servicer? You've got to be kidding. Anyone could service the thing, but no one would pay for the rights to do it on the front end, given all of the other expenses they would have to start such a business.
No, they can't as Eclipse recently accentuated with the $500K DayJet offer. It is true that nobody may bid on it, but it doesn't mean that it isn't a separate business opportunity that someone else could bid on aside from aircraft manufacturing.
Look, if you're right, nothing stops somebody from buying the whole thing through 363, and then selling the pieces to make a profit.
Actually with 363 sales it doesn't eliminate all the liability. Someone might want to assuming the liability for building their own new aircraft but not the liability of the old fleet and vice versa. If an older aircraft crashed and someone bought the company only wanting to manufacture new aircraft but bought the whole thing anyway, they could be sued if they were the deep pockets.
The blog has been saying for a long time that the cost of manufacturing this aircraft exceeds $2.1M. A higher selling price will equate to zero demand, another point made on the blog. So, now that's not true anymore?
This is part of having a high volume factory that needs 1.7 units per day and all the bad blood created Vern/Roel. A new plant and a new set of owners can change both operating costs and relationships with vendors.
Orville,
you mean Ken is one step closer to AOG, right?
A new plant and a new set of owners can change both operating costs and relationships with vendors.
But they can't fundamentally change the cost to manufacturer the E500 to a lower number! Lower volume, as you've pointed out, will result in higher unit costs. This dog don't hunt at a price that yields a profit without high volume, and high volume doesn't work because there's not that much demand at even that price. DOA
But they can't fundamentally change the cost to manufacturer the E500 to a lower number! Lower volume, as you've pointed out, will result in higher unit costs.
Yes, but that is because the aircraft contracts and plant was designed for high volume production. When you've built your whole business around almost 2 units per day or more, obviously you are going to lose money with lower volumes, but if you build your business around low volumes, that changes the equation. I'm not saying it is necessarilly a worthwhile business to enter into (if for no other reason than we don't know what other design flaws there are that just haven't show up yet), but people have to be given an opportunity to assess, arrange financing and submit a bid for all or part of Eclipse. It is true that nobody might show up, but you can't just say it is a forgone conclusion.
Dave, you've left the reservation! Build a new low volume factory to reduce unit costs? For a design that can't fly above FL370 and has dead end avionics?
Might as well start over instead of throw good money at this mess.
Dave, you've left the reservation! Build a new low volume factory to reduce unit costs? For a design that can't fly above FL370 and has dead end avionics?
Might as well start over instead of throw good money at this mess.
I'm talking about maximizing the return for creditors, I'm not saying I'd want to touch any of whatever business came out of it with a 100 foot pole. I think it would be crazy, but given the outstanding $1B+ debt, there is craziness out there. I've said of Roel's offer that I think he's buying costume jewelry but thinks it is the crown jewels, that is not a compliment or endorsement of his plan, but there can be other Roel's out there who just want to manufacture or just want to service. I think it is extremely unlikely that there's a good business to be found within Eclipse, but if I were a creditor, I'd want there be time for as many people as possible to come up with their own hairbrained or not so hairbrained ideas instead of just automatically leaving it the guy who played a none to insignificant role in getting to where we are now.
Bron, your victimes, for the most part, RUN the asylum.
Also, according to you, they have better information than the rest..
You should really get a grip, and face FACTS.
The investors.. most of them, are board members, or have representation on the board, and have insider info, as you so like to believe.
If you feel badly for them, its becasue you admit they have been screwed.
Otherwise, they just made a bad investment decision, and short of a bailout, should accept the loss.
The others have definately been sold a bill of goods... bought into a BS story about 2500 orders... tra, la, la, la....
make up your mind... who knew what and who shafted who?
I personally think the shareholders probably have a case against EAC/management as well...
Dave,
its a tax write off... that's all it is - plus an embarassement for the Collier folks who awarded this fiasco a trophy.
Let us not forget that the production concept was reported only a couple days ago to be under, yet another, consultant review. That makes 4 over the past 2 years if I am remembering correctly.
I believe at this point that no amount of replanning will make this aircraft profitable while selling for less than the Mustang -
Not even if the BK wiped away all debts and obligations,
Not even if all vendors stayed on the program and do not substantially raise their prices to offset their previous losses,
Not even if all customers remain loyal,
Not even if new orders come in at a sustainable rate of say 100-150 per year.
The design and manufacturing requirements based on decisions and assumptions made by Eclipse (some good some very bad) result in a plane that is amller than the Mustang but very likely costs more to produce.
This is like comparing a $103,000 Corvette ZR1 to a $192,000 911GT2 or a $354,000 Murcielago (in terms of general business/economic rules, certainly not comparing Eclipse to Porsche). The Eclipse is potentially going to be the boutique toy car where the Mustang has been, is, and will continue to perform yeoman's work in personal and commercial operations.
Lower production rates requiring high technology or labor cost more than conventional technology, conventional production rates, and conventional business approaches.
DOA
"WTF Baron? Are you on some kind of experimental mood control drug lately?"
Priceless!
Dave,
you observation about how EAC has rigged the auction, regarding timing and conflict of interest of Roel, is accurate.
This is reflected in Roels F-U attitude to customers.
If anyone wants a fair deal, they need to petition the corts. I would enjoy seeing a longer DIP process, where Orel has to sweat out his sweetheart deal for 6 months, while paying to continue operations and make "equitable" deals with suppliers and customers.
Otherwise, its just a scam that ends up in Pieper's favor.
But I digress- its still a DOA product and plan, that makes no economic sense.
But I digress- its still a DOA product and plan, that makes no economic sense.
I think we are basic agreement on things. What I was trying to say was what I thought what was best if I was a creditor, not necessarilly that I think the end result would be something good. I don't think it is outside the realm of possibility for something to be made of the remains of Eclipse. I see the greatest likelyhood coming from servicing and upgrading the old fleet rather than building new aircraft, but even that I see as a huge risk given how I don't think we know yet what liabilities are going to be found as well as the risk of the FAA grounding the fleet. I think Roel has been a huge schemer, but all his schemes wont matter in the end as far as him making a profit goes.
dave,
for my feeling, when RP/ETIRC became major shareholder, it was clear that the .... wedge had already driven EAC under the bus.
We had been talking about Ponzi scheme! After the price increase this was obvious for everybody.
Why was the Frankenstein orderbook opened although it was clear that the normal business could not produce any positive cash flow?
At that time EAC was already BK and kept alive for certs! Thus the BK was "postponed" as long as possible.
"NEXT TUESDAY" took place on Tuesday just to keep RP at the helm and to prevent involuntary BK - not to pay homage to the blog!
If I correctly understand CH 11 sec.363 it may be used to wash the CEO, CFO, COO, and the BOD from any misuse of money,etc.
Process and debt restructuring during the holiday season - impossible!
If the judge accepts the bid of "an affiliate of ETIRC" of perhaps 20M$ and "an affiliate" wins, RP et al. are clear of any "stupid question" about the EAC activities?
Why doesn't EAC reveal the identity of the "an affiliate of ETRIC aviation..."?
A collecting basin "in process" for stake holders?
Julius
The DIP financing is a huge risk to those providing it. RP argument to the court can easily be that once the $20M is gone, it's lights out. The only way the 363 sale occurs is to purchase the company still operating, which means it has to close before the DIP is exhausted. May not seem fair, but thems the breaks. If anyone else wants to pony up DIP financing to extend the time frame, I'm sure the court would entertain that.
DOA
Deep Blue said ... C11 rarely (if ever) works for start ups that have already failed (i.e. they never captured sufficient demand). C11 is not a tool for somehow stimulating new demand that wasn't there before.
Deep Blue, great post - and spot on.
I just would like to point out and get you to comment on the fact that this is not the typical CH 11 filing.
This is really a CH7 Asset Sale, with continuing operations via DIP and no re-org plan or committed financing post sale. RP is buying the assets. Period end of the story, just like a Ch 7. (I have failed in my attempts to communicate this to Dave)
It is also different in the sense that RP and his band is both the CEO/Chairman, largest stock holder, DIP provider and Asset Bidder.
There is no attempt here to show to the courts or creditors post discharge viability, reorg plan, etc. It is an asset sale - period.
In this case, the only issues for the court to decide are:
a) Highest Bidder, via auction.
b) Allocation of money to creditors.
Now, having said that, it appears that EAC, in its filing is trying to steer money to "critical suppliers". I don't know if that is true or not. It may just be in the filing in case they change their minds half way and switch from 363 to reorganization.
Either way, I'm sure this is all a mute point. I'm pretty sure that ETIRC (RP/Mann as well) are secured and or senior creditors. Any money from the sale short of several hundred million will likely flow just to the "in" crowd.
As I said before, the unsecured creditors have ZERO pull in this. They are hosed and should have known they were hosed for a long time.
"S/N: 722, TBD, IFR, Only asking $25k over deposit. 3Q 2009 With FIKI, Avio NG, and more. Be the envy of the early owners! "
Hope springs eternal - an excerpt from a current listing on Controller.
If EAC had embedded themselves through the years with the Washington and Wall Street establishment, they could have joined the orgy and asked for a FEDERAL BAILOUT too. I can see our leaders, telling us on CNN that the entire world economic structure/system is dependent on the EA500 and if the EAC goes, so does the entire VLJ industry.
CW said... YOU are the one who seems to think this is all just par for the course and no big deal and oh well.
This sham of a company has obliterated near $3B of capital, disrupted the lives of thousands of families
I'm sorry if this seems extraordinary to you, but fact is that 9 out of 10 (or so) start up companies go out of business and leave plenty of debt behind.
And as to obliterating $3B and disrupting the lives of thousands of families????!!!! How do you figure that?
I see a company that provided hundreds to thousands of jobs, salary and benefits for about 10 years to hundreds to thousands of families in a depressed area of the US. The fact that you choose to remember ONLY the loss of those jobs and choose to forget the CREATION and CONTINUATION FOR 10 YEARS of those jobs, just shows you bias.
ANYONE only loss their job at Eclipse because ECLIPSE CREATED that job in the first place. How many people now know a trade (e.g. aviation assembly or certification processes) because of Eclipse?
It is so incredibly amazing, how one-sided the "truths" are on this blog.
The only people who will never fire a worker are the ones who never created a job in the first place.
That is it!!! Send your plan to Obama. New way to prevent lay-offs in America. Prohibit any one from hiring any worker in the first place. It is guaranteed to work.
That is it!!! Send your plan to Obama. New way to prevent lay-offs in America. Prohibit any one from hiring any worker in the first place. It is guaranteed to work.
I hate to be the bearer of bad news but.....
Darren said...
If EAC had embedded themselves through the years with the Washington and Wall Street establishment, they could have joined the orgy and asked for a FEDERAL BAILOUT too
It is worth a shot. After all eclipse did make loans to Day Jet and others, right? They could file to be a bank holding company and get a piece of the bailout.
In this ridiculous over-reaction by our government they are letting anyone that loans anyone a buck to be certified as a bank. Even my 11 year old after lending his brother $10 asked me if I could bail him out.
P.S. Of course I told him no. I'm old fashion in that sense. I said he could either pay up or have his brother bust his knee caps. I can report that he is still walking fine.
By the way, since Dave and others are muddying the waters and purposefully or inadvertently confusing a 363 free and clear asset sale as a going concern with a Ch 11 reorganization filing, I you post the following 3 paragraphs from analysis of 363 orders from the Northern District of California (yes, I know it is not Delaware, but the NDC has issue guidelines in 363 asset sales, and other courts have taken judicial notice of them).
Here is a recap from legal reviews:
The Section 363 Sale. As a reminder, a bankruptcy asset sale often happens in the first few weeks or months of a Chapter 11 case, rather than as part of a plan of reorganization. Frequently this will involve a sale of all or substantially all of a debtor's business as a going concern. The sale is generally referred to as a "Section 363 sale" because Section 363 is the key Bankruptcy Code section that governs a debtor's sale of assets in bankruptcy. The debtor must seek bankruptcy court approval of a sale that is not in the ordinary course of business and of any effort to transfer executory contracts, intellectual property licenses, or commercial real estate leases to the buyer.
The Sale Order.For a buyer of assets in a Section 363 bankruptcy sale, a big question is what type of factual findings and legal rulings will the bankruptcy court include -- or refuse to include -- in the order approving the sale. Buyers typically desire that the sale be ordered "free and clear" of all liens, claims, interests, and encumbrances, rather than only certain ones specifically identified in the notice of the sale motion. They also prefer to have findings added to the order on issues such as fair value paid and no successor liability, and often ask for an injunction against actions affecting the buyer that are inconsistent with the sale order's findings and provisions.
So you can spend as much energy as you want talking about EAC having to prove to the court that they will emerge as a viable business. That is not what this is and the court will not hear this.
Typically, this is how it goes. You file CH11 and concurrently or right after you file 363 asset sale of most or the whole business to a buyer. Court hears objections to the sale or to the conditions of the sale, opens up for bids, select winning bidder, enters the order, pays any creditors from the proceeds (based on seniority, status, etc).
The buyer, in case they acquired all/most of the assets as a going concern (typically free and clear and unapealable), can sell the assets, sit on them for as long as they want, or operate the business.
The remainder of the original company (any parts not sold for example) typically immediately changes the filing to CH7 and liquidates.
I do expect the customary 5-10 interested parties to take a look and 3-5 to submit bids, with 1-3 being serious bids.
I expect some creditors to file a motion for piece meal sale of assets. I think that motion will be denied because of the DIP and going concern valuation, except if the court is informed that several parties are willing to bid only for individual assets. For example, if Cessna comes in and say "We are prepared to bid in excess of $50M for the FSW IP and tooling, but only for that" and Lineair comes and say "We are prepared to bid $25M for the DayJet airframes and only that", etc, then this will go piece meal. Short of that, it will be a single sale.
Dave said:
Roel doesn't want any other bidders...
Dave, I'm a huge fan, but couldn't disagree more with this notion.
Deep Blue ( or was it Whytech? Or both? ) has repeatedly suggested that RP has been looking for an exit for some unknown period of time now. I tend to agree with this characterization of his situation. He's proposing a 363 sale for roughly the amount he's got invested in Ecorpse, and would simply love to have somebody else "outbid" him - there's his exit. He'll figure out some way of diverting all of the funds his direction, um, next Tuesday.
( Mind you, I don't believe that it'll actually work, I'm just saying... )
Would you like the hot sauce?
DI
Thielert is a good comparison...
Before BK they were selling engines with a 2400 H warranty for something like 30-40K.
Post BK
Engine costs something like 135K to get to 2400 once you factor in the HP Fuel pump, gearbox and cylinder head replacements which you have to do, but now cost $$$ cash up front.
It is cheaper to operate a PT-6 per hour.
By the way, since Dave and others are muddying the waters and purposefully or inadvertently confusing a 363 free and clear asset sale as a going concern with a Ch 11 reorganization filing, I you post the following 3 paragraphs from analysis of 363 orders from the Northern District of California (yes, I know it is not Delaware, but the NDC has issue guidelines in 363 asset sales, and other courts have taken judicial notice of them).
I don't know why you keep bringing me up unless it has something to do with what I said about liability. 363 sales do not automatically eliminate successor liability. Generally "free and clear" means of current claimants, but it is much trickier with future claimants. It can be done by order of the court, but saying this is like Chapter 7, which that Chapter 7 itself doesn't necessarilly eliminate successor liability. Given Roel's existing ownership of Eclipse, I would not say it is cut and dried that he would be able to wipe away successor liability. If you wish to put yourself out that Roel will categorically have no successor liabiilty, you're welcome to, but I'm not going to say that.
So you can spend as much energy as you want talking about EAC having to prove to the court that they will emerge as a viable business. That is not what this is and the court will not hear this.
I tend to agree with you on this. Where things are more likely to hit some speed bumps is when one or more of the creditors questions not the viability of the emergant Eclipse, but rather the substantiality of the offer to purchase the assets.
From the press release:
"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."
If I'm a creditor, I want to know, how much cash? How much debt? Equity in what, exactly? These need to be evaluated to determine whether or not ONE DOLLAR, cash, is actually a higher and better offer than what Mr Peepers has proposed. 1% of a buck is better than 1% of nothing at all.
But a BK judge isn't going to think that way unless a creditor objects on those grounds, and gets counsel for the U.S. Trustee on board.
JMHO,
DI
I'm no business exec, but I just can't see why anyone would want to buy into this bag of snakes, then spend the money to fix all the design problems, establish a new production line/production certificate, buy-off/placate the vendors, get all the engineers who are baling out back,and the fix the multitude of other problems this program has.
And after you finish, what will you have? An undersized personal business jet that will probabaly be priced within spitting distance of a C-510.
And you just know there is somebody out there thinking, "With 3 billion bucks, I can do a lot better than that......."
I'm still of the opinion that one of the major vendors will decide to quit supporting the program, when they calculate the possible gain (if any), vs. the REAL exposure to Product Liability lawsuits they could see, from a problem-plagued design, with an original issue Maintenance Manual, and nobody trained to work on it.
No Eclipse for the lawyers to go after, so they will be next on the hit parade.
Eclipse needs P&WC a lot more than P&WC needs the E500 business.
B95:
I agree with your post/comments. It is indeed a mere C7 in the cloak of a C11 (CWMR sensed same). This is because Etirc is trying every angle to retain control of the process (BK's by design put control at risk).
If a true C11 "workout" were contemplated (and they are called "workouts" because all the creditors and in many cases equity players, are trying to "work out" a solution/alternative to complete liquidation) then a going forward plan would be on the table and the assets would not be put at play in a carved out sale/offer; the enterprise would be the key issue, and its reconfiguration and re-capitalization would be the game.
RP Etirc obviously have no intention of rebuilding the enteprise and that's logical: there are no customers, there is no revenue, there is no operating income, there is no free cash flow, there is nothing.
RP clearly has no industrial partners; no primary investment banks; no suppliers; no customers; no employees. There are no components present to do a true C11 and a C7 in my experience never amounts to anything when:
There are no customers; there is no revenue.
He thinks he can monetize EAC's "assts" but he doesn't understand what those are, and that the tools, TC, building, brand, design, production blueprint, etc are just hollow shells without value, because:
There are no customers; there is no revenue. There is no cash flow.
Thielert is a good comparison...
...Post BK ... It is cheaper to operate a PT-6 per hour.
Makes sense ( though the heavy handed guidance of the German BK court is in no small part directly responsible for the degree to which costs have escalated ). I guess the FPJ will soon be the 21st century equivalent of the Lockheed Jetstar, in terms of operating costs.
Would you like fries with that?
DI
If I'm a creditor, I want to know, how much cash? How much debt? Equity in what, exactly? These need to be evaluated to determine whether or not ONE DOLLAR, cash, is actually a higher and better offer than what Mr Peepers has proposed. 1% of a buck is better than 1% of nothing at all.
That's a very good point that I hadn't even noticed before.
Waiting For the Other Shoe
All that's needed now is a new AD that requires the manufacturer to remedy something, and it's all over. Finito. Fat Lady done singing.
I expect some creditors to file a motion for piece meal sale of assets ... For example, if Cessna comes in and say "We are prepared to bid in excess of $50M for the FSW IP and tooling, but only for that"
I realize that it's just an example, but wouldn't Fuji be a more likely suitor for FSW? They haven't come right out and said how they plan on building their announced line of Nakajima Citations, so I figured FSW was still on the table for that purpose.
Would you like to try the Stir Fry Special?
DI
DI said ... I tend to agree with you on this. Where things are more likely to hit some speed bumps is when one or more of the creditors questions not the viability of the emergant Eclipse, but rather the substantiality of the offer to purchase the assets.
Exactly right. It is all about the "offer", any competing offers, and what each creditor will get, and as you correctly point out how they will value the equity and debt part of the offer.
Dave said... I don't know why you keep bringing me...
Because you are the one leading the charge and talk on reorganization plans, and "proving" to the court that newEAC will be a viable business, etc. All this talk is, unfortunately, misplaced, and has taken the whole blog discussion down the wrong path. This is an asset sale filing. Plain and simple, not a re-organization filing that you so immediately associated with the CH 11 heading.
Dave, I do appreciate your personal experience with Ch 11 and SCO. But please, try to look at this transaction for what it is. You are a very insightful person and I truly would like to hear your opinions on the asset sale. You do bring very valid points on liability. But it is hard to dialog with you when you keep on bringing up re-org plans, etc.
Any way, I wish you all a Great Thanks Giving. Don't focus on the market/housing crash and the recent layoff announcements. Remember, the market only crashed and lay offs only happen because we live in the most innovative, free and exciting place on earth. Everything was going up at a torrid place and needed an adjustment.
We have much to be thankful to in this Thanksgiving. Yes, even the Eclipse employees. Many of you learned a great trade. Many of you had cool jobs for 10 years courtesy of Eclipse. I bet you you love(d) telling your kids what you did for a living ("Dad/mom builds jet airplanes") how cool is/was that? That experience will serve you well. So I hope you all have a wonderful time with your families this Thanksgiving.
For our European colleagues, go to the nearest American-brand hotel and have some turkey tomorrow. Just make sure it is not an overfed French chicken.
B95 - wheels up to Myrtle Beach.
This is an asset sale filing. Plain and simple, not a re-organization filing that you so immediately associated with the CH 11 heading.
So the creditors don't want to see why they should take debt and equity in EclipseJet and only some portion of cash? Creditors can say a lot and creditors can put the kibosh on this. You're assuming that just because Eclipse filed it, that it will go through and that creditors wont speak up to either require a reorg plan per Chapter 11 or force Eclipse into Chapter 7. You also insult people on one hand for having a lack of experience with BKs and then you blow them off on the other if they do...if you're going to treat people that way where there is no right answer, don't state things like that in the first place. What we know is Eclipse has filed for Chapter 11 and made a motion for 363, but what we don't know is how the creditors feel about this as it is not a done deal. The judge could say you don't have to show a reorg plan and everyone is happy with the 363 sale, but as far as I know, the judge hasn't said that yet and until that time, Eclipse at some point will be required to file a reorg plan.
As I said, I'm the least knowledgeable person in the world about C11/263. But I find baron95's posts to be logical and supportive of my personal 'to Russia with love' conspiracy theory.
Judge OKs Eclipse Aviation request to restructure. In the article the sale is mentioned, but it doesn't say the 363 in particular was approved by the judge and I don't see it its approval in the current filings. There was a full house with show many people showing up, that it ran out of spaces on the sign-in sheet.
In the article the sale is mentioned, but it doesn't say the 363 in particular was approved by the judge and I don't see it its approval in the current filings.
Dave, you manage to sound so petulant when people disagree with you. How about this part?
Pieper, who was in Albuquerque for an all-hands meeting of the company's 945 employees, says the court ruling clears the way for a public auction of Eclipse Aviation's assets in January.
Sounds like a 363 sale to me.
Here's one of the guys who showed up. He's a partner of Covington & Burling and in reading about what he's worked on before, it mentions having worked with the investors who put up $225 million on convertable debt:
Andrew W. Ment
The group representing "Polygon," which Ment was a part of had more present there than anyone else including Eclipse/ETIRC/EclipseJet.
Dave, you manage to sound so petulant when people disagree with you.
I was pointing out what was and was not said or filed. Even though Chapter 11 was just filed, we are supposed to ignore Chapter 11 because Eclipse made a motion on the first day.
How about this part?
Pieper, who was in Albuquerque for an all-hands meeting of the company's 945 employees, says the court ruling clears the way for a public auction of Eclipse Aviation's assets in January.
That part is why I checked the BK filings. Roel saying something is not the judge ruling something. Two completely different things.
Sounds like a 363 sale to me
Yes, I expect that is what Roel wanted the impression to be, but Roel is not the judge. The judge approved restructuring, while Roel talked outside of court about asset sales.
TBMs et al, perhaps I was a petulant as you put it. It is not so much that I disagree with what Baron is saying (363 sales aren't reorgs and it is like Chapter 7), but a matter of where we are in the process. I've been pointing out all the different things that could happen under Chapter 11, while Baron has pointed out what would happen with the 363. The only real contention is that I've felt rubbed the wrong way by Baron saying to drop talk about what could happen in Chapter 11 because Eclipse filed a motion and so I've responded petulantly because I don't feel I should drop something that has just started with literally the First Day filings yesterday. BK courts are fast in legal terms (actually they can be extremely fast), but fast in legal terms is slow in ordinary terms and having the Eclipse BK wrapped in two days with all that is remaining is the auction I believe would be unheard of in the history of US bankruptcies. It is my strong contention that we have to wait to see how the creditors respond and then see what way the direction looks like we are going after all the interested parties have had their input.
I'm sorry if I acted inappropriately.
Dave has a point, if the world is constantly told something, even if its not true, they will probably act the way EAC wants...
I think theis has been a happy pattern for them for about 13 years, now.
I think the guys left out in the cold by ETRICK need to make a lot of NOISE now - in the press, and in the courts. Don't stand for any more BS - I think Roel is counting on you guys assuming the positio (again) and he can get off scott free...
The alternative is holding his feet to the fire, and let him know you will not just take it, any longer.
I've been rechecking the BK courts and what the judge approved was to have a hearing on the 363 sale on 12/15 with objections due 12/8. This is filing #42 in the case (thanks for all the fish). This gives all the parties the ability to have their say before the judge rules.
The terms ETIRC is offering:
* $28 Million Cash for the creditors
* $160 Million debt owed to the creditors
* 15% of stock in NewCo to the creditors
(Valuing Eclipse at $880M with $132M equalling 15%)
* Using the Russian VEB deal to finance the purchase
If others bid:
* $5 million depost if you wish to bid
* Must be $5 million over and pay the DIP amount
* Up to $1 Million Misc Expenses
* $4 million break-up fee (for the deal not to happen)
Regardless who gets it:
* Assuming the MOU between Eclipse and ETIRC signed 12/15/07
* No 1/12/06 ETIRC fleet order
Of note:
* Roel's severence between both Eclipse and ETIRC was 7/25/08 and amended 8/27/08. It gets tossed BTW.
More to come...I'll probably send this to Shane to get a second pair of eyes on this to see if I'm reading it right...
Project Top Gun?
Pacer document 19 is the creditor matrix. I note with some amusement that "Project Top Gun" is plastered across the top of every page of the extremely long list.
Congratulations bagholders - while Roel was executing his scheme to leave you feeling materially less wealthy, he did so with visions of Tom Cruise dancing in his head.
Would you like to try the Goose?
DI
From Roel's bid:
Excluded Assets
...(iii) any Customer Contracts;(iv) any Contracts pertaining to Jet Complete Program;(v)any Contracts with Employees or otherwise pertaining to employee maters;...
So Roel wants all the existing orders erased as well as Jet Complete for existing owners. I've got to wonder if Eclipse's current employees will feel "upbeat and relieved" to know that he's specifically excluding them from his bid, but of course Roel doesn't want employees to know such things as this.
Section 7.2 No Successor Liability to Seller's (Eclipse's) Employees
Roel excludes any contracts with you going forward and isn't liable for anything Eclipse did to you in the past. With the sale everyone is basically fired and it is up to Roel if he wants to re-hire you.
Section 7.6
Certifications. Prior to the closing date, sellers shall cooperate with a provide reasonable assistance to the buyer in connection with the buyer's negotiation with (i)all EASA authorities, employees, officials and personnel to obtain the issuance to buyer of new EASA certificate, of the same quality and type as the Eclipse EASA certificate and (ii) all FAA authorities, employees, officials and personnel to obtain the issuance to buyer of a new (x)FAA production certificate (y) FAA type certificate of the same quality and type as the Eclipse Production Certificate and Eclipse Type Certificate.
I think this section speaks for itself. Also Eclipse in their filing says they think Roel's offer of graciously letting the creditors have Roel owe them another $100M+ is the best deal around rather than liquidation or selling all or part to someone else.
Would you like to try the Goose?
How about the Duck? Donald Duck is listed as a creditor!!! Oh, and Richardson for Governor and Chavez for Mayor (actually there's a few Marty accounts listed) are listed as creditors?!?
During the third quarter of 2008, Albany International Corp. (the "Company")
issued a press release announcing that its subsidiary, Albany Engineered
Composites ("AEC"), was suspending production of parts for Eclipse Aviation
("Eclipse"), one of AEC's key customers. The Company further reported that this
event contributed to a Q3 AEC operating loss of $3.3 million, and that AEC had
accounts receivable from Eclipse totaling $7.4 million, which it believed at
the time to be fully collectible and for which, accordingly, the Company had not
recorded a reserve.
On November 25, 2008, Eclipse filed for protection under Chapter 11 of the U.S.
Bankruptcy Code. According to public filings as well as communications received
from Eclipse, Eclipse intends to pursue the sale of substantially all of its
assets in a competitive auction process, and to continue to operate until such a
sale is finalized. While it is too early to ascertain the amount, if any, that
the Company will realize through the bankruptcy process, the Company currently
anticipates that it will need to write off all, or a substantial portion of, the
Eclipse receivable of $7.4 million during the fourth quarter. Additionally, the
Company anticipates additional Q4 write-downs of $2.1 million for equipment and
$1.7 million for inventory dedicated to Eclipse.
Albany International 11/26/08 8-K Filing
Okay, I admit I was wrong...
I made the statement several days (weeks?) ago that I foresaw The Faithful using things from this blog in a possible court case involving an FPJ.
I would like to modify that prediction to say that I foresee The Faithful using things from this Blog in their court cases to get their $$$ back from RP & gang!
Now the Honor Roll may be called as witnesses!
Any idea how long it would take for the Eclipse factory and Eclipse 500 to ber re-certified assuming everything was the same except it was under a new company? The same also goes for EASA. How long would it take and how much would it cost for EclipseJet to get all the certifications all over again?
Any idea how long it would take for the Eclipse factory and Eclipse 500 to ber re-certified assuming everything was the same except it was under a new company?
Assuming everything was the same, the TC should transfer to Newco upon execution of an APA. I suspect that even the slightest amount of scrutiny of Oldco would result in withdrawal of the PC - it seems highly unlikely ( to this relatively uninformed observer ) that the quality procedures & controls have survived Ecorpse's turmoil intact as we speak. Newco might not even apply for one if production rates remain low - I've read on the blog that Mooney has been operating without one for years ( or was )...
The same also goes for EASA. How long would it take and how much would it cost for EclipseJet to get all the certifications all over again?
EASA certification requirements are a cold dark place, where my seed can find no purchase. I frankly have no idea.
Okay den,
DI
Assuming everything was the same, the TC should transfer to Newco upon execution of an APA. I suspect that even the slightest amount of scrutiny of Oldco would result in withdrawal of the PC - it seems highly unlikely ( to this relatively uninformed observer ) that the quality procedures & controls have survived Ecorpse's turmoil intact as we speak.
So it would be fair to say that the TC is easy to transfer, but the PC could be very difficult even if everything is the same as things are at the factory right now?
EASA certification requirements are a cold dark place, where my seed can find no purchase. I frankly have no idea.
Gotcha. If nothing else I gather that it would cost some $$$.
Couldn't resist a post flight/dinner peak.
Dave, my apologies - I was a bit frustrated by what I perceived as a tangential line of discussion. One more time, I do value your opinion and your efforts to post factual info.
A couple of quick points on the filings.
1 - Dave IS CORRECT. The court simply granted the CH11 PETITION, and RP is trying to make it sound like the court approved the outcome. Approving the petition is almost an automatic if the filings is complete and convincing. It means very little in terms of the final outcome.
2 - As I predicted, because of the time limits on DIP and bid expiration, the court is moving very fast (see DI even the Wilmington court move when there are deadlines). 1 week to file objections and one more week till hearing.
3 - As expected, the bid is a tough pill to swallow. I'd value debt in the new company as ZERO. I'd value equity in the new co as ZERO. So this is a $28M cash offer. That is at best $0.025 on the $$$, and I assume most of it will go to senior creditors, unless RP convinces the court it should go to critical vendors with stipulations to continue to supply (Dave this is the murky area, where the court or creditors my ask for an operating plan (note that is different than a reorg plan) so they can value the debt and equity in newCo.
4 - There are poison pills everywhere for any other "outside" bidder. Best bet is for a creditors bit to make RP raise the cash portion of it. Question is can the creditors get their act together? Unlikely. Eclipse did their homework and has been cooking this for a while. The creditors (vendors, owners, depositors) totally missed the boat. They should have formed a group/class and had representation on the ready, or better yet, should have taken the initiative, and filed for involuntary BK. Too bad - seems like they believe in the tooth fairy. They let Eclipse pull tooth after tooth after tooth ...
By the way, I anticipate that the court's 363 asset sale order will NOT have provisions preventing Eclipse owners and depositors from pursuing a civil fraud case against EAC management. I equally anticipate that no owner depositor will vigorously pursue that option.
I also anticipate that one of the first things newCo will do is offer the depositors "some" consideration for their deposits IF they reconfirm their order at a price north of $2.15 AND indemnify and agree not to bring any action against newCo and EAC management.
So by Dec 8, once the objections are filed, we'll pretty much know which way this will go. Assuming to "real" objection/alternative bid emerges, expect just a bit of bank and forth and a little increase in the cash portion of the bid, if any.
We will, see. But there is a fair chance that this could be really wrapped up by mid Jan. Even with objections and competing bids, it will likely be over by Valentine's day - The massacre of the creditors. Want chocolates with that?
Time to shut down the computer before I am shut down by the baroness.
Happy TG again to all. Creditors turkey (err goose) was cooked early this year.
Dave, my apologies - I was a bit frustrated by what I perceived as a tangential line of discussion
I'm sorry if I came off that way. Right now I see this as very early on in the process with a whole range of things possible. The further we get into this, the more things will collapse into the direction this is going leaving only so many things that can happen. At this point I see Eclipse could go into Chapter 7, do a regular Chapter 11, have the 363 as planned or have it, but at a later date and all these possibilities I don't even think encompass everything.
3 - As expected, the bid is a tough pill to swallow. I'd value debt in the new company as ZERO. I'd value equity in the new co as ZERO. So this is a $28M cash offer.
Actually isn't it more like $7M+/-? I say this because Roel is putting up the DIP of up to around $20M and that is the first thing that gets paid back and it would go right back to him. I believe, but I don't speak with much certainty that the part of the $28M would go to pay Roel for the DIP.
So by Dec 8, once the objections are filed, we'll pretty much know which way this will go. Assuming to "real" objection/alternative bid emerges, expect just a bit of bank and forth and a little increase in the cash portion of the bid, if any.
I agree in that what happens on or before December 8th will show which way this is going.
We will, see. But there is a fair chance that this could be really wrapped up by mid Jan. Even with objections and competing bids, it will likely be over by Valentine's day - The massacre of the creditors.
I agree with everything except your odds. At this point I wouldn't give odds. I think the smaller creditors (those being owed 7 figures or less - namely depositors and current Eclipse owners) have blown it by not getting together (as you've stated), but I don't think we know enough about the big guns yet. They might just be there to show up (or alternatively the big vendor debtors might have not shown up because they've completely written off Eclipse and have no future plans to deal with Eclipse or EclipseJet) or they could be preparing challenges to contest the 363, try and postpone the 363, etc.
I also think that current and former Eclipse employees might want to take action regardless of what Roel is telling you (I doubt for instance that when he told the "all hands meeting" about the sale that he said all his employees would be fired and they'd lose all their rights to sue over unpaid wages, vacation, etc). Roel is taking action to eliminate their rights, so employees should see if they want to speak up in BK to protect their rights. I'd suggest anyone who has dealt with Eclipse read the APA to see if Roel is trying to affect your rights and if you want to do anything about it.
This could be very interesting (if lots of motions fly) or very boring (nobody does anything and just lets Roel have his way without any resistance). In any event it will be very informative. BTW Eclipse is looking at spending a few million per month (it varies week by week whether or not payday is in that week) to operate. Part of what is going on is static testing.
just gone some 40 hours to sea making circles in water ...
and the world seems to be upside down ...
ok , after reading posts , 3 comments :
1° some posts seems to be utterly funny (if only they could be joke...)
WAKE-UP ...
what is missing here is CUSTOMERS !
individuals or corporate ready , able and willing to buy the Fpj ..
so , no point to draw a new path on the clouds !!
2° the whole plot has been something based on EMMOTIONAL !
what roel is aiming at(IMO) :
the few ALREADY owners are joining together and put-up a little more than what they would pay for getting their Fpj finished ...
by this saving the company , the bird and eventually making it survive ...
one day (may be they will make even or (lets be crazy ) a few cents of profits ...)
3° as far as i know the EASA is NOT tranaferable ...
it took 5 years to have it (and partial only)
how long would it take to do all the paper works (in case a transfer can be done ) ?
how long to cert. new furnishers ?
in a cash starved mode = almost ever ....
Dave : RP doesn't care about waht other think ...
his history is made of so many failures , how could be else ?
the only person i have beentalking to , knowing the "beast" ddin't want to say anything else than :
" with such guy , it is wise to check how many fingers you have left at your hands , once you have shaked hands with him ...."
the author of this comments is a first position business guy in Luxembourg ...!!!
so the conclusion :
nothing has changed ...
a cloud hiding an other cloud ...
a today-lie trying to hide the yesterday-lie !
same tomorrow ...
so on such i would be on Airtaxi opinion = you've been done , get it over , it's finnished !
unless you're an (unfortunate owner) and decide to work out a simple calculation :
Upgrade = 200.000 ;300.000 ;400.000$ a piece ...
join together , put in the pot 500.000 (or less) and have a "club" that will cater for your bird , in some better eco. time can build it anew ... and may be do some profits .... one day ...
tough choice , but sometime to have 80% of something is better than 100% of nothing ...!
250 planes at $100k profit a piece for upgrades... if the price it right -
Hmm... seems like a low offer to me.
I wonder "why?" the Russian money is being used to acquire EAC assets...
Anyone think Roel obtained THAT money while working for EAC?
Even though hthis is all self-dealing, I think its hysterical that Roel actually wants any of this - he must know its a hard sell, worth nothing, and a failed business.
Perhaps the Russians are into building 200 planes a year and trying to make a go of it.
Anyone know what eklipshke (or thereabouts) means in Russian?
Enjoy Turkey, be thankful, and thanks to all...
Gunner, I hope you are OK man... you've been MIA for a while..
ATMan
The Owners Club and a group of unsecured creditors have both retained counsel, and have been working with them for a few weeks prior to the filing. Both groups had representatives at the initial hearing.
That's good to hear. Who were the representatives?
Pieper says the company's work force was upbeat and relieved that the restructuring might mean the manufacturer's troubles are nearing an end.
I floated 30 days without tooth paste or soap, when suddenly someone let down a rope. I knew that my troubles had come to an end, and I climbed up that rope saying "thank you my friend".
But when I got to the top it wasn't a friend, and I saw that my troubles were not at an end.
A long remebered mis-quote from a favourite book :)
The Fallout
I've mentioned that the Japanese were annoyed. I thought it was only $31.8 million that Fuji (who make the wings) were up the creek for, but it appears the situation is a little worse that that....
From Forbes.com today.
FUJI HEAVY SLUMPS ON ECLIPSE FAILURE
Fuji Heavy Industries plunged after the maker of Subaru brand cars said it may have to write off its exposure to U.S. aircraft maker Eclipse Aviation Corp, which has filed for protection from its creditors.
Fuji Heavy fell 9.7 percent to 289 yen, underperforming the transportation sector, which slipped 0.1 percent.
The Japanese carmaker, which also supplies air jet wings to Eclipse, said its exposure totaled 9.5 billion yen ($100 million) in inventory, accounts receivable and an equity stake.
As more such stories hit the news headlines, the chances of getting people like this to put more materials or credit into ABQ get less and less likely.
I don't care who you are, that's gotta hurt your chances of avoiding bankruptcy.
Shane
Bearing in mind my previous comments, I should also remind the blog in general, and Roel in particular, that the Japanese don't really have the word 'no' in their vocabulary.
Maybe, just maybe, Fuji representatives have already said they 'really would prefer to explore alternatives' when talking to Roel. He might think that he can bully them into continuing to supply, when what they mean is the word they can't say.
NO.
This won't be the first time Roel has been led astray by what people have told him. He must be regretting his involvement with The Wedge every hour of the day....
Shane
YA said:
Dave and baron,
The Owners Club and a group of unsecured creditors have both retained counsel, and have been working with them for a few weeks prior to the filing. Both groups had representatives at the initial hearing.
I'm afraid you know not of what you speak.
Given that that is precisely what Baron has been recommending for quite a while ... well, you just go ahead and finish this sentence as you see fit [ boggle ].
Dave's reply:
That's good to hear. Who were the representatives?
"Representatives" might be too strong a term - "spectators" seems more likely, judging from the sign-in sheet from the hearing. Other than Ecorpse-related counsel, there were two attorneys present who signed in - one for TW Metals, and one for Gulf Coast Commercial. Two also appeared "telephonically" - one for the Ferdinand Family, and another from Perkin Cole for whom it's not clear who they appeared on behalf of.
Even if they just attended without making an appearance, there is plenty to be gained from simply having been there. All in all, a good move for the owners.
I still can't get over Eclipse's internal name for BK preparation being "Project Top Gun".
Would you like to fly into the danger zone?
DI
Baron95 wrote
Eclipse did their homework and has been cooking this for a while. The creditors (vendors, owners, depositors) totally missed the boat. They should have formed a group/class and had representation on the ready, or better yet, should have taken the initiative, and filed for involuntary BK. Too bad - seems like they believe in the tooth fairy. They let Eclipse pull tooth after tooth after tooth ...
Very well written Baron. Thanks
As far as the Owners Club goes, they had some Delaware attorneys physically present, but I don't know their names.
Presumably "Polygon" represents the owners and unsecured creditors group (I say this because Polygon was the only group besides Eclipse or ETIRC who had more than one attorney present). Polygon was represented by John H. Knight of Richards, Layton & Finger and Benjamin Hoch, Charles Jeanfreau and Andrew Ment of Covington & Burling. C&B had represented the creditors previously in the $225 million Eclipse debt financing.
The only person who appeared (telephonically) that they didn't say who they represented was Brian Jennings of Perkins Coie. He has experience in being involved in the bankruptcies of aircraft manufacturers, but he gave no indication on whose behalf he was appearing.
There was also the telephonic appearance of an attorney representing the Ferdinand Family. Does anyone know who they are?
"Representatives" might be too strong a term - "spectators" seems more likely, judging from the sign-in sheet from the hearing. Other than Ecorpse-related counsel, there were two attorneys present who signed in - one for TW Metals, and one for Gulf Coast Commercial.
Yes, for first day filings, you're basically just a spectator, but in regards to all the attorneys present, you left off the four from "Polygon" who were from two different law firms.
The EASA TC does not reflect an EASA certification project. EASA did a Validation of the FAA TC. As long as the FAA TC is valid, and the FAA transfers the TC from Ecorpse to Ezombie, EASA will follow suit.
EASA bills the TC transfer at €220/ working hour, and the Ezombie will have to pay the annual TC holders fee of €670.
EASA will have got there €227K for the issue of the TC, it is normaly cash in advance.
Seems like Pieper and the EclipseLegalTeamNG are a fair bit sharper than the Wedge and the original team.
If you want to steam roll through a process with little resistance, file just before everyone disappears for Thanksgiving, assume that productive working hours of outfits wanting to oppose you will drop by 20% in December, and that the theoretic 30 working days till Jan 9th are about halved with xmas parties, skiing holidays, shopping das, Xmas, Newyears, hangovers etc etc.
Looks like Pieper found his bigger fool. Now if he can just keep faking it till he has the cheque from the Russians, life is sweet.
How high will that cheque bounce :)
Where did he sail to on tuesday?
Fuji got in this for $100 Million? Just to make some wings?
Lame!
Cessna could be laughing their arse off as the amounts become public that all the wannabe VLJ players sunk on the Wedges Dream. Unfortunately, as others have pointed out, billion dollar craters hurt the entire industry.
Cessna spend something like $300 million, to design, certify and deliver what they said they would on time, on cost, profitable, finished planes. Using cheap labour and rivet guns giving a production process they will probably turn down now to a pilot light.
Meanwhile the Wedge blows 10x because of the theoretical advantages of a stir fried A/C, which too few Kens want, and therefore too few Kens can afford.
Lame.
The Wedges plan ..............DOA
The Pied Pirates plan.........DOA
The resurrection..............DOA
The Service company plan......DOA.
The fat ladies coming through loud and clear. I have no doubt we'll still have this blog next thanks giving, as Ezombie flops around gasping, but ATM and other have poited out for years - Where are the customers? If you want to sell something nobody wants and nobody needs, you only hope is to paint it olive drag.
With Fuji they have about $72M in Eclipse inventory and Eclipse owes them $26M. Any idea on how many wings Fuji has in inventory and how many wings Eclipse has taken but hasn't paid for?
Meanwhile the Wedge blows 10x because of the theoretical advantages of a stir fried A/C, which too few Kens want, and therefore too few Kens can afford.
I don't believe Vern ever believed in either the advantages nor the market size. I believe Vern was just trying to cash out on something he knew wouldn't work, but he wanted to leave others holding the bag while he profited.
My pre-production proof is the claims of Eclipse that they could build an aircraft in 600 hours plus paint and testing did not jibe with the stated staffing levels. From Day One they never though FSW would do what they claimed it would do. I personally believe there is criminal fraud there just in what has been published in the media and that what was shown to investors could be proven to be false (not to say that any criminal investigation will happen or that there will be any indictments or convictions). In any event, I believe Vern also knew post-production that it wouldn't work and that was why he constantly cooked the order book (which Roel helped Vern with and then continued once he took over).
Where are the customers? If you want to sell something nobody wants and nobody needs, you only hope is to paint it olive drag.
There were customers just Vern destroyed what could have been a successful business by building it up in such a way that it was designed to fail because he was trying to scam. If he hadn't tried to scam, Eclipse could be going along OK and not burnt through so much money. I'd have some sympathy in Vern really thought he could produce aircraft in 600 hours and that there really was going to be a lot of customers, but I think he knew full well the aircraft would take around 10X more hours to build and the market was 1/10th what he said it was, so he intentionally designed the business model to fail, but hoped to cash out before others figured it out. I do by the way understand what Baron says about entrepreneurs, but when I speak of Eclipse my comments are limited to them unless I state otherwise and I see what Vern did (and Roel has continued to do) as an intentional sham rather than a bold failed experiment.
Readers of this blog may want to have a look at Should Pieper Retain Eclipse? By Russ Niles, AvWeb
OK, I'll say it...
Its nice to discuss how unfait this BK proceeding is...
Its nice to talk about how wonderful the plane is, in someone's eyes...
Its nice to speculate on how inflated the order book was, or how dishonest EAC was regarding milestones, or how the plane ws cracking and was not designed for air taxi, really...etc...
Bottom line is, we had certain intuitions, insight, opinions on all of this, BUT THE REAL ISSUE IS WHAT WE ALL NOW KNOW:
EAC WAS A HUGE FAILURE.
1- there is nor ROI for the $3Billion dollar mess
2- there is no EA-50 as orignally envisioned
3- there is no EA-50 as revised
(the plane for around $1M or so (who cares, say south of $2M) with the low operating cost numers sold, IS DOA)
4- there is no jetincomplete
5- there is no warantee
6- there is no free upgrade program
7- there is no AVIO
8- there is no high rate production
9- there is no "thousands of employees"
10- there is no large market
11- there is no air taxi market for this plane
12- there is no platform for suppliers to leverage lower cost/higher rate efficiencies
I'd say all in all, the expression WCSYC, was correct. Everything EAC set out to do, everything that was truly important, has been proven a failure. A huge failure. A business school case study failure.
I know some will say: they obtained Cert, they flew a good plane, you'll see, they will emerge like the others who ran into problems and ended up getting bought up... etc...
Well, this IS different.
EAC set out to revolutionize the airplane making business, and the transportation system, and instead they produced a very small, never finished airplane that missed the intended purpose and market by a HUGE MARGIN.
Pieper says "its a failed business model"
OK, what's the new plan?
PS. if you are ever thinking about investing in a project like EAC, find some old guys, and let them have a looksee... then fond some younger guys and let them have a looksee... and listen to them. They may not tell you (Like Russ Meyer) NOT to invest... or even to invest, but they will probably show you where the risks are, and provide some insight into the real prospects for success or failure.
All the BS about entrepreneurial progress regarding EAC is just that, BS... a way to get your money. This industry makes progress... and just because no major OEM agrees with a dumb approach frought with risk upon risk, does not mean the industry need another "entrepreneur".
I have a $3Billion hole to back up my opinion on this... plus 3 years of blog history which simply states - it was not too tough to see how this would all end up.
Happy Turkey.
As our Robber Baron95 likes to point out, 9 out of 10 start ups fail (is it really that bad), and that is a healthy essential part of free enterprise.
I also think that this whole sorry tale is largly poor perfromance and miserable failure on the part of the Wedge.
However, when three thousand million dollars of other peoples money is invested, and the result is an asset worth seven million, some where in there is fraud.
It probably started out with the ever increasing pressure, as the lame management of a half arsed plan started causing schedule slips. The payroll and costs grow month by month, but the TC slips further and further into the distance as the organisation slowly gains understanding of how badly they underestimated the task.
Corners start getting cut, questionable decisions start to be made.
Soon a few lies are needed to smooth over the sharp edges caused by the questionable decisions.
Frustration mounts, in the heat of urgency, a manager on the spot orders actions which are clearly not legal.
Sooner or later the persons trying to implement a quality system raise the flag. They are forced to either bend or leave. Soon enough you have a subservant quality system, which is in name only.
As the certification really gets going, the weakness of such a system is all to apparent to an independant auditor. Things grind to a halt. A standoff occurs.
The upper management fires up the old boys network, looking for favours, scratches a few back, a few changes get made to speed up the process.
The greed and pride of politicians and political wannbes is used to gain investment, preferential treatment,etc.
Once one sees how easy this is and becomes good at it, it takes only a little misrepresentation to really get the gears greased.
Fraud may not be the biggest, or even a significant part of this story, but in a implosion of this size, somewhere there must be fraud.
Readers of this blog may want to have a look at Should Pieper Retain Eclipse? By Russ Niles, AvWeb
Yes, aside from the article itself the comments of Barry Barash were good. Depending on how the creditors feel about what Roel is doing, this could get very interesting.
I also suspect that in reality the aircraft can't meet its contractual performance contracts and that going forward, the aircraft will have to be operated at less than the contact level if one wants to avoid major breakdowns. I believe the aircraft is too heavy and that is why there are tire and landing gear issues and I also think the carbon on the engines is because the FADEC was changed to hit the contracted performance at the expense of damaging the aircraft if you do this repeatedly. I think there are many other such problems that Eclipse new about and hid by re-programming Avio and the like. Assuming all the parts remain available this isn't to say the aircraft can't be used, just that if you want to use the aircraft over the long term and not cause serious damage to it, use it below the contracted performance levels.
I just checked the NM courts and there was another lawsuit filed against Eclipse the day before they filed for BK. It is Total Eclipse Aviation LLC/Gary Johnson v. Eclipse Aviation/EVLJ LLC. Fraud is mentioned along with the usual stuff.
I have one other question if anyone knows the answer to it. Much has been made about Vern's leased aircraft and how Vern says he has nothing to do with Eclipse now. In the BK filings there is mention of a leased aircraft that Eclipse leases for $1500 a month to a non-profit that is there to promote Eclipse. Does anyone know if this is Vern's aircraft that he is being leased for $1500 for the stated reson of promoting Eclipse? If it isn't Vern, who is it?
surprise!!!
"Fraud is mentioned along with the usual stuff."
Dave:
I think it could be Ken..
;)
Well, Vern is certainly a non-profit!
In the BK filings there is mention of a leased aircraft that Eclipse leases for $1500 a month to a non-profit that is there to promote Eclipse. Does anyone know if this is Vern's aircraft that he is being leased for $1500 for the stated reson of promoting Eclipse? If it isn't Vern, who is it?
There's a pretty good chance that it's a Skyhawk. IIRC, they said they paid 225K for the aircraft in 2005 - which was also the approximate cost for a new 172SP, in that time frame. Stated purpose for the aircraft was to promote GA for Eclipse staff, their families, and the general public.
DI
There's a pretty good chance that it's a Skyhawk.
Or maybe not?
FreedomsJamtarts mentioned the Quality system. And I'd like to echo that sentiment, that our QMS had many holes to say the least.
In my experience with EAC, specifically in the Quality department, I had EIGHT different managers from March 2006 thru August 2008:
1. Sam Powlen (now at the FAA)
2. Larry Davis (now back at Bell Helicopter)
3. Ken Hamby (formerly the Manager, Supplier Quality Assurance)
4. Robert "Bob" Matthews/Ray Pilon
5. Saul Pacheco, our Quality VP (I list him because Metrology was at the ass-end of QA and it took a long time before the Bob and Ray show was replaced)
6. Mike Page, who replaced #4.
7. Mark Rodriguez, the most inept and worthless QA manager I have EVER had to work with in the last 20 years of my career. We called him the "beachball" cuz he is so FAT. Or he was referred to as The Lawnjockey because all he ever did is stand around and play with his friggin' Blackberry.
8. Randy Widgeon
People at my level seldom left the company. But I was considered to be an 'old-timer' by some. Even from day one, I learned how to control my managers; working 50-60hrs a week was enough for me. A lousy divorce in 2005 was still fresh in my mind. Working for my father-in-law, by far, was the single WORST decision I have ever made in my career. Working for him was worse than working for EAC.
I would occasionally cause shit, no question there. Saul was in over his head. I have no grudge against him per se ....especially since he had the decency to honor a verbal promise Larry Davis made to me to get a raise since I was moving to take over Metrology. Long story short is that the December 2006/January 2007 time was very strange. This was when Glenn Pressley was our Director of QA yet they hired Saul to be the VP. Saul came from Motorola and Medtronics; he had ZERO experience in an aviation company. To be fair, neither did I. Yet I REAMED our VP of Manufacturing, Paul Schumacher, because I was roaming the halls at 5:30am in Feb 2007 and I found tool lockers wide open. Yep, I took pictures and circulated them to everyone because the FAA was on site THAT VERY DAY for an audit. And I deliberately used these audits to sound the alarm whenever I had clear evidence of people not doing their job. Paul had his hissy fit with Saul ...and then Saul eventually chatted with me later that day. I didn't expect to get so angry with him, but it was extremely emotional. I ended up yelling at him regarding the loss of Ken Hamby. How can we run the QA department if all our Managers are leaving - and we have no authority to enforce any of the rules? He did not have anything powerful to say at all to give me any reassurances that anything was to change anytime soon.
I am getting ahead of myself because I wanted to briefly mention the Glenn Pressley mess. Now, understand this was still a good-old-boys network. As much as Vern would publically say he hated aviation "experts" ...he DID hire some. Glenn had a prominent career with Textron/Bell Helicopter yet was passed over for promotion on more than one occasion. The details are fuzzy in my head, but there was some major paperwork mess and Vern PUBLICALLY blamed our Quality department. I'd have to dig thru newspapers, but I remember that time very well. Glenn was pushed out and had to take the fall. Naturally that meant a major WAVE of skilled QA managers soon left the company, mainly anyone that Glenn had brought with him: Sam Powlen, Gary Whalen, Larry Davis, Bobby Taylor. Ken Hamby came from Delta, but he saw the writing on the wall and left on 2-1-2007, just DAYS before the FAA audit. Ken Hamby and Gary Whalen are the only two QA managers that shook my hand on their last days.
Without question, our Quality system was severely lacking. I didn't really care if I was liked or feared, but I do believe that the trains, er planes, need to be made correctly. I believe there needs to be a healthy tension between Quality and Manufacturing. There was still lots of political stuff going on, but EAC didn't certify sn 002 until March 2007 if memory serves. Vern was really ticked off at that, yet he never took personal responsibility.
The most recent shake up had Mike Page and Saul Pacheco fired late January 2008, THIS YEAR. And low and behold, Todd Fierro's buddy, Jason Lundstrom, becomes the "Senior" Director of Quality. TF had another fox guarding all the chickens, Steve Clem. Now, the few times I had to chat with Steve, he was ok. But the secretary HATED Steve and Todd. And you know the first rule of business, NEVER piss off the secretary. So, I always got lots gory details from her...
Jason and I had several run ins over the last 2 and 1/2 years. But getting him to say more than 2 words to me would be a miracle. He didn't have any personality that I could understand or connect with. Even SAUL had more charm to at least understand my point of view even if he didn't agree with my tactics. No harm, no foul. Jason tore into the a/c 106 flight test coordinator, Kurt Encinas, at one meeting, and that pretty much told me all I needed to know about Jason. He is MY age, 36, and he is a Senior Director. Go figure.
As I said to my friends, the process auditors, on the QA Process Integrity Group, working in QA for Eclipse feels like being a cop without a gun. No shit. They laughed ...but it also became our inside joke.
A few days ago, my contact at Davis Inotek confirmed that EAC is behind in paying them for calibration. Davis is refusing to perform any more repairs/cal for Eclipse until the account is current; they are even holding some EAC tools hostage until the bill is settled. Apparently EAC is no longer calibrating/repairing ANY tools used on production or flight test birds. Since I was also responsible for GNV and ALB service centers, I think that little detail is kinda important. Yep, I forwarded that email off to my friends at the NTSB and FAA. Sure, they might not be making any more planes ...but then EAC should lose their Part 135 cert and Production Cert if they can't afford to cal a damn torque wrench anymore...
If one of these planes kills someone because of shoddy maintenance on tools, I will be the FIRST one to volunteer to testify for the product liability attorneys suing EAC, even in bankruptcy. Just because they laid me off doesn't mean that I will sit idle on the sidelines on a matter like this. So, if anyone else from QA is reading this blog, in my opinion, you have a higher professional obligation. You MUST make sure people like Jason or Steve are not trying to cram bad product out the door when no one is looking, or just because we didn't get paid, or whatever.
Just because the company is now in CH11 doesn't mean we stop doing our job.
e.d.t.
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Dave,
Does anyone know if this is Vern's aircraft that he is being leased for $1500 for the stated reson of promoting Eclipse? If it isn't Vern, who is it?
Two thoughts spring to mind.
1. It might be The Wedge's FPJ, with some sort of 'offset' against what he claimed he was due when he was fired. I understand that he claimed he was in line for one of the earliest 'final config' FPJ's, so it's possible he does not actually own this one.
2. John Travolta has an FPJ, which I'm told was not paid for. Is it possible that this 'nominal' sum is being charged against 'nominal' appearance fees?
Just a couple of ideas...
Shane
Two thoughts spring to mind.
1. It might be The Wedge's FPJ
We're thinking too hard about this - it's not Wedge's FPJ - that's covered by a lease agreement from August of this year ( and is listed as an excluded contract on the proposed APA ).
Finally found it, Doc #18, page 7, footnote 3:
"In addition to the indebtedness set forth below, Eclipse Aviation, as a borrower, is a party to that certain loan agreement with First Source Bank, dated as of July 2005 in the original principal amount of $226,000, bearing interest at a rate of 7.4% per annum ( the "Aircraft Loan" ). The Aircraft Loan requires monthly principal and interest payments of approximately 3,000 through June 2010 with a baloon payment of $104,000 due at maturity in July 2010. The Aircraft Loan is secured by an airplane that was purchased with the loan proceeds. Eclipse Aviation leases this aircraft for $1,500 per month to a non-profit organization dedicated to supporting and promoting general aviation for Eclipse Aviation employees and the community."
It's a little prop job for an employee flying club ( or something like that ). Boeing, too, has an employee flying club which - curiously - does not send the newbies up in Boeings. List price for a new SR20-G2 at the time was $236.7K plus options - Eclipse probably got a discount There is a 2005 SR20 currently registered to Eclipse Aviation, N499SF ( the "Eclipse 499" ).
Nothing to see here, move along...
Ask the man who owns one ( of each )...
The other day, bill e. goat asked about foreign sales of Mustangs. While I feverishly researched an answer, somebody else on the blog provided an answer of higher quality than I'd ever be able to come up with.
A name that caught my eye on the FAA registry of Mustang owners was "Eclipse 5 Coal Sales LLC". Heh - consider the irony!
The irony thickened as I read through the list of Eclipse creditors. You guessed it - Eclipse 5 Coal Sales LLC is on the list.
Though the history of Pennsylvania is littered with various "Eclipse Coal" ventures, there are no non-VLJ-related returns on Google for the named company, and its address is an 18th floor luxury condo on the bluff overlooking Pittsburgh's Golden Triangle - a seriously nice location. Nothing wrong with that - it's either an early adopter, or a speculator in the "coming VLJ Revolution" that Wedge trumpeted so effectively. Additionally, probably one of the unfortunate depositors who'd never see that money ever again.
But wait! Eclipse 5 coal took delivery of both aircraft - Mustang #007, FPJ #178. Must be a speculator! S/N 178's for sale on Controller:
"Call for price"
"Ready to receive FIKI and G400W upgrade"
"Best valued aircraft on the market. Avio NG equipped. $180,000 worth of options including a training slot and 250 hours remaining of engine and airframe time paid for on Jet Complete"
( Might want to update that ad, Mr. "Coal Sales". )
A speculator - that's it. Not so fast! When I scraped Controller in August, #178 was not for sale.
And the Mustang still isn't.
My guess is decidedly non-conspiratorial - "Eclipse 5 Coal Sales LLC" is a guy who could afford to try 'em both out, and throw away the trash.
Would you like the combo?
( never mind )
DI
Dave I,
Boeing, too, has an employee flying club which - curiously - does not send the newbies up in Boeings.
I don't care who you are, that's funny...
Shane
folowing is a Quote from the comments section on the AV WEB article.
It appears to say that RP is going to have a lot of trouble with the 363 sale unless RP gets approval from the junior creditors.
"I bring some bankruptcy expertise to this discussion, as well as being a 30+ year Cessna dealer, and executive VP of Jet Air, Inc., FBO at GBG, IOW and BRL. My "day job" includes Chapter 11 and I'm one of three downstate Illinois members of the Am. College of Bankruptcy.
A few months ago, the 9th Circuit Bankruptcy Appellate Panel ("BAP") decided the Clear Channel case. The BAP held that Section 363 of the Bankruptcy Code doesn't permit the old equity (ETIRC) to form a new company (let's call it "New Eclipse") to credit-bid at the court auction without settling with the junior lienholders who, until Clear Channel, were believed by most bankruptcy experts to not only be out of the money but out of the game as well. Now, with Clear Channel looming, a quick 363 sale may not be possible. If the 363 route is blocked, an alternative is Chapter 7 liquidation, but the time involved will cause employees and their expertise to dissipate, making a restart problematic.
Conclusion: those in charge of Eclipse's reorganization had best come to terms with the junior lienholders and the other constituents. A quick and easy 363 sale may not work.
posted by Barry Barash on November 27, 2008
SNIPPET TIME
1. It is alleged that 'the Feds' are very interested in the activities of 'senior leaders' at our very own FPJ company. Seems someone is talking, at last....
2. Dassault were not the only company running job fairs in ABQ recently. EPIC have also been active in hiring from EAC, where the brain drain is causing concerns.
3. Key (and I mean key) vendors are out, and staying out. It's very simple, really. They couldn't afford to keep their staff when EAC failed to pay them. Many of these people will be difficult, if not impossible to replace. The phrase 'no going back' comes to mind.
Shane
Shane please speak a little softer, you are blowing away some of the smoke. Also don't stand there, you spoil the reflections in the mirrors.
There are no american troops in Bahgdad!
Pieper says the company's work force was upbeat and relieved that the restructuring might mean the manufacturer's troubles are nearing an end.
Right now it really is important that the Russians believe. The Pied Piper needs them to pay back all the money he wasted believing the Wedge.
Christmas is coming, a guy in a red suite will fly a raindeer power sledge in the upper flight levels. Wonderful things are happening in ABQ. Just close you eyes and wish hard enough and you too could believe.
Shane,
you remember that RP's ETIRC stated that ETIRC's investment prevented EAC's BK (as the blog anticipated).
My impression is that RP only ran EAC in "involontary BK"-prevention mode, just to get the EASA Cert.
The current CH 11 Sec. 363 activities do not respect the concept of CH11 (continuation of the business as a OEM) and the sec. 363 sales as a means to get a quick debt relief (instead of airline-type period of years).
I think RP/AM use 363 sales
to "erase the economical history including the responsibilities of the exec team and the BOD".
After the auction EAS might be a design and/or maintenace shop but with much less than 954 employees.
RP was right when he said that there was a need of +200M$....
Naturally it would be much better if I would be wrong and EAC , owned by "ETIRC US", would produce 100 EA500 p. a. with a reasonable profit!
Julius
Christmas is coming, a guy in a red suite will fly a raindeer power sledge in the upper flight levels.
Er, to the extent that an FL370 limitation can be considered upper...
Would you like to Super Size it?
DI
"Also don't stand there, you spoil the reflections in the mirrors."
But Shane doesn't reflect! And he is from Transylvania, not Ireland. Think of him as a vampire for the good side with Roel and Co. being the real gouls.
Drive by burp (oops, make that blurp- too much turkey .):
Didn't Polygon (make that Poly-GONE) have a lackey on the Board of Mis-Directors for a while?
(Maybe he got...board and left- or voted off the island when RP came in?)
yes , Freedom ...
no one should blow the smoke ...
if one look at the Roel's cursus , there is a kind of pattern in curbing reality and put others in front of "le fait accompli" (right spelling , baron)
so i feel that here we have someone to push others to believe fantasies ...
before it was Mega-orders ...
then admitting the whole Bizz-plan was cooked , that he could see an new way ...
now it is about something that DOESN'T exist :
the urgency of situation ...
(all scam of world integrate this parameters = no time to think and weight situation !)
the DIP money , for continuation of business ...
(What for ? did they do anything that has to be preserved at all cost after filling BK ? are new customers , the one buying with some profits plausibility, waiting in queue at EAC doors ? )
the timing
(too many persons will have other things to do , to really estimate the "right" decision ...)
and finally the price !
(what i read in the proposition :
"Gimme 5 millions bucks and i buzz off" ...)
using (this is where is the pattern) understatements , half lies , wishes stated as already reality ...
if you read the Press release from EAC = "no problem , we'll do a bit of re-organization , hire some more talented ones (peg was bad ?) and we will FINALLY deliver the PROMISES !!"
i see that as an other stunt !
THE SALE has to be done by XX of January !
i thought that it was court decision to see first if anything is to be saved , then eventually how it could be , then at what date ... NOT in any ways something to RP wishes ...
if i am wrong on this , i should open a Bizz in USA ...
i could burn a few Billions as well , and when things go wrong either say
"someone told me US tax-payers accept gladly to cover the costs of 9 failing , if the 10 th make it ..."
or
"i want to fill BK to buy-out myself and screw all creditors .."
needless to say if this had any chance to be true (i really hope not) this land would be the paradise for all kinds of world-class crooks , complete dreamers and pathologic losers !!
so yes , R.P. is playing BS , again ...
just trying to find the ultimate fool , without saying that :
Still even with all debts written-off , Where are the New Customers ? Where are the old Furnishers ? (remember ,: they have to justify in front of Boards , their plans if they would wish to keep on with EAC have to be 100% stainless steel = Cash On Delivery : an absolute minimum ! if not = first bill unpaid , the board will push the "Jettison C.E.O." button )
who is going to pay for the extra-delays to find new furnishers ? have them getting used to theirs New Customers (only the best of best can deliver a perfect spare on first attempt , but the best are either not interested or already shafted ...!)? and what about Cert. ?
this is all madness , to end-up with ONLY one SURE AND KNOWN thing : the plane doesn't sale ! when it was damn cheap (and risky) they had to "Cook" the order book ...
now it is even worse = quality remain the same but price has been multiplied by XXX !
time to stop dreaming ...
Didn't Polygon (make that Poly-GONE) have a lackey on the Board of Mis-Directors for a while?
Why, yes. Yes they did...
( from 2006 ):
"To scale the IPO-track Eclipse, the company secured $225 in convertible debt funding. The round was placed by UBS, with eleven institutional investors participating. Brandon Jones of Polygon Investment Partners joined the board as well."
Pay at the first window,
DI
Dear Fellow Eclipse employees, contractors, customers and vendors,
I saw the writing on the wall for a long time, and fortunately removed myself from the mess prior to the Chapter 11 filing. It is rough times for all involved and the financial state of affairs affects so many. My prayers are with everyone.
I still believe the basic airframe is sound and viable. The pompous Eclipse Management team never once took any responsibility for the current state of affairs or had the cojonas to stand up to Prince Raburn. Shame on them and the poor decisions they made that affected so many. "Eat, drink and be merry", you know the rest.
R&D milestones were met with numerous accolades, but no thought for customer service was ever planned. You can only pat yourself on the back so many times before you eventually have to support the product, and actually communicate with your customer base! Shame on management for not returning customer calls promptly and not being straight forward! Honesty is the best policy, no matter how dyer the situation.
I am proud of the my efforts to support the EA500 during my employ at Eclipse Aviation and do not have any regrets. The EA500airframe will endure and if I can assist any past and present Eclipse employees and customers, please don't hesitate to contact me. My lines of communication will continue to remain open, as they have always been. gffrag@msn.com
Best Regards,
Greg Fragano
MAKE SOME NOISE....
Conclusion: those in charge of Eclipse's reorganization had best come to terms with the junior lienholders and the other constituents. A quick and easy 363 sale may not work.
posted by Barry Barash on November 27, 2008
GREAT POST - GREAT ADVICE...
(RP this AM: "boy, I never should have stopped the effort to try to shut down the blog...")
I don't think the 363 will take place by January 7th if any of the creditors speak out. I see the deal as very easy to challenge because I think Roel as for too much too quickly.
Frankly in reading the documents closely I found them contradictory. Roel on one hand has to plead that this was done at a an arm's length and he didn't force or require Eclipse go BK for the sale, but the APA itself requires Eclipse to go BK (a potentially important thing is that the APA was voted on by the board at the same meeting they voted on BK rather than something post-BK).
Many of the individual components of this BK are usual, but not the totality of all the components. Doing a pre-planned insider sale could raise a lot of questions. Roel says we have to rush through this because Eclipse has no money, we've gotta use my DIP, etc, but there has to be time to look at the books to see what clawbacks can be done and other such options. However, Roel's APA could again be used against him because he's proposing on firing everyone and wiping away all his employee's rights (and then he will pick and choose who if anyone he wants to re-hire), while someone else could make a counterproposal that helps sustain at least some of the employees for a longer period which would serve to both protect them as well as other creditors by giving them more time to look into the books and let other interested parties have time to look at the books as well to come up with couter-proposals, talk to vendors, etc. Keep in mind Roel was the one who publicly made a big deal about the employees and keeping the continuity of their jobs and now that can be turned against him with Roel actively trying to get them all fired and wiping away any claims they have - and he was probably doing this plea at the same time he was working on the 363.
It will be interesting to see which way things go.
Hi Dave I.,
Thanks for the Polygon question- your kind post hit the nail on the head (uh, not the Wedge on the head, although I would second that motion)- it's just what I had in my fuzzy memory.
(Guess the memory ISN'T so fuzzy in the Polygon's guys heads though).
More on Polygon and Eclipse's former board:
OSHKOSH, WI - July 27, 2006 - Today Eclipse Aviation, manufacturer of the revolutionary Eclipse 500 very light jet (VLJ), announced that it has elected a new director to its board and raised $225 million in convertible debt funding as it prepares to advance to the next-stage of its corporate growth including aircraft production and after sale support.
New Board Member Brings Eclipse Deep Financial Expertise
Eclipse has elected Brandon Jones to its board of directors. Jones has extensive experience in investment banking, securities law and private investing, and is currently co-head of private investments for Polygon Investment Partners LLP. Prior to joining Polygon in May 2004, Jones was senior vice president at Liberté Investors Inc., where he was responsible for sourcing, analyzing and executing acquisitions. Before Liberte', Jones spent five years as an investment banker at Lehman Brothers and Thomas Weisel Partners. Jones began his career as a corporate M&A and securities lawyer at Baker Botts L.L.P.
“It is a great pleasure to welcome Brandon to the board,” said Vern Raburn, president and CEO of Eclipse Aviation. “Now that we have successfully completed the development of the Eclipse 500, we are aggressively focused on advancing our manufacturing operations, customer service infrastructure and financial performance. Brandon’s expertise will be invaluable as we move forward to this next stage of company growth and maturity.”
As a member of the board, Jones joins a noteworthy team including Chairman Harold Poling, retired chairman and CEO of Ford Motor Company; Kent Kresa, chairman emeritus of Northrop Grumman; Alfred Mann, chairman and CEO of Mannkind Corporation; Brian Barents former president and CEO Learjet; and Vern Raburn, president and CEO of Eclipse Aviation.
Eclipse Raises $225 Million in Convertible Debt Funding
Also today, Eclipse announced that it recently closed a $225 million pre-IPO convertible debt offering which was placed by UBS Investment Bank. Demonstrating a high level of confidence in Eclipse within the financial community, the offering was subscribed by eleven major institutional investors who conducted significant due diligence on Eclipse, its business plan, management team, markets, customer base, suppliers, high volume manufacturing capabilities, pilot training plans, and the Eclipse 500 certification progress.
Convertible debt is a loan that can be converted into equity at a later date. Over the last decade convertible debt financings have become more prevalent as financing vehicles for high-growth private companies who plan to conduct an initial public offering (IPO) at some point in the future.
Eclipse Press Release:Gearing Up for Growth, Eclipse Aviation Expands
Brandon Jones left the board sometime in late 2007.
Polygon putting money on Eclipse could have in part resulting in the downsizing of one of their top brass:
HIGHFLYING HEDGE FUND LOSES INVESTMENT CHIEF
Polygon Pro Scaling Back Role
HBK (the second largest holder) has got to be pretty unhappy. HBK was founded by the former top convertable arbitrager at Merrill. Along with Eclipse tanking, HBK is one of the largest shareholders of Circuit City and the founder is an adviser to AIG.
I was remiss in my manners, in not expressing my sincere gratitude to Mr. and Mrs. Ringtail (David and Becky Johnson) for being the first ones to RSVP to Wedge's Christmas party invite list back in April.
The blog, and fellow invitees, appreciate your firm response and helping to derail the Wedge's circus train*.
Thanks again!!
---------------------------------
(*Too bad that did not stop the Wedge from acting like a clown for months before and after though...)
I hope you guys are suffering no ill effects from the latest happenings at EAC.
A few comments: a "Top ten" scenario:
1. Etirc will soon completely abandon ABQ; there is no C11 restructuring taking place. There will be a C7; it will barely cover legal fees; lawsuits will pierce the corporate veil. Etirc will be dismantled.
2. What "assets" may exist are arguably a "production plan" and possibly a TC; however, a TC (and esp PC) are like a FAR 135 or 121 operaitng certificate: you cannot transfer them. You can only buy the company that holds the authority and then there a number of strict technical, managerial and financial fitness requirements that must be conformed to in order to keep the authority live. Their current nominal value is less than $250K.
3. Industry outsiders like Etirc (and again, this is nothing but a shell controlled by foreigners) often believe they can carve out some "asset" to monetize in a desperate effort to recover their risk capital; it has never worked.
4. As the BK filings, corporate docs and lawsuits all converge, observers will likely be even further suprised to see what variety of uses EAC's capital was deployed to. With the magnitiude of capital that was present here, various fraud assetions will likley be made including securities.
5. This business failure may trigger a set of new FAA rules, much like a large scale crash ushers in new operating regs. SEC rules may be tightened on private placements and Reg "D" rules for risk disclosure and advance deposits may be more tightly controlled under actual securities law. it is not inconceivable that the SEC, among others, could bring various arguments to bear, including characterizing the advance payments/deposits as a Ponzi scheme.
6. Foreign and other control parties may face higher scrutiny and background reviews concerning management qualifications necessary to ensure technical conformity to production, engineering and safety. Many of the new comments coming onto the blog outline apparently gross deviations from standard QC and the safety implications are startling.
7. The current E500 fleet will be forced into a grounding after further revelation of production and control irregularities force an emergency revocation of airworthiness. It will not likley be recovered. The entire fleet may be canabalized and otherwise scrapped.
8. DayJet will be subject to further scrutiny concerning its relationship with EAC. Certain lawsuits against EAC may include DJ as co-defendant.
9. Certain Board members may be forced to bring actions against EAC sr. management in order to protect themselves by acting as representatives of various investor classes.
10. A huge employee class action will be undertaken by a specialty law firm.
Deep blue:
What is one the other hand... you know the positive side :)
DB,
you would think... right?
Include a "position holder" class action suit
and
Include an "owner" class action suit
Here is something to keep in mind. Even though lawsuits are frozen against Eclipse due to BK, there is no freeze on suing ETIRC or any of its tentacles...namely EclipseJet.
Also Roel does have to give the employees proper notice of what he is trying to do in court. If Roel repeatedly tries to lie/mislead employees, employees can challenge the new owners of the company by saying they were not given proper notice and as such EclipseJet has successor liability. It is Roel's responsibility to give notice and if he lies or otherwise keeps people in the dark, subsequent court rulings after BK can find the new entity stuck with the judgment. In any event, I would think he'd have a big mountain climb to show why an insider who is also a majority equity owner shouldn't be a successor.
A third thing that I'd like to point out that could show for how long Roel planned this out is with the Dutch basketball team. Even though Eclipse Aviation was the sponsor they were billed as EclipseJet...which is the name of the take-over company. It could mean something or it could mean nothing as sometimes coincidences are just coincidence, while on the other hand such things as this could show breach of fiduciary duty, civil fraud, criminal fraud, etc.
I'm very curious to see what Covington & Burling does as right now my bets are that if anything is going to result in being popcorn-worthy, it will come from them on behalf of their clients. The wildcard is also the US Trustee.
You guys talk about lawsuits, lawsuits, lawsuits....
Anyone ever hear of the saying "You can't get money out of a rock?"
I stand by my claim of the E500 being a good airplane. There are a few issues here, however. If ETIRC buys Eclipse this will be a problem as you have pointed out. People will get screwed big time.
I think you guys can dislike the company politics and business model all you want, but I will say the plane is sound.
Eclipse will arise again, as I have said before. "Pheonix Aviation"
And you guys can hate Vern all you want too, I think it is becoming very clear Roel is a much bigger douche.
And you know what? I won't mind paying more for the upgrades. For what I bought the plane for it will still be MUCH cheaper than the Mustang.
There is a going to be a big question mark about the warranty, which is concerning. Service and training I don't think will be an issue. The service because they were already making prepartations for 3rd party service centers to put in the new upgrades. And you can't tell me that those people know nothing about the airplane. I mean someone was going to have to upgrade SN 1.
Anyways, my thoughts... There are too many airplanes out there and too much invested in the for them to just become "scrap" as stated before.
Hmm... the guy makes a deal for the international rights to EAC products, then provides some financing and become EAC chairman -THEN...makes a deal with an international manufacturer, who apparently provides a few hundred million, based on producing EAC products... and now they are funding a takeover together.
Does this sound Kosher?
EPMSV,
Make some noise...
- if you want anything to be fair... you are going to have to make noise.
Warrantee... GONE
Avionics upgrade.... GONE
Jet Incomplete... GONE
Even while delivering planes over the last few months, RP was promising these to position-holders... in order to induce them to take the planes.
In order for you to be correct, something is going to have to rise from the ashes - and you know what?
The $50M it would cost to fix the planes and make good on the promises, is a drop in the bucket -he should pony up the cash.
Warrantee? Well, who would buy this plane without a warrantee? If you think there's no money for a warrantee... (BTW, normally this is a required reserve on the books - where did it go?) There is going to have to be money for warrantees, and RP keep stating how large the market is, so I guess respecting warantee for the the 250 delivered planes should be a drop in the bucket.
Look, either they have a workable plan for a real aviation company going forward, or they don't.
If they do, guess what? Doing the right thing by you is not a major deal compared to the rest of the problems.
Unfortunately, you will have to make a lot of noise, because these people ARE inclined to screw you.
EPO wrote
And you know what? I won't mind paying more for the upgrades. For what I bought the plane for it will still be MUCH cheaper than the Mustang.
On what facts are you basing that opinion EPO?
How much will it cost to get ISS climb back on the Titanic?
You guys talk about lawsuits, lawsuits, lawsuits....
Anyone ever hear of the saying "You can't get money out of a rock?"
Actually it's "blood," but it means money. In any event:
* If you read the APA as part of the purchase EclipseJet states that it will have tens of millions of dollas in operating capital and that money can be used to pay future judgments and it in fact states the sources of those funds.
* What I have been talking about in regards to employees would have to do with relatively low dollar amounts (but could be critical if you're an employee) that could came from said funds.
* There is clawbacks and the sort that can be done. Just because money or assets have left Eclipse, it doesn't mean they can't return.
I stand by my claim of the E500 being a good airplane
I generally agree with you provided that we are talking about low utilization non-commercial use and that the recent AD along with the past tire issues don't point to larger problems. I think that the aircraft wont be able to be used to the contracted performance levels, but that might not itself be so bad depending on what the limitations are.
And you guys can hate Vern all you want too, I think it is becoming very clear Roel is a much bigger douche.
I agree with you there.
Eclipse will arise again, as I have said before. "Pheonix Aviation"
In the rest of your post it isn't clear by this you mean with Eclipse arising again as a servicer or if you mean as a servicer and aircraft manufacturer. I think the best opp is as a servicer, but I see the odds as much lower (but not outside the realm of possibility) for Eclipse to be a manufacturer as well.
If the owners and others intend on taking over Eclipse, I think something positive could come of it. If Roel gets it or Vern gets it, I don't think so.
All this discussion . . . and still, not ONE single finished aircraft.
And now the very ones who could contribute to a finished aircraft are “long gone”. (Can you say, “Sayonara” . . . in “Fuji” talk.) Amazing!
From here on in, we’ll learn the true net worth . . . er, “integrity”, of bankruptcy judges, etc., etc.
We already know about mayors and governors . . . and lawyers . . . nothing new in that regard. And the taxpayers of New Mexico . . . another day, another dollar . . . whatever! Same old, same old!
In “olden times”, there were signs along “Old 66", going west . . . “See the rattlesnakes” ( at the top of ‘Nine Mile Hill’) . . . and last chance to buy a “water bag” before the desert. Granted, it’s a little bit off “I-40", but “Double Eagle” might become the tourist attraction of the twenty-first century . . . “same old snakes”, etc., with a real-life (almost) stuffed and mounted “E500" on display.
gadfly
(‘Just thinkin’ ahead on how to recover the $19 million, in the sleepy little town by the Rio Grande.)
"a TC (and esp PC) are like a FAR 135 or 121 operaitng certificate: you cannot transfer them."
I believe you can sell the Type Certificate readily; you cannot sell the Production Certificate as easily, if at all. A pre-bankrupt Eclipse, for example, could not start cranking out airplanes in Russia under the existing PC, unless the FAA OKed the facility.
(‘Just thinkin’ ahead on how to recover the $19 million, in the sleepy little town by the Rio Grande.)
One does wonder why the Governor would personally go on a junket with Peg for Eclipse, but when it comes to actually get taxpayer money back, he doesn't even send a representative to the hearing. By the way is Roel requiring Eclipse to go BK and fire all its employees as part of his bid what Chavez meant with acting as Roel's PR sockpuppet with his saying hundreds of millions was on its way?
A pre-bankrupt Eclipse, for example, could not start cranking out airplanes in Russia under the existing PC, unless the FAA OKed the facility.
It would be having a small staff in ABQ making kits for the Russians. I believe there is a specific FAA designation for "homebuilt" aircraft with the parts coming from an manufacturer with a PC. I might be describing it wrong, but I remember I posted something about this a few months ago.
Readers and bloggers should not lose sight of the fact that EAC is literally bankrupt -- they are out of money. They have no revenue, no new investors, no new lenders (except for limited DIP), NO MONEY. So, no matter how screwy an insider deal it is that RP has going on, or how twisted a story he's trying to sell to some greater fool, EAC is TU. Maybe a bunch of angry creditors, owners, position holders, employees et al can make a bigger mess of the bankruptcy proceeding than it already is, but that won't cause there to be more money available. Good luck trying to get money out of ETRICK through some near term lawsuit, because they are basically judgment proof in the US. If EclipseJet manages to close on some 363 purchase, you can pretty well bet that they won't have closed if it leaves them exposed to successor liability. A 363 purchase may well never close, but whatever Newco does close is not going to be liable beyond a very limited extent for the mess that is EAC (otherwise, why close on the purchase?).
So yes, everybody associated with EAC is getting screwed. What else is new?
Anyone ever hear of the saying "You can't get money out of a rock?"
I have heard that...I have also witnessed them coming to get the rock...
Total Eclipse Aviation LLC/Gary Johnson v. Eclipse Aviation/EVLJ LLC
Does anyone know if this is Gary Johnson - former Governor of New Mexico?
If so, quite interesting.
> The body of a GM Chevy Malibu,
> Olds, Buick, etc are "fundamentally
> sound" as regarded by the
> engineers and production linemen
> that built them but they are still
> fundamentally flawed market
> products with no NPV.
Careful - you are falling into the "insult by comparison" trap that bedevils anyone who tries to create analogies involving entities such as Eclipse and The SCO Group Inc. The current incarnation of the Chevy Malibu is considered by "Consumer Reports" to be competitive with Toyotas and Nissans in its class, which given CR's massive anti-Detroit bias means it must be a pretty good car.
sPh
FJT:
Yes, I do know of the positive side of turnarounds. There isn't one here.
My reality filter? Would I make a run on this compoany with my own money (and others) and especially, with my time. Answer: No.
I've made a number of structured attempts at a number of businesses. I cannot find a thesis here to make such a move.
Ask yourself: do you see the Blog members huddling with a plan to "take over" EAC? They wouldn't touch it (I suspect) with the proverbial ten foot pole.
There is no "on the other hand." There is only debt, liability, a flawed airplane, and a non-responsive market.
As for the professionals that claim the airframe is "fundamentally sound" it may be, but even if it is (I doubt it), so what?
The body of a GM Chevy Malibu, Olds, Buick, etc are "fundamentally sound" as regarded by the engineers and production linemen that built them but they are still fundamentally flawed market products with no NPV and otherwise are highly life-limited, inferior products with dubious safety engineering.
I think "Dave" is fundamentally correct: the E500 is overweight and the "Big Sync" between airframe and engine never got done: hence the carbon, among other outcomes.
I stand by my top 10 scenario; in fact, I'm being generous to EAC/Etirc.
The "other hand" is another airplane maker's model: try the Cessna, EMB, Honda, for a VLJ. For a nominal finance cost, upgrade to a light jet or even fractional cabin class. The NPV/ and RVs are higher, with a better risk adjusted cost of ownership, on top of a safer, Pt 25 platform and superior performance.
Something else if I understand the APA right is that the Eclipse state (namely the creditors) have to pay for a new TC/PC certification as well as EASA without any specification on which factory would have the new PC. Of the $30 million cash, how long would that last before the creditors are having to give Roel more money to get the Russian factory and aircraft all certified? Roel's APA if I read it right could make them owe Roel many tens/hundreds million more. Having an Eclipse garage sale would seem to be a better deal if I'm reading this right.
Total Eclipse Aviation LLC/Gary Johnson v. Eclipse Aviation/EVLJ LLC
Does anyone know if this is Gary Johnson - former Governor of New Mexico?
The creditors list shows Total Eclipse LLC as being out of Lamar, CO.
There are two 'Gary Johnson's listed - a Gary C Johnson of Radcliff KY, and a Gary Johnson of Benton AR.
HTH
I think this is the Arkansas Gary Johnson. I also believe this is the Kentucky Gary Johnson. The lawyer in Kentucky even talks about having pilots on staff in order to rapidly respond nationwide and he's a member of AOPA.
"Maybe a bunch of angry creditors, owners, position holders, employees et al can make a bigger mess of the bankruptcy proceeding than it already is, but that won't cause there to be more money available."
BM, while in some cases, I would agree... in this case, there is a strong desire by Roel to end up with this mess, which tells me a couple of things.
There MUST be a bigger pot of money- becasue you cannot do ANYTHING with EAC unless you have a ton of cash. He knows it, so does evenryone else. They need north of $300M...
So?
MAKE SOME NOISE... a measly $50M in upgrades and warrantees should not stop him from getting what he wants.
Make sure you make a lot of noise, and stand in the way - he'll make some arguments about "you are better off... and I have no more than XXX..." BUT reality is, he better have tons and tons of cash to burn, or might as well just shut down right now.
- if conventional "die-hard" wisdom holds... there will be a cottage industry formed to support the fleet anyways - and they will probably be MORE fair in their pricing and treatment of the owners.. so? Why not get what you were promised?
Make noise...
PS. Think about why Peg left? She stood by Roel after Vern, and she was Vern's biggest cheering squad -so what gives? Perhaps a senior manufacturing person in the US did not wich to be associated with this mess, for fear of... I think there is a story here, which will be revealed soon enough.
If you want to be treated fairly, make a place for yourselves at the table any way you know how... and make it as painful to just dismiss you as possible...for as many folks as possible -execs, board... anyone with a pocket and should have been "in the know"...
Even if they are already gone.
EclipsePilotOMSIV,
And you guys can hate Vern all you want too, I think it is becoming very clear Roel is a much bigger douche.
once and a while it might be quite interesting, to use that funny, thing we carry on our shoulder, not only for talking but also for thinking!
- In which position would the owners if they would have paid 2,5 M$ in 2008$?
- In which position would be the wedge/EAC, if he/it would have sold the FPJ with the correct price tag?
- In which position would be RP,
if the wedge would have sold the FPJ with the correct price?
Perhaps, you will say too expensive.
Ok, above there are only specs....
You will agree with me, the wedge made the desaster; RP simply tries to get the best for - why should he care for you?
BTW: EAC was BK in December 2007 - instead of the Saturday night sales show the wedge should have filed for CH 11 or even CH 7!
Julius
Julius , bonsoir ...
i think you are right ...
RP is trying to get whatever he can ...
may be not very ethic but fair ...
deep blue :
no problem , i see from here that not a single person reading here would like to take over EAC ...
may be with a gun on the head ? (with a knife on throat ...)
the funny thing = eventually , i believe it could be (with BIG IF) less expensive for the already victims ...
in a sort of move where it would be cheaper to pay some more now , than to be hostage later ...
or to have to decide to throw plane to the trashcan ...!
Let’s try to look on the bright side of the situation. Eclipse owners have their Garmin 496 and product support will be good. No matter how bad it gets, you could pull the aircraft out of the hangar and run up the engines.
There is a certain caché in owning the Paris Jet of the Twenty First Century. The DeLorean Owners Group will welcome a merger with the Eclipse Owners Club.
Let’s try to look on the bright side of the situation. Eclipse owners have their Garmin 496 and product support will be good. No matter how bad it gets, you could pull the aircraft out of the hangar and run up the engines.
I'm not so sure about that. Aren't there issues with the Phostrex bottles leaking? This could lead to an absurd result, in which the highly corrosive stuff perforates fuel lines leading to a general conflagration. Set a row of hangars ablaze, and an entire local aviation community could be wiped out by Eclipse's fire suppression system.
Would you like to try the flambe?
DI
Couple of points...
1. Peg was the one (I'm told) that caused Wedge's departure. She, it is alleged, failed to make a required transfer of funds to ETRIC, and this opened the door for Roel. When you read Wedge complain about 'investors' he means Roel.
2. Peg was toast as soon as it became clear UBS had failed to find an American or European buyer. She knew this, as our Russian and (whisper it...) Middle Eastern friends are loath to see women in business 'leadership' positions. Hence her 'Starbucks' moment a few weeks ago. She had just lost the will to fight the inevitable and was about to clear her desk.
3. There is NO volume for a small 6 place twin jet with a 1,000nm (remember the AD) range. Nowhere on the planet. No matter what the price. Why? Not enough people want to buy it, fly it or pay to be a passenger in it.
"It's the market, stupid!" with apologies to the Clinton campaign....
And from the ABQ Journal today, a rather plaintive note:-
If ETIRC's estimated $198 million bid is accepted, Eclipse officials said they believe the manufacturing operation employing 945 workers would remain planted in Albuquerque. If another buyer bought the company, it's anybody's guess what happens to the local operation.
I'm sorry to say this, but it matters not who, if anyone buys the assets. The ABQ factory is history. Maybe not in January, but in a short period thereafter.
There is no volume market for this aircraft.
Shane
Question for the baristers among us ...
EAC sent a letter to customers/depositors.
What is their responsibility to vendors (nee unsecurred creditors)?
While everyone should be clued in, does EAC have a notification or other mandate?
If they continue to ignore this group, can that get them slapped in court?
Bottom line,
If anyie counts on scale for this aircraft, FORGET IT
As I have sadi for 3 years, there is no large market for this plain...pun intended.
Shane is correct.
This does not mean you cannot do what ROel IS doing - benefit from the can of beans, short term.
Make noise, and get what they promised you. Even in the short term, its better than being shafted again by EAC... and having to pay for upgrades and completing the plane you were promised.
If Roel want this Bag O S%$t so badly, let him pay for what he/they promised. Remember, he is a perp - inflating the order book for years along with Ed and Vern.
He shafted you once, and he's trying to do it again - its not your obligation to figure out WHY he wants this POS. Just make him pay for what he promised you FIRST, before he gets it.
There is a good chance the AD will be rescinded or modified, especially in light of IS&S departing and the Chapter 11 filing.
Both Avio and AvioNG provide a simple means to monitor and control the temp setting and blower above 370.
At least a few comments have surfaced that the FAA paid no attention to EAC attempts to provide compliance guidance, and issued the malformed AD out of spite.
Whether true or not, if this AD stands, there is little hope of escaping a complete AOG scenario.
If issues with easy work arounds generate an envelope limiting AD, expect severe limitations when real issues surface.
"which given CR's massive anti-Detroit bias means it must be a pretty good car."
But apparently too little decades too late.
The last time I bought a GM (or Big 3 ) car was 1978, and it is difficult to forsee the circumstances under which I will do this again. GM, Chrysler, and Ford have lost the public trust, and it will take generations to restore this, even with competitive products. Similar story at EAC.
Thinking out loud: It seems to me its about time for Ken to recognize that he is screwed, and to come over to the dark side and lead the charge on behalf of Eclipse owners and depositors to recover something from this unhappy, inevitable sequence of events. Dontcha think, Ken? If you do this with half the passion with which you have supported Eclipse, this group may get something useful out of this fiasco.
Did Peg Cut Vern's Throat?
Maybe not, or maybe not alone.
They have a SVP/CFO, a VP Finance, and a VP Controler/CAO.
For a company that had VP level folks approving every check at that point, there is more to the story than Peg forgot to approve the payment.
Interesting pair of articles
First- from September, a discussion of the special certification review. I wonder what ever happened to the Congressman's request to also conduct a review of the Production Certification process?
Discussion of the SCR here
and
an article about the legacy of Nick Sabatini- head of AVS, who's continued support of John Hickey, in the wake of the Eclipse "phone a friend" Type Certificate, led to Hickey being PROMOTED to deputy at AVS...
Read it here.
I can't wait until the movie comes out.
Attention ConJet Depositors
Per the purchase agreememt, if you received a refund, you must return the "Eclipse 400 Owner" polo shirts and fancy bag you received from your Eclipse sales manager.
If the shirt was worn, it must be restored to original condition. This will be accomplished at an Eclipse Service Center, and billed on a time and material basis.
In addition, a $50K restocking fee, a $250K ABQ IRB recovery fee, and a $2.15M lobotomy transfer fee will apply.
I think we can expect strong reaction to Roel's tricks...or at least Roel's attempts to screw creditors and take Eclipse all for himself. Today the US Trustee filed for there to be a creditors meeting (the first meeting) on December 22nd. Seeing how that is a week after the court hearing on the 363 sale, I think Roel's motion will either be completely shot down or it will be postponed. I obviously haven't seen Eclipse's books, but perhaps financing ongoing financial operations can come from clawbacks in order to take Roel out of it. It is in Roel's best interest for all the Eclipse money to go to EASA-related matters, but it might not be in his creditors interest to focus on EASA.
Hi Dave,
Thanks for the post regarding Polygon.
(That was some bad news for the HBK crowd!)
EPx,
"Anyone ever hear of the saying "You can't get money out of a rock?"
While I won't argue that Wedge is dumber than a box of rocks, I'd still like to put his head in a paint shaker and see if anything comes out.
Shane,
"Peg was the one (I'm told) that caused Wedge's departure".
Everyone has some redeeming merits.
-----------------------------
Zed,
"Did Peg Cut Vern's Throat? Maybe not, or maybe not alone. They have a SVP/CFO, a VP Finance, and a VP Controler/CAO".
Everyone has some redeeming merits.
Oh, My - where to begin.
1 - RP/Mann would not put up $12-$20M in DIP UNLESS they had at least 10x-20x as much money lined up. They and the other investors simply want a clean plate before sitting at the table. So yes, there must be a $200M+ investment lined up.
2 - What is all this talk about the Ch 11 363 APA "trying to screw" everyone? Everyone is already screwed. If RP and Mann withdraw their offer ang go sailing how is it that anyone is less screwed? You guys must believe in fairy tales, that somehow it is possible for everyone to be OK!!! Put your hands together and give thanks this day after TG to RP and Mann for even making the effort to put an offer and line up financing (see above) to "try" to continuing servicing the fleet and maybe building parts and planes.
3 - All this talk of creating trouble for the 363 sale, and objections, etc... is just that. Talk. Unless someone comes forward with a better DIP package and a better offer (that is $20M+$28M) the court will not even bother reading it.
4 - All those dreams of liability following the assets to newCo, are just that - dreams. RP and Mann would not accept a 363 order that leaves the door wide open.
You guys need to accept reality. As you yourselves say on the blog.... Eclipse is DEAD, everyone connected to it is SCREWED, the assets are WORTHLESS and NOONE willbe so stupid as to want to buy the assets or invest in the thing.
Ok, given all the above, ALL should be jubilant that Christmas will come in early January and someone will put some more money in this and try to make it a go. So you will be screwed with a little TLC.
Now, back to original programing. Lets here how the SEC will stop focusing on the huge mess in the public capital markets to focus on a two-bit private placement deal or how ultimately Roel's dead grandmother's state will ultimately bear the brunt of the law suits because of a mult-tiered, multi-nation, multi-generational corporate vail pierce, and blah, blah, blah.
Now where are Shane and Fred et al when really disturbing news in advanced transportation hit the wires?.
That's it, Baron!
Stay out of Gad's medicine cabinet!
INTERESTING 'Snippet' TIME
Hmmm, this will cause some to wonder if the CAN escape from EAC...I just spoke with two of my friends that resigned from Eclipse over the last two weeks. As today is payday, these individuals did not receive any compensation for their last hours worked or any remaining vacation. They finally contacted someone within Eclipse and were told that since they quit at the time of the BK filing, they are considered unsecured creditors and they would have to seek legal counsel if they wish to pursue reclamation of their pay. This will cause quite a stir once it reaches the production floor next week!!!
And Baron, the only wonder is why DB didn't choose to go with a V 11. 'Not because it is easy, but because it is hard'...
I've also just deleted an ungentlemanly remark about an ex EAC employee. I understand it was said in jest, but....
Shane
Baron ...
i agree with you (must be sickness ;-) )
Yes EAC is DEAD !
anything related to it is either screwed or on the verge to be ...!
where we disagree :
if you read RP bio , you could find out that it is not the first time he is shaking a red rag in front of a bull ...!
the red rag : jobs lost in ABQ ; the "Potential" of th Fpj ; the huge profits that will be made ,once every creditor is screwed ; etc ...
the bull : anyone or anything with an idea of doing better in management (not very difficult in term of mngt )
this is where the "emotional" side is playing ... think of Kenny having to acknowledge his fate ...
so the aim double edged , get some cash out of a higher bid or/and get somebody else to pick-up the gauntlet and face all problems ...
that a good explanation of the ABQ journal and the press release ( ie:yes ,future is possible) where even RP ot Wedge would know it can't be done , in any way ...!
** WARNING **
RANT FOLLOWS:
Fred,
Thanks for mentioning the ABQ Journal.
In recent months, I had concluded it was most useful for wrapping some of CWMOR's buddies (dead fish), listing garage sales, and reading the funnies (comprised of both cartoons and EAC press releases).
Needless to say, my concerns about the ABQ Journal quality are essentially: will the fish leak through?
(rather than the truth leaking through).
And, it really IS thoughtful of EAC to write it for them- saves all that pesky, what did it used to be call...ah, journalism.
To wit: The only lawsuit the ABQ journal is willing to risk is from mis-typing the copy EAC gives them to print.
billy :
#The only lawsuit the ABQ journal is willing to risk is from mis-typing the copy EAC gives them to print.#
yes , very probably ...
it is quite funny to see from far , it seems to be very close to the "L&H" story ...
where in bullshitting about the numbers of jobs who could be lost, already invested money and profits prospective a Belgian town and region got to put their fund into the pit called "L&H" ...
if you see the city of Albuquerque and the state of New-Mexico , we aren't far off ...
and Ulyanovsk have been bullied in the same way ...
(which is strange : if (when?) PWC leave ; with what are they going to motorize the RU.Fpj ? if they DO not leave (PWC) , Jet-Engine may be restricted , if they leave , new Engine is not part of the Cert. = even if it could work : it doesn't make any sens ...!)
i wonder how much the "politic friends" are willing to sink into the mess in order to keep it quiet ?
(remember President Elect declared that one of the first priority is find where wasted and unneeded funds are going to ...
if you put in perspective with NM Gov. and what has been sinked already ...
it surely going to leave a stain !
so a good bet would be : we keep it quiet and tax-payers assume the bills discreetly ...)
with THAT out of the way, and $15M of the state's money...
Richard Metcalf's article (Nov 28, 2008) does a nice job of summarizing the situation.
Richard Metcalf, ABQ Journal, Nov 28
It's mostly old news to folks that have been reading the blog, but there are a couple of noteworthy items, possibly NOT scripted by EAC:
1) State of NM has reciepts (ashes from the incinerator) for $13M, plus mostly ashes from another $5M of "secured" (ahem) debt.
2) Hampson "laid off 90 of 104 workers" in Grand Prarie in August. So, what happened to the other 14- laid off in September? The Hampson website still has some Grand Prairie stuff:
"Hampson Aerospace Inc. based in Grand Prairie, Texas ... provides the capability to supply the world’s leading aircraft manufacturers...)
Hampson Aerostructures
3)"the estimated $198 million offer on the table to buy Eclipse's assets as part of the bankruptcy process".
I thought we've been blogging about around $50M upfront to "grab" EAC v 1.1, then $200-300M later.
(Maybe the copy from EAC just got confused? :)
Why would anyone put $20m of DIP financing into EAC? If this is effectively a bridge to buying one's choice of the EAC assets, then what assets are thought to be worth $20m plus a bid? What does one get for all this money?
Fixing up and supporting the 250 delivered airplanes?
Key vendors have departed the scene, there is a potentially-troubling AD in place with (likely, no?) more to follow and who knows what further problems to follow. This is not like picking up a bankrupt Mooney or Aero Commander where the vendors are all the "usual cast of characters" in the industry and would regret a writeoff with with the bankrupt company but be willing to go forward with the new company.
Build new airplanes?
Ditto on the departure of the vendors. Where and how, exactly would one put one's new EAC assets to use in building airplanes if one loses many key vendors? Replace them? Theoretically possible, perhaps, but what vendor would sink money into supplying the manufacture of this aircraft? This is a major impediment to going forward, even before considering the number of aircraft that can be sold, which is a big questions and which many on this blog think is a really small number.
So, presuming that the people supplying the DIP money and making a bid for the assets are not just STUPID, what do they see of value here? In their projections, from whence will come the cash flow to repay their outlays?
Does any reader here have insight into what they are thinking?? Is it just that they hope to elicit several bids for the bankrupt EAC so that there is money to pay back the DIP plus something to secured creditors? Or do they really think that if they get the EAC assets that they have something that can be part of producing a positive cash flow?
Hi Fred,
Thanks for the mention of L&H. Sounds like more IT geeks behaving badly
Lernout & Hauspie"
"its financial statements need to be revised because of errors and "irregularities," a term that in official accounting literature often signifies fraud".
(I'd say EAC's Wedge-era accounting was very...irregular).
"Mr. Lernout recalled. But he seemed to thrive on crisis. One of his favorite sayings is, 'The grass is always greener on the edge of the precipice.'"
(Yikes! Sounds familiar!)
"Mr. Lernout says, the complexity fed suspicion about the company. To outsiders 'it looks like a scam,' he says. 'But it isn't.'"
(Say, have you seen my bar of soap?- ah- there it is, would you please...)
"In those difficult years, the entrepreneurs found support among the well-to-do farmers..."
(!! ANT farmers ?!?)
"After a short presentation, the farmer produced a half-eaten bank savings certificate for about $60,000 that he had salvaged after it was accidentally fed to his pigs..."
(HEY- I'm NOT making this up- Fred, where do you come up with stuff!?! ...guess it beats a pile of ashes though :)
(Gadfly: "cast not your pearls before swine". Nor bank notes. ...Not sure what ants would do with them though. Maybe it depends on whether they are domesticated, or feral, ants :)
"Stefaan Top, a Belgian venture capitalist, says the combination of ambitious entrepreneurs and a government that sorely wanted "a local tech champion was a combustible mix -- it was dangerous."
(Too bad they didn't invent Faux-tricks, er, Phoxtrex).
"L&H dreamed of creating software that would let computers effortlessly understand human speech, speak back, and translate among the world's tongues."
(Too bad they hit the market too early. We sure need a EAC and Wedge-to-English, or anything coherent, converter).
"But development was painstakingly slow..."
(Not sure if they're talking about Wedge, or EAC. Both apply though).
"not to mention the need to sort out homonyms such as 'wait' and 'weight.'
(All of the above).
(?Is that "wait and wait", or "weight and more weight"?).
"Demand was sluggish, and many rivals struggled..."
(Say, are we talking about software, or VLJ's here).
"L&H also relied on sales to a web of customers with which it had financial ties. Investors are always wary of such "related-party revenue," because it is hard to be certain the transactions involve bona fide products worth the price paid."
(DayJet, anyone??)
the Flanders government played a key role, guaranteeing 75% of a $15 million bank loan..."
(Hmmmm...that $15M again. Maybe that's how many Franklins will fit into a briefcase...)
"Messrs. Lernout and Hauspie became entrepreneurial celebrities, Belgium's answer to Bill Gates and Paul Allen of Microsoft"
( !!! )
"In information technology, a company often is judged by its partners, and L&H had some top ones..."
(Pratt, Hampson, IS&S...)
"Though all seemed well from the outside, internally there were continuing glitches with L&H's technology."
( !!!!!!!!!! )
"A 1998 presentation Mr. Lernout gave to French executives in Paris turned into a debacle when the software failed to recognize many words"
(Just think what it would have done at Wedge's 2008 VLJ Forum address !)
"The bottom line was that the technology wasn't ready and the market wasn't ready"
(Ah, yeah).
"Say, are we talking about software, or VLJ's here").
-------------------------------
"but management had to deliver every quarter."
(Ah, I will so miss Wedge's Stunt-of-the-Quarter shows).
I left the best one out:
"With few exceptions, L&H has made little progress in developing the software, in some cases two years after receiving its upfront fees."
and
"L&H knew it was trailing competitors ...'If we didn't catch up, we were cooked,...But we couldn't catch up, because we didn't have enough R&D dollars."
(Cessna Mustang, anyone?)
yes , billy ...
as far as i know and saw it , all scams and crooks work with a certain pattern ...
in the present case :
(as well in L&H and probably later in Ulyanovsk )
it is NOT about if they can produce anymore ... (the real question being:"what for anyway?")
it is not about How much worth are the assets ... (to me : Zip, nada , 0)
but more how much a piece of dirt can be sold and eventually how many layers of golden paper need to wrap it to make the whole looking good ...
with a very funny aspect : "small creditors" have to make a lot of noise to be heard ...
if no one is fooled enough to put a higher bid ...
they can use the noise to scare the "politicos" ...
(how much will they give of tax-payers money for NOT making public how damn stupid they have been ???)
you see "red rag in front of bull !" whatever happen some reactions to be expected and used ...
Brick :
#What does one get for all this money? #
Answer = Nothing !
but still , that would be the least expensive way for the present victims (owners) to keep their planes ...!
bill.e:
nice recipe for how to create a "snake oil" company of the 21st century... looks like some followed precisely the recipe - OH wait, looks like they wrote the book!!!
As for Baron: I am constantly amazed at how much I agree with what you write, but you write it as if this side of the point needs to be somehow corrected by your opinion/observation - not so.
1- there is no visible business that can work based on the EAC failed business model, so why look a gift horse in the mouth? Good point, we agree
2- they obviously have tons of cash to throw at this thing, and do not want to spend it on "past problems" - of course
I agree - somehow these guys THINK there's some benefit to having EAC... OK, let them have it, IF YOU benefit from it. Everyone agrees a cottage industry for supporting/finishing the preemie-fleet will arise naturally, and someone will make money CHARGING for the FREE IOUs, FREEE warantee work and FREE MRO. What's the downside in pushing these clowns hard to get what you were sold? ZERO.
Insider management has a dramatic DISADVANTAGE in these cases - the ill will created is hurtful, the broken promises people counted on is hard to overcome. RP is just another computer guy, friend of Vern and friend of Ed, and so far, his "way" has been the same or worse.
Are there other offers? Will there be? Maybe, but until then...
If I am a buyer of these planes, based on PROMISES they will be completed and current and warranteed and supported... that is what I want, FROM THESE CLOWNS - if its truly someone else, perhaps I would support them.
I personally think the first dollars they have go to finishing my plane, providing a warrantee and making good on jetcomplete.
Sorry, if their deal fall apart BECAUSE I refuse to let it go... they never had a viable financing anyways -this is small potatos compared to what is needed to make this thing go.
So, yes, you are correct, ITS REMARKABLE THEY ACTUALLY WANT THIS THING, and THEY HAVE TONS OF CASH TO THROW AT IT - I imagine they dream about an IPO and get out and make money without a care in the world for my plane, or my money - tough Sh&^t if I try to get in the way of THAT.
My point is, let them make good on their promises to me... let them know they cannot screw me any more.
I said there's no way the sale will go through in January, as they stated. They are screwing around BIG time with this, and I think it will come out. It looks like at leat on Fraud allegation is on the books, and I am sure there will be more. Now there's a hearing scheduled in Dec... OK, MAKE A STINK... let them know their exit strategy is in jeopardy...
Everytme these guys put forth a "don't look a gift horse..." proposition as in the $1M twin jet
that costs $200 per hour to operate, or the delivered partially finished planes with promises of IOUs...
YOU GET SHAFTED.
Make some noise...
They would not be doing this if they did not have a clear line of sight to an exit...and if they really want that exit, they will make good, if you get in the way... otherwise, Baron IS correct... YOU HAVE BEEN SHAFTED
Keep it down guys. The smoke is clearing and the mirrors are getting fogged up.
I we just believe then we can fly!
As I understand it, the $20M is just to "hold it together" until BK court determines outcome in six weeks or so.
Figure 1000 employees (or so, 945 in the ABQ Journal article*) x $100K /50 = $2M/week payroll.
Through in utilities, sodas, hush money to Wedge, and that is probably about six weeks or so.
I believe Mr. Mann and Roel could have just filed BK and locked the doors, so it looks to me like:
1) They DO have some compassion for the customers and employees. (okay, it does benefit them as well, in step #2):
2) They ARE hoping to pull something viable together in 2009.
------------------------------
I believe a more correct question would be, "what will $XXX to acquire EAC from BK court do for the winning bidder?".
Consider: "Fixing up and supporting the 250 delivered airplanes?"
Think NOT (ah, stay with me, I'm not going into the Wedgian space/time/finance non-continuum):
Think NOT: LIABILITY (as, warranty)
Think: OPPORTUNITY
(For example only): figure charging around $400K each to convert the existing fleet into something besides airstream trailers. At a cost of $300K each: profit of $100K per airplane: $25M profit, right off the bat. Then, the ingrained rights to support the fleet for another 15+ years., Say, $500K profit per plane x 250 = $125M over those 15 years.
Plus, the option to revive production, at some modest level, and eventually, once the "fixes" are proven on the worlds largest flight test fleet, rolling these into a stable production-line configuration, and ramping up production when the world economy improves in a few years: maybe 150 per year.
Nice, if you can whack the overhead designed for 2000 employees down to 600-800. (sorry for the 1200-1400 affected there, but thats about where I see it being viable).
Plus, maybe do something with the ConJet, outsource most of it, keep the common components with the twin in-house.
And, maybe do some outsourcing for Detroit of FSW ashtrays for Buicks, or something.
------------------------------
I'd say Al and RP have some warm fuzzy feelings if they are spending $20M now, just to be able to spend another $50-200M to exit BK.
lordy ...or as Baron said, Oh my, where to begin?
as much as Baron's posts remind me of fingernails on a chalkboard, i have to agree with his 11-28 post regarding the lunacy of piercing the corporate vail, blah, blah, barf. at least, not thru *legal* means. i even tried to do that with a piddly-shit small claims lawsuit on a company that worked on my POS ford mustang. the Judge didn't go for it despite the fact that it was an incorporated auto repair shop that was really a sole proprietor. long story. i'm guessing that you'd need a really good lawyer (think Erin Brockovich, someone with large tits!) AND you'd need hard core proof that a corporate officer killed someone with their bare hands. Al Pacino as Satan in Devil's Advocate could likely pull it off. otherwise, i bet that it almost never happens.
i will admit the wishful thinking on my part that an Angel Investor may come in at the 11th hour and tell roel to F**K himself with no personal lubricant. considering my Dutch heritage -- (my grandfather's name is van Loon after all but i got sick of trying to explain to people so i changed it to van Lone) -- i am truly SICK to my stomach to see a fellow Dutch person mess this all up. Roel reminds me of Gordon Gecko, in Wall Street, explaining to his protege' that he's going to carve up the fictional Blue Star Airlines (ironic for sure) "BECAUSE IT'S WRECKABLE!" where is Oliver Stone when we need him to document the blatant injustice??????!
or maybe roel is like that strange Dutch villian in the Austin Powers movie "Goldmember." except that everything he touches turns to dust.
the local ABC station is reporting that an Eclipse person wasn't paid Friday. as Shane said, i figure this will cause a mess with the guys n girls on the shop floor come Monday. the TV report is saying the guy got a letter from EAC telling him that since he turned in his letter of resignation BEFORE they filed for BK, they don't have to pay him but he could still get an atty to sue for his wages. normally i would never condone violence, but in Roel's case i will make an exception. eventually Roel is going to piss off the wrong person. and considering what happened to his wife in France, you'd think that he'd be smarter when dealing with well-armed New Mexican's. does he not realize that people have gone postal for a lot less??? ya can't even go to a Toys R Us today without the risk of another fellow shopper pullin' out their piece to shoot someone. Christ!! my Records Clerk was real casual one day when SHE boasted about keeping her gun in her car/truck, ON EAC PROPERTY!!! the shit is bound to hit the fan soon, for real, but it won't be any surprise WHEN it happends. the only question is WHO will be the first one to pop: a screwed-over employee, a screwed-over customer, or a screwed-over supplier???? when you have been fucked - unwillingly - emotions tend to override any attempt at rational thought, Game Theory 101. or just "tit for tat" as described by my favorite Evoloutionary Psychologist, Robert Wright.
and for DI, ya want me to SUPERSIZE your turkey leftovers??! pay at first window AND pay at second window.....(you get a bag of partially eaten food. but at least you get something, right Ken??!)
e.d.t.
PS - the link mite force you to watch the damn ad first.
http://www.koat.com/video/18167718/index.html
Niner Zulu--
You're expressing your jet-envy again. Honestly, it isn't very becoming on you.
This deal's not quite wrapped up yet, why don't you wait til it's done and see what the final form looks like? But even as proposed, the buyout of Eclipse Aviation accomplishes what I wanted the most: it means the design will continue to be manufactured, and it keeps my Eclipse flying. Whatsamatter with that?
You'll recall I got mine for a good price--is that why you're so jealous?
It is an awfully nice plane. Honest. And it proves that every time I fly it. For Thanksgiving, we flew multiple hops to pick up various family members and bring them to the big feast. Yesterday, we took them home. While you're moaning and groaning, my plane soldiers on and takes me above weather I wouldn't want to fly through in a mere propeller plane. It provides quiet, comfortable, reliable, affordable jet transporation. I'm delighted to hear that it will keep being produced.
Now then...Do I think the company is populated by nice guys with humanitarian goals in life? Of course not; I never thought that. They're business people trying to make a buck.
Ken
1- there is no visible business that can work based on the EAC failed business model, so why look a gift horse in the mouth? Good point, we agree
The answer to why look a gift horse in the mouth is to be sure you aren't getting a white elephant.
You and Baron are assuming the creditors get around $20 million and wash their hands of Eclipse, but that is not the case per the APA. There are expenses related to the NewCo that the creditors are responsible for. After all those expenses are taken out, you'd better be sure that you net more than you'd net if you had liquidated. Just because you receive an offer, it doesn't mean that it is better than no offer at all and just liquidating. One area that I'm for instance not sure about is the DIP financing, which is a super-priority debtor meaning they get paid back first. I'd want to know if the purchase price for Eclipse would go toward paying off the DIP and if that is the case, the creditors could end up with virtually nothing and that alone would be a reason to make a motion to stop DIP and liquidate or at least challenge the existing proposals. Any offer is not necessarilly better than no offer at all. It all depends on the terms and so far what is being offered, I don't exactly see a strongly compelling reason to take the offer compared to liquidating.
In regards to what you say about the owner debtors as well as when the sale would take place (if it takes place), I agree with you there. It wont happen in January regardless and owners should make a stink even if it results in Roel cancelling the deal.
But even as proposed, the buyout of Eclipse Aviation accomplishes what I wanted the most: it means the design will continue to be manufactured, and it keeps my Eclipse flying. Whatsamatter with that?
I agree with you regarding the design continuing, but where in the APA does it guarantee that EclipseJet will even touch a pre-BK Eclipse aircraft? Though I personally think servicing the existing fleet is the more viable business model (if a viable business model exists), I see no guarantees in the APA that Roel sees it that way. Roel could see touching pre-BK Eclipse aircraft as too much of a liability to EclipseJet and as such only would work on post-BK EclipseJet aircraft.
Now then...Do I think the company is populated by nice guys with humanitarian goals in life? Of course not; I never thought that. They're business people trying to make a buck.
Exactly the point. What makes you certain that they don't consider you as a pre-BK customer more of a liability than an asset when they could just wash their hands of you via BK court? Unless you get explicit guarantees in BK court that EclipseJet will service Eclipse aircraft, which so far I have not seen such guarantees, don't assume Roel will needlessly take on a liability that the BK court could let him get out of if he doesn't do any new work on the aircraft. Roel isn't out to sing kumbaya around the campfire with you and as such could just see you are worth a negative dollar value if he lets EclipseJet even touch your pre-BK Eclipse aircraft.
Dave, I don't need Eclipsejet Aviation International to service my aircraft (though honestly I think they will, precisely because it is a profitable venture). All I actually need is that parts that continue to be produced and made available for purchase.
Ken
"They're business people trying to make a buck."
missed it by ttthhhaaattt much.....
Fly safe... and remember, every flight is just one step closer to AOG.
Other bloggers double-check me on this, but I believe the the existing creditors besides Roel and Mann wouldn't see much of anything out of the $20M+ because Roel is a super-priority DIP for approximately $20M. Per DIP, they get money before anyone else. Regardless of how good it is that Roel made an offer, it doesn't mean from the existing creditors point of view that having a DIP and continuing operations to sell to Roel maximizes the value to the creditors who aren't Roel and Al. If you factor out the DIP costs from the EclipseJet offer, there is virtually nothing. I'm asking others to check this out, but this is why it is important to keep in mind all the different hats Roel is wearing and his relative standing in each of those hats. I'm pretty sure DIP gets paid before any other creditor (to my understanding Roel is now the top creditor as far as getting paid back from any buyer), so if this is the case Roel wouldn't actually be paying any premium for Eclipse and instead he's just paying the ongoing operating costs. It's all well and good that Roel is willing to continue the business, but it doesn't mean that the other creditors are better off with this deal than if no offer had been made at all and Eclipse went right into Chapter 7.
Dave, I don't need Eclipsejet Aviation International to service my aircraft (though honestly I think they will, precisely because it is a profitable venture). All I actually need is that parts that continue to be produced and made available for purchase.
And selling you anything for your pre-BK aircraft is a liability to them that they don't have to voluntarilly take on. Unless you have it in writing, you have no guarantees that they will do anything for pre-BK aircraft.
Remeber the words "the business model did not work"...
This "model" was an inexpensive jet, with inexpensive support, sold in volume.
Say bye-bye to what you bought.
The new model will in fact be "them trying to make a buck"...
I see very profitable MRO, Upgrades, services and the like.
Pay-through-the-nose at the next window as DI would say. The pay-through-the-nose at the second window as well...
Sorry Ken, you've been shafted. The good news is, without the warrantee, you can try to buy parts and have service done from anyone.
- Anyone out there making parts to support EAC, please email Ken.
I've gone through and read the DIP motion itself and Roel is offering to exchange the DIP financing for equity in EclipseJet rather than be paid out of the sale price. By offering the DIP Roel could get cash from the sale price as that is allowed, but per the terms of the DIP he isn't. However, now I'm a bit confused because Roel as senior creditor is saying he'd acquire up to 20% of the new entity via his DIP financing, but only 15% equity is being offered to the creditors, so that would seem to add up to 105% of EclipseJet. This equity offer from Roel might be better than I first thought, but I think it is important to read the legal docs with a fine-toothed comb to be sure something is a gift horse and not a white elephant.
Ken said ...
All I actually need is that parts that continue to be produced and made available for purchase.
Sounds great for the metal parts. Just hope that the mezanine card in your PFD doesn't turn south.
Things will get pretty interesting then.
Hi Ken,
I'm delighted your airplane is working out well- thanks for the posts of destinations visited.
(I especially like the color pictures!! :)
I think EAC 2.0 will emerge, and provide design and support too, as you say, because it is a profitable venture.
But I would point out that it is fairly critical that they do emerge as an entity, rather than fragmented, because integrated nature of the avionics.
Parts are one thing, but R&D to resolve an AD for a software issue is another story (same with updates every now and then- that's not going to be designed and tested by a 5-man shop that rebuilds airspeed indicators: wait a minute- that's what EAC 1.x tried, except they didn't know how to rebuild airspeed indicators:) -it will require an "integrated approach", with multiple disciplines involved- expensive overhead there.
But, also profitable- if it's not being done under warranty; another reason I think the will be an EAC 2.0.
Parts are one thing, but R&D to resolve an AD for a software issue is another story (same with updates every now and then- that's not going to be designed and tested by a 20 man shop that rebuilds airspeed indicators- wait a minute- that's what EAC 1.x tried, except they didn't know how to repair airspeed indicators:) -it will require an "integrated approach", with multiple disciplines involved- expensive overhead there.
But, also profitable- if it's not being done under warranty; another reason I think the will be an EAC 2.0.
If Roel believes it will be a profitable business with Eclipse 2.0 to work on ADs, parts, servicing or whatever for pre-BK aircraft, then Roel should put it in writing. If it is not in writing, I would not assume it will happen. There merely being an Eclipse 2.0 does not itself guarantee that support for Eclipse 1.0 customers will happen.
Kenny :
i Admire you ... really ... no joke !
i would to see always the cup half full ...
unfortunately , this is real world and as you wrote they are after your cash ...
so be prepared to pay dearly ... i can almost hear their selling argument :"you bought for such a little amount , now pay 10 X normal price it is only making the balance !"
Ken said ...
All I actually need is that parts that continue to be produced and made available for purchase.
What supplier will take on the liability that woud come from just "selling" someone a part...And...as an A&P, I would NEVER put my number on such a mess
Hi Dave,
"If Roel believes it will be a profitable business with Eclipse 2.0 to work on ADs, parts, servicing or whatever for pre-BK aircraft, then Roel should put it in writing".
Better than that, he's putting it in writing, and attaching a check for $100M or so.
"If it is not in writing, I would not assume it will happen. There merely being an Eclipse 2.0 does not itself guarantee that support for Eclipse 1.0 customers will happen".
Think- NOT UNDER WARRANTY, thus charge whatever they can get away with.
(I think RP is expressly guaranteeing that there will be no express guarantees: parts or support, and especially NOT under warranty. But still, if they have the intact capability for repair and upgrades, why not market those at a profit to the "captive audience"?).
Maintain customer goodwill?
HA HA HA HA HA
(Can't be too high though, or customers will walk to Mustang or Con-Jet clones).
billy ...
i agree with you ...
it can be a profitable business ...
but one thing is sure = to make it profitable they have to dump all previous liabilities ...!
at the same time , due to the fact that most bought the Fpj because it was cheap , how long will it take them to analyze situation as
1° something cheap became as expensive as competitor , the reliability over time missing ...
2° i am fed-up to fill that money pit with Franklin of my pocket...!
then at the same time IF they produce new planes , who is going to buy them ?
the brand is plagued with a bad name already ...
to reach some kind of profitability they have to screw old customers = what a good advertising ...
then there is the price-tag = who is going to buy Fpj if it is north of 2.3M$ ?
it doesn't really make sens , if they sell in one spot (ie : around ABQ) fine ! they can lower costs of services ...
if they sell international , it is only harder to reach profits ... as they will have to have service-center abroad or sell only a couple due to lack of support ...
As for parts-
There are not many FAA-PMA'd parts from other manufacturers. The entire list of FAA-PMA parts could fit on one page.
If the PC is revoked, there will be no source of approved parts, unless and until someone else obtains PMA.
Here is the entire list of current FAA-PMA approvals so far:
Eclipse Aviation Corporation
2008073007/30/2008 2 Assembly, Panel Eclipse CSP 80-00883-01780-00883-017 80-00883-017 Astronics - LSI 130 Commerce Way East Aurora NY 14052-2191 United States
2008073007/30/2008 2 Assembly, Panel Eclipse CSP 80-00883-01880-00883-018 80-00883-018 Astronics - LSI 130 Commerce Way East Aurora NY 14052-2191 United States
2008073007/30/2008 2 Assembly, Panel Eclipse CSP 80-00883-01980-00883-019 80-00883-019 Astronics - LSI 130 Commerce Way East Aurora NY 14052-2191 United States
2008073007/30/2008 2 Assembly, Panel Eclipse CSP 80-00883-02080-00883-020 80-00883-020 Astronics - LSI 130 Commerce Way East Aurora NY 14052-2191 United States
2008073007/30/2008 2 Assembly, Panel Eclipse CSP 80-00883-02180-00883-021 80-00883-021 Astronics - LSI 130 Commerce Way East Aurora NY 14052-2191 United States
2008073007/30/2008 2 Assembly, Panel Eclipse CSP 80-00883-02280-00883-022 80-00883-022 Astronics - LSI 130 Commerce Way East Aurora NY 14052-2191 United States
2008073007/30/2008 2 Assembly, Panel Eclipse CSP 80-00883-02380-00883-023 80-00883-023 Astronics - LSI 130 Commerce Way East Aurora NY 14052-2191 United States
2008073007/30/2008 2 Assembly, Panel Eclipse CSP 80-00883-02480-00883-024 80-00883-024 Astronics - LSI 130 Commerce Way East Aurora NY 14052-2191 United States
2008073007/30/2008 2 Assembly, Panel Eclipse CSP 80-00883-02580-00883-025 80-00883-025 Astronics - LSI 130 Commerce Way East Aurora NY 14052-2191 United States
2008073007/30/2008 2 Assembly, Panel Eclipse CSP 80-00883-02680-00883-026 80-00883-026 Astronics - LSI 130 Commerce Way East Aurora NY 14052-2191 United States
2008073007/30/2008 2 Assembly, Panel Eclipse CSP 80-00883-02780-00883-027 80-00883-027 Astronics - LSI 130 Commerce Way East Aurora NY 14052-2191 United States
2008073007/30/2008 2 Assembly, Panel Eclipse CSP 80-00883-02880-00883-028 80-00883-028 Astronics - LSI 130 Commerce Way East Aurora NY 14052-2191 United States
If it's not an Astronics Panel component, it's not FAA-PMA'd.
Better than that, he's putting it in writing, and attaching a check for $100M or so.
The only thing I've seen in writing is writing to remove existing contracts with owners, not continue those contacts or make new ones.
Think- NOT UNDER WARRANTY, thus charge whatever they can get away with.
(I think RP is expressly guaranteeing that there will be no express guarantees: parts or support, and especially NOT under warranty. But still, if they have the intact capability for repair and upgrades, why not market those at a profit to the "captive audience"?).
That is an assumption that Roel wants to do it at all and does not see working on pre-BK aircraft as more trouble than it is worth. If Roel will not sign a document regarding ongoing support of pre-BK aircraft, owners of those pre-BK aircraft should not assume Roel provide support. Ken right now is assuming that will happen, but as far as I can tell there is nothing in writing guaranteeing that and the warranty is expressly terminated. Current owners are creditors and as creditors they should be able to get an answer one way or another instead of just assuming what will or wont happen post-BK.
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