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:
1 – 200 of 738 Newer› Newest»One wonders how they can file for CH 11 with over $1B in liabilities.
Doesn't CH 11 require a workable plan?
Regardless, my heart goes out to anyone immediately effected by this long foreseen event.
Best of luck to anyone who ends up voluntarily or involuntarily looking for work - there are still other active OEM's and programs.
Well...looks like it's finally arrived. Not surprised ETIRC went to grab the assets as fast as it could, though.
Reposted from previous thread because (thanks to Stan and Shane): There really are a lot of good people that depend on this source for decisions in their lives. This wasn't good news for many of them.
I hope there will be some degree of better news in the coming weeks and months though.
---------------------------------
EPx,
Thanks for the scoop (again! .)
This seemed pretty unavoidable, another $200-300M would only have delayed it and made the hole deeper.
If a dim wit like me could figure this out, let's figure smart people like Roel and Peg did as well, and already have a strategy in mind.
I figure they do, and hopefully things will continue as smoothly as possible during BK.
I fear the suppliers are getting reamed with this; I hope no owners-in-waiting get dinged as well (I really don't think they will, other than perhaps having to deal with some additional delays, which was probably inevitable anyway, if EAC lost the empenage supplier (Hampson) and IS&S).
Like I say, I figure they have a plan prepared- lets hope it is well executed, for a change. (Perhaps this will give Mr. Pieper some freedom from the constraints he inherited from the Wedge).
For the employees- my heart goes out to you. You've done a great job. The blog's general consensus is that the near-term sustainable size of EAC is somewhat smaller than projected in the past.
But it's a good product (and will continue to be refined), so hopefully this transition period will be as, ah, "Non-Disruptive" as possible.
Godspeed during the next few months, to all involved.
UPDATED HEADLINE
Please keep an eye on the headline, as I'm updating it as I get data.
Shane
To clarify what Shane posted the $92M debt is the largest unsecured creditor. Also in regards to the workable plan...it is having Roel take the remaining assets (as predicted by yours truly). Also in reading the equity investors, Vern is listed in there, but he owns an extremely small share of Eclipse. Hopefully this $1 billion in liabilities left by Eclipse will come up in Governor Richardson's confirmation hearings, or better yet, Obama will drop him.
Dave Ivedorne predicted this exact date for BK back in September or October. Good predicting Dave!!
From the previous thread BEG said ...It hadn't occurred to me, but it obviously had to Fred, that we've got a little swap-aroo going on here. EAC v1.0 bagged FAA cert with Avio, then immediately swapped to IS&S. Now, EAC v1.1 has bagged EASA cert with IS&S, and is immediately swapping to ____??
BEG, great comment and very perceptive. To me that is sign of mature pragmatism. Eclipse, previously had too many "moving parts" in their certification efforts.
This is the right way to do it. Certify "something", then go for enhancements. Every certification agency treats enhancements differently than first certs. They figure "these guys are already certified, if they bring something new, it must be better". On first cert, it is more of a "prove to me this thing meets reg and is safe".
Qouting the Wedge, from the top of the previous thread...
"I’m surprised you’re all here. I had heard the VLJ revolution was over. I’m happy to be here."
WHAT an Ass.
i am not making fun of it , but if someone could clarify this , for me
(i'm not a chap.11 specialist ...!)
1B$ of liability , in the processing of a Chap.11 :
Can the judge attribute the assets to the higher bidder , regardless of th amount of the bid ?
if it is so ; does it mean (for example) that if RP propose 100M , the 900M$ will remain on "community" expenses ?
does the BK judge declare the sum to big to save anything and void the whole thing ?
UPDATED NUMERS....
Keep checking the headline, I'm typing as fast as I can!
Shane
$29.7M owed to customers, assuming only initial deposits would represent about 250 'positions', and if I read that right it only covers the customers with $2M or more at-risk, meaning fleece orders, I mean 'fleet orders', or multiple position holders.
On wonders how that jives with the 1100 remaining 'claimed' orders and floptions?
I am curious how many single aircraft order customers are owed how much back?
You will likely be amused by this web page snapshot. Honest, I didn't modify the image aside from blanking out my bookmarks area for privacy purposes.
I should add: for those who may not see the joke right away, look at the ad beside the headline.
In case you're wondering, I'm a long time reader, first time poster.
I wonder if Ken will have anything to say.
Worry not J,
Ken will no doubt be along soon to tell us how excited he is for this latest greatest development, then he will tell us again as a 'different' person, then again, and again.
I am betting that $30M to P&WC represents somewhere 60 to 80 aircraft - anyone think Enclipse owners will be getting any AOG spares?
I just have one thing to say…
Yes, it’s finally TUESDAY.
metal guy, I hadn't realized that but that is funny right there, I don't care who you are, that's funny.
Congratulations on EASA!!!!
Congratulations on AVIONG 1.5!!!
Silly boys...
Yes ATM, the pattern continues, make big noise about a little bit of good news, then drop the other shoe a couple days later - without fail.
'bout time.
will be interesting to watch in the coming months to see if this thing stays dead(as it should) or comes back as etird 2.0
If Roel does buy the remainder of Eclipse, who is going to trust him? Roel strung people along ever since he became CEO and yes he did secure funds...for himself! No wonder the figure bandied about was $200-$300 million even though Eclipse has over $1 billion in liabilities - Roel never intended to pay that off. He just used Eclipse's vendors and depositors for his own ends and now if he becomes Eclipse 2.0, what makes him think that vendors and depositors will line up to be treated like that all over again? No surprise that he spent Eclipse money on EASA because now anyone post-BK who wants to sell worldwide has to pass through him via ETIRC and it is also no surprise how totally obvious he was about it by having Eclipse be the "strategic partner" for his dutch basketball team despite Eclipse's dire finances.
B95,
"Eclipse, previously had too many "moving parts" in their certification efforts".
I agree- Wedge's mouth was a huge detriment.
I wasn't particularly complimenting EAC for their expediency, just noting the irony of it. (I feel the FAA worker bee's got played by Wedge, with the collusion of their management, so I'm glad they filed their suit).
EAC 1.1, and apparently, EAC 2.0, ARE being pragmatic, as they have no options.
(I DO wonder how the EASA guys are feeling today, though...)
ALTHOUGH, it will be interesting to see what happens with IS&S now. Maybe in IS&S's best interst to keep playing?
------------------------------
TBM_R_Us,
Thanks for pointing out Dave I.'s prediction- that's pretty...eerie?
Sort of like when I heard Peg talking with certitude (ah, about certification) regarding "the arrangement with EASA for cert in the next x days".
------------------------------
Jstrkl,
Thanks for the funny post!
(more comment on that later...)
------------------------------
Metal Guy, CWMOR,
Roger TUESDAY !!
.)
ColdWet,
That $29 million is just what's owed to those over with $2 million each.
There are only 8 of them listed.
I know more than 8 depositors who've contacted me directly! Everything I've seen tells me there are at least 100 depositors seeking refunds on the FPJ alone.
It also explains the gap between what I've listed and what the company claims its total debts are.
Remember, the filing on record only list those owed MORE than $2 million each....
Shane
Hmmmm. I wonder if anyone is answering the phones at the GNV and ALB service centers...
e.d.t.
jstrickl,
1. I have a policy of maintaining a 'Zoom free' zone on the blog. Please delete the post.
2. I think if you clear your browser cache you'll find that ad goes away...
Zoom is going to be one of the listed creditors, down a not insignificant (for him) $20k. He's avoided new EAC advertising for about 3 weeks.
I know, because I've been checking...
Shane
Looks like RP got ~65% of the company for a reported $100M (could be more).
Assuming a 50/50 debt and equity split, the previous $500M-$1000M of equity investments have been diluted (deluded?) to 35%.
We can assume that most of the debt will be flushed.
So, in addition to the aircraft owners and depositors getting a Wedgie, so did nearly all equity investors.
RP just needs to get ~$154M from the fire sale to get his investment back.
Seems that the 2nd Biggest Looser* might be the Biggest Winner after all.
Zed
Thanks Shane, that was how I thought I read that - but it would be at least 250 aircraft given the favorable terms fleece orders were reportedly given.
100 individual customers would represent between $13M and $100M depending on whether they only had deposits in or were at 60% - I bet somewhere around $70-80M there.
Man, $30M here, $100M there, pretty soon you're talking real money.
Amazing when you consider Eclipse has received about $250M in revenues for the delivered aircraft, AND between $1.5 and $2B in investments, and they are over $1B in the hole - they have essentially managed to spend the equivalent of somewhere between $11- $15M for each plane they have delivered so far.
Guess they were hoping to make it up on volume.
Email from Stan
WOW!!!
I feel left out...
Stan
The lucky man is enjoying a well earned break in a tropical paradise.
Don't worry, my friend, everyone here is thinking of your 'initial spark' in 2006. It might have taken a little time, but you've been proven correct in the end.
Shane
CWMR
TUESDAY
finally THE "next TUESDAY".
RP missed the date - he knew the blog's forecasts...
After a lot of years of lies, broken promises there is now the the long anticipated BK rep. ch 11...
Wagoner (GM) says for GM CH 11 will lead to CH 7 because of the missing loans to contine and the lack of customers...
Isn't auction a CH 7 act? (I will learn...)
The employees - now its's their turn! Anyhow good luck!
Julius
folks,
its good to be left out of this...BTW.
I just think its funny that we said EAC burned $2B... and were repeadedly corrected, using all kinds of fuzzy math and BS.
Bottom line, this is a huge hole... a lot of dammage, and very little to show for what looks like north of $2B, evaporated.
Some would say that EAC provided a bost to GA, "invented" the VLJ, and even pushed the others into the marketspace.
I say, "no"... there is a long history of little jets, like VLJs, and there were plans on the drawing boards of the majors for years.
Vern sold everyone a bill of goods... like CW begins to illustrate, this is a huge failure from an investment POV... Even if you agree that have a few hundred orders left... the cost associated with developing, certifying, selling and producing these planes can be characterized as a joke... especially considering the planes were SUBSIDIZED just to get them out the door.
Reality bites.
No big market....
No market for this plane north of $2.5M or so....
No way to recoup the investment....
Someone still has to demonstrate there is a way to make money with this plane... and I would say, there's no way.
I am sure the court proceedings are going to yield some other FACTS that corroborate our ideas and conclusions, here... should be interesting.
A couple of comments..
This C11 is news only to the extent that it is yet another deviation from public statements regarding plans and intentions.
A C11 case (and the DIP financing, if true), is odd in that EAC has no revenues; none. It has only liabilities. Moreover, a BK judge/trustee would normally want to see creditors (in some cases equity holders, including employees) "carried" in a Newco and with a viable going-forward plan. RP seems to be trying to actually conduct a C7 asset purchase in a C11 format (to try and maintain control); not a coherent plan/sign.
Lastly, even if EAC were completely cleansed of debt, lawsuits, future claims and other liabilities; and even if the E500 were in perfect conformity with spec and upgrades:
Where is the market? It's 50-75 aircraft/year, max (and with full after-market support) esp. given competitor offerings from Cessna, Embraer, Honda and others. And the E500 is not an airtaxi or commercial platform (no current VLJ is).
"High production," like the Air Taxi DayJet premise, is dead. There is no market that large, year over year, even if the E500 were "perfect" and priced sub $2MM.
And the current fleet? 250 units almost all for sale; no takers even for $1MM.
This is going to go just like the Dornier project; an entrepreneur working every desperate angle for his loan payback, then a final collapse, because:
There is no sufficient market for this aircraft
(other than a very limited/problematic personal use segment).
Deep Blue,
Dornier Project sorta rhymes with Donner Party.
Shane,
Is there anything in the docs that explain the Russian factory??? Are they considered a creditor or an investor??? I'm sure the Russians will want their 'royalty fees' returned if there won't be any FPJs made in the now unnecessary 2nd factory...
e.d.t.
Great point about the 363 Sale angle DeepBlue - seems like RP trying to pull a fast one - dangerously close to self-dealing given his dual roles as CEO of the BK plaintiff and the largest secured creditor.
I suggest we start a pool to project the final 'selling price' of Eclipse's $100,000,001-$500,000,000 in assets vs their more than $1B in liabilities.
Our accuracy has been freakish to-date - maybe a closing date a couple days before the sale is to be final - and no Roel, our guesses are not to be taken as serious bids.
I strongly recommend anyone wanting to play this game review the proceedings for Columbia and the original Adam Aircraft - there is a lot to be learned there.
I think there is a "middle of the road" with this situation. They are going to have a final buy out in 01/09. However, as it seems business will continue as usual until then. The GNV service center is still open, and so are the phone lines at Eclipse. I think their production will continue through this buyout period. It is going to be interesting to see if Eclipse is going to stand by putting Avio NG 1.5 and FIKI in my plane. Which if I read this whole thing correctly, then the people with planes are not looked upon as creditors. It is going to be interesting to see how this will unfold. I personally do not believe this plane is dead. But then again Roel could just take what money and company he gets his hands on and jet (quite literally)! Good times with Eclipse. I'm gonna go start drinking now.
KEN,
Am I wrong, or did your direct operating cost just baloon to over $3K/hr?
Unsecured Creditor’s Committee
Only the seven largest unsecured creditors get on the final committee (a dubious honor), but everyone should complete a Form B10 nonetheless. If in doubt, fill it out!
Our plan is to file a claim, and then update once Eclipse actually communicates with its vendors. (YES, that was a JOKE!)
We need ALL unsecured creditors (now includes depositors) to file with the Bankruptcy Court so that the enormity of the impact upon the little guys is evident to the Court.
Sort of like building an igloo on the surface of the sun, but one must make the attempt to get some money out the DIP “stalking horse” (aka Roel and Al).
http://www.deb.uscourts.gov/
http://www.deb.uscourts.gov/Forms/b10.pdf
So OMSIV,
Are you prepared and able to part with another $200-300K to get your plane to finally meet spec and be complete?
Do you think Ken and the other 200 or so owner/operators are as well?
Seems to me Vern himself suggested that the warranty exposure was north of $100M sometime in the past few months.
One possibility I expect to see is for P&WC, Avidyne and IS&S, along with some of the more exposed vendors, to consider buying-up the delivered aircraft and scrapping them to end the liability exposure rather than double down to meet their support requirements under the FAR's.
Cold Fish
This is one of those situations when it might be best to quietly put the “can of beans” back on the shelf, and simply walk away . . . quietly! Hopefully, it’s leaked enough gas, that it will die on the shelf . . . but if it actually explodes, it’s best to be at a good distance. In any case, there is no advantage to be anywhere close, when it reveals its true contents.
Customers, vendors, investors . . . it’s all a “lose, lose” situation . . . except for a few lawyers, than can retire on the aftermath. It’s a “profit” when you can get someone else to remove a pile of garbage . . . and give you a receipt as a “charitable gift”, for tax purposes. ‘Just quietly accept the receipt, and walk away.
gadfly
(And let the “nearest of kin” assess their grief over the loss of their dearly beloved . . . it is “enough”!)
EclipsepilotOMSIV:
It’s good to see you discussing with us, not ranting. I cannot see why Roel would not create a program to charge each of you for the upgrades- the liability to you was wiped clean by the BK.
I do not believe that there will be a successful exit from this BK in today’s climate but, if there were, the cost of capital is so high, he would not burden himself with ANY prior liabilities he can avoid.
I’m curious, if we have any lawyers, if Roel pulled his self serving moves far enough ahead of the filing to avoid BK rules??? And what about his huge conflicts of interest???
Turboprop_pilot
Ken and EPx,
Sorry about the "disruptive" news today.
B-u-t, I agree with EPx, and think things will be okay. Maybe not as great as they could have been, but okay.
I figure the best case is a delay of some months in the retrofits, and worst case, you might indeed have to sink the $2-300K our chum CWMOR mentions. But I think you will still have a fairly good bargin- especially if you got in for $1.5M-ish or less.
(Bound to be some "rib'n" between now and then though .)
Good luck with EAC v2.0, please let us know how it works out. (I suspect, it will -probably- improve over the past 12 months experience).
In a word...
this is all about NOISE...
If you intend to come out OK as a creditor, position holder, airplane owner, etc... YOU NEED TO MAKE SOME NOISE.
If yu are not heard, Roel will just walk away and shaft you - whoever you are.
The court needs to see that you will not be happy with Xcents on the dollar, or paying $XXX,XXX to have your plane finished.
MAKE SURE YOU ARE HEARD...
Agreed ATM,
Any owner who has received a plane and is owed IOU's to meet spec (yes Ken, this includes you and all your alternate identities, and OMSIV, and EA-Pilot and the rest) need to be sure they are represented in the BK filing as creditors - not sure if they count as secured or unsecured (damnit Jim I'm an engineer not a bean counter) but they need to get in line and be able to show potential damages/costs as a result of the BK filing.
I am fairly certain Wedge gave an actual figure in one of his speeches/interviews since his departure and I seem to recall it was near $100M but I recommend any owner find it themself.
I am interested to see how much Pieper is going to charge for finishing the owners' planes.
It's a bit of a catch-22... charge too little and lose money on every plane. Charge too much and the cat's out of the bag on how much these planes/systems really cost.
Imagine if they charge $400k or $500k...
Its going to be tough to even come up with a number of how much you as an owner are owed based on accepting a promise to complete the planes.
A judge would need inisght into the proposed cost.
How is Pieper going to fund this mess? Looks like he needs at least $500 million.
If I am a judge, a look carefully and forensically at "how they managed to blow all this money" and "how will they ever make money" and "how much more do they really need"...
I doubt the sale would occur in January - I'd be surprised if there were not more creditors, and a lot of grief, and more lawsuits... even ones with strong misrepresentation/fradu accusations. A few of these and the courts will shy away from any sale or agreement for financing of this company without a really large sum of money in the bank.
Finally, how is foreign ownership of an aircraft manufacturer looked upon? Not really sure.
- a judge can just say - nope, this makes no sense... why should I preserve this "cash incinerator"???
Now the wedge will lose his FPJ -
he will be sad like all other investor... toy/money is gone.
Why did RP file for CH 11 right now?
The preemie EASA cert only
allows non provessinal usage of the FPJ!
Did someone knock at the door too loudly and threatened to file for involuntary BK?
I am not sure - there is still Al -but CH 11 allows normal operation
at "cash level". After winning the auction for xM$ RP could cover everything and cease or sell operations at ABQ within a year.
BTW: How much time is needed to make an appropriate bid - December is the best time of the year?
BTW:A year ago EAC was economically TU - and RP knew it?????
Julius
I am interested to see how much Pieper is going to charge for finishing the owners' planes.
It's a bit of a catch-22... charge too little and lose money on every plane. Charge too much and the cat's out of the bag on how much these planes/systems really cost.
Imagine if they charge $400k or $500k...
Why would he do any upgrades at all? Why bother?? There is now no obligation at all.
Not sure if the FAA link will carry thru ...but I found this new AD on the FPJ. They can't fly higher than 37K anymore...
http://www.flightglobal.com/articles/2008/11/24/319278/engine-issue-restricts-eclipse-500-operations-at-high.html
http://rgl.faa.gov/Regulatory_and_Guidance_Library/rgAD.nsf/0/A94345433CDBE4B88625750B005BB60A?OpenDocument
To add to the discussion, I think the early planes, with Avidyne glass S/N 001-105??), are basically orphaned now - no upgrade opportunity (IS&S seems to have given up hope for EAC), no FIKI.
And I am unsure what will be possible after the aircraft currently under production and for which 100% of the parts are on-hand are completed.
Hampson is done, no rear fuselage.
IS&S is done, no brains or displays.
Seems to me this could get real ugly(ier) real fast(er).
Something about ch 11 section 363
or simply "Section 363 Sales"
Pathology of Section 363 Sales (Not as Simple as They Look)
If there are two legal entities -
it's like a method for cash conservation.
Other information can be retrieved
via "Section 363".
Julius
TBMs...
Yes my fine feathered friend... you are correct -
In order to ensure Pieper upgrades your planes... yu must MAKE NOISE.
Only a judge can help you with this now.
Even if he "promises" to do it... you need assurances, only available through the courts.
And, he "should" upgrade so as to keep the customers happy - think he sees it this way?
MAKE SOME NOISE.
If Julius is correct about the 363 sale (read the linked article!!), then RP does not need to make any promises at all, and the creditors will be left splitting how ever many cents on the dollar. Smaller creditors, such as owners and position holders owed deposits, won't have any say at all. Only another bidder in the 363 process could stop RP, and that doesn't seem very likely.
RP takes the carcass. What he does with it later remains a mystery. The carcass won't have any suppliers who've been screwed in the process before and during BK.
Finally a minute to comment - those pesky things called "customers" kept me away.
CH11 is obviously no surprise.
The fact that it is an incestuous CH11 filing with RP as the CEO, Chairman, Majority Owner, Largest Creditor, DIP Financier and Proposed Acquirer is no surprise, but boy, it will STINK to any judge - expect major push back by the courts if any alternative suitor emerges.
Owners/Depositors, as I mentioned numerous times, MUST for a single creditor-group to be at the table - they will probably make it to the final creditors committee as a group - individually, no one will hear them.
The fact that Fuji, Pratt and Hampson are each owed over $30M is shocking. They should have put Eclipse on a COD basis over a year ago. Really Shocking!!! It is a positive indication that these vendors are keen on keeping Eclipse as a customer.
It is clear that ALL unsecured/non-debtor equity investors will get ZIP. Proceeds of sale, if any will go to the creditors.
Assets listed are in the ballpark. I think I estimated between $250M and $350M previously.
The fact that DIP of $12-20M is lined up at filing is an excellent sign for current owners (with planes in hand). It means that investors are still intent on financing business continuation.
IF, and it is a big IF, the court manages to have the asset auction by Jan 9, that will be an incredibly fast disposition and will set the stage for a cleaner 2009.
Timing is perfect, with depressed asset values and poor liquidity, it is unlikely that many suitors will appear to try to top the 363. If it all works out, Eclipse 2.0 should be hitting its stride as the economy and markets start their ascent from the ashes in 2H/09.
All in all, it looks good. Lets see what Judge this thing gets assigned to. If it is a populist type, like it is in fashion in the US of late it could drag on. If it is a practical guy, he will dispose of this in a hurry.
And Chapter 2.0 begins with a Ch 11 filing. The turkey is in the oven!!!
Baron,
You’re clearly insane…….
The new AD restricting the pos to FL370 effectively killing the “stellar” PPH burn and range, further crippling the pos, and you say “all in all, it looks good”.
The suppliers are going to get reamed to the tune of mere pennies on the dollar of what’s owed, and it looks good???
How many of these suppliers are going to be around for the second round of bids? Do you really think Fuji, Hampson and PWC are going to be signing the same deals as last time when it cost them a combined 90+million? IS&S???
The tire issue still needs to be resolved, as do the problems with the pitot/static system and everything looks good????
I’m sorry, but just how bleak does it have to get before it stops looking good?
The fact that it is an incestuous CH11 filing with RP as the CEO, Chairman, Majority Owner, Largest Creditor, DIP Financier and Proposed Acquirer is no surprise, but boy, it will STINK to any judge - expect major push back by the courts if any alternative suitor emerges.
It is all extremely convenient that the same board meeting that declared BK also accepted Roel's Asset Purchase Agreement of Eclipse. However, I think utlimately people (both existing customers, potential customers and vendors) have seen what Roel is like and they will be the ultimate arbiters. I frankly think that Roel has shown himself not to be trusted and even if he financially gets Eclipse with a financial clean slate, he's personal standing is in the high negatives and nobody has to buy aircraft from him or sell things to him.
The fact that Fuji, Pratt and Hampson are each owed over $30M is shocking. They should have put Eclipse on a COD basis over a year ago. Really Shocking!!! It is a positive indication that these vendors are keen on keeping Eclipse as a customer.
In defense of Hampson, they already took Eclipse to court and there was a settlement and then I think there's now a dispute over the settlement. I believe Hampson has since stopped doing business with Eclipse and has already closed the factory that provided parts for Eclipse.
The fact that DIP of $12-20M is lined up at filing is an excellent sign for current owners (with planes in hand). It means that investors are still intent on financing business continuation.
Roel and Mann are the ones and there are reasons for doing that relate to selling assets in BK and being a stalking horse.
All in all, it looks good. Lets see what Judge this thing gets assigned to. If it is a populist type, like it is in fashion in the US of late it could drag on. If it is a practical guy, he will dispose of this in a hurry.
I think it depends on how many creditors make noise, what that noise is and if anything else comes up. Having Roel at all ends of this (CEO of Eclipse, CEO of ETIRC the distributor, CEO of ETIRC the bidder, finacier of the DIP) could potentially make this real challenging - particularly if other creditors make noise about it.
Also an amusing sidenote unrelated to what I said up above - Ed Iacobucci is an equity investor in Eclipse. Also Irell & Manella (Eclipse's former law firm who handled their IP transactional as well as the business litigation and is currently owed over $3M) is an equity owner.
"Baron,
You’re clearly insane……."
The thought crossed my mind as well. Like looking at a train careening off a high trestle bridge into a raging torrent and being told it the train will be a few minutes late at the station.
I’m sorry, but just how bleak does it have to get before it stops looking good?
If someone besides Roel buys Eclipse who has stature and money, I'm willing to say that things look good, but with Roel, I see the long-term prospects as DOA. Roel has not shown himself to be someone to put Eclipse on the right track. Even in the BK filings Eclipse - under Roel - praises their flawed business model (claiming it gives them a competitive advantage). If roel gets Eclipse post-BK, he'll still be doing the same thing of foisting the flawed business model on the company so that it continues to burn more money in order to sell it to someone who is a greater fool than him.
It's been clear to me and most folks for a long time now that EAC wasn't very good at systems integration, not at all.
On the other hand, they have been been excellent at navigating the regulatory and legal waters (except perhaps for the unfortunate suit against blog commenters for telling the truth).
Many aviation folks were surprised when they got their PC, their intial TC, FIKI, EASA, and when New Mexico didn't seem to mind risking millions of taxpayer bucks on what was clearly a long shot, even before it became clear to most folks that their management wasn't the best.
I don't know the first thing about corporate bankruptcy law, but I have this feeling that Roel will come of this in pretty good shape to restart eclipse. Probably not in the U.S., but somewhere.
EAC has always been good at manipulating the system.
Baron said:
"...these vendors are keen on keeping Eclipse as a customer."
I live less than 10 miles from Hampson (Grand Prairie) in an aviation-rich environment, and I will safely say Hampson will probably NEVER build another empannage for Eclipse.
P&WC is going to be essentially stiffed for somewhere between 69 and 100 shipsets, potentially some NRE, and having to deal with a customer who operates in bad faith - can't say I would look forward to keeping that relationship, especially when the real world volume turns out to be 50-150 shipset per year range (if that).
As we say, that dog just won't hunt. The math does not work.
I don't know the first thing about corporate bankruptcy law, but I have this feeling that Roel will come of this in pretty good shape to restart eclipse. Probably not in the U.S., but somewhere.
Yes, self-dealing helps...along with being a foreigner living overseas as part of an overseas entity. However, as I said before BK, I thought Roel wasn't doing his fiduciary duty and was basically trying to rob Eclipse, but rather than stealing the crown jewels, he's only getting costume jewelry. I don't think anything will happen to him other than he will fail with Eclipse 2.0 despite all his machinations and his reputation will be pretty well trashed worldwide. Probably what happens to the politicos and [former] Eclipse brass will be interesting. There is also the wildcard of the FAA, Congress and/or EASA throwing in a monkeywrench. Oberstar hinted about this months ago with the IG report only being "preliminary."
baron,
"it will STINK to any judge - expect major push back by the courts if any alternative suitor emerges"
Boy, you can say THAT again.
I kinds wish PW and another few creditors would get together and forma bid with another group... giving them some advantageous dela over Pieper's deal.
I think as a matter of principal Pieper and his gang should be left out of any future deal... BUT,
I suspect no one in their right mind would go near this deal.
Also, it does not mean a judge needs to back any deal.
An industry expert could advise a judge that enough dammage has been done... let them close.
At the very least, let the "winners" provide personal guarantees to the trade...
Yeah, right.
P&WC is going to be essentially stiffed for somewhere between 69 and 100 shipsets
I've got to wonder what that does for the profitability of the 600 series product line.
having to deal with a customer who operates in bad faith - can't say I would look forward to keeping that relationship, especially when the real world volume turns out to be 50-150 shipset per year range (if that).
Pratt, Hampson, etc could turn this Chapter 11 into a Chapter 7. Eclipse has already created a "Critical Vendors" list and if vendors refuse to be part of Eclipse 2.0 and the BK court knows that, that would eliminate the justification for Chapter 11. With how much Eclipse integrated all the parts with Avio, Eclipse could find itself hoist by its own petard with the aircraft falling out of certification due to parts from different manufacturers than what the certifications said were required. It frankly would serve Eclipse right for how they made a big point on how you couldn't upgrade anything with an aircraft without their say-so in regards to the $500K per plane offer for the DayJet fleet.
Quick Update
Lots of incoming on the old blog email, so have not had time to properly sort everything, but here goes
1. ABQ is agog, with everyone is waiting to hear from Roel. He's due to address the troops at '6 pm this evening'. Class act, our Mr. Peiper. He's treating his staff well and keeping them fully informed. Not.
2. Peg has known for some time that no matter what happened, she was out. Hence the rather 'relaxed' air about her recently. Personally, I think she went to a gunfight armed with a knife....
3. The list of bond holders is very long. People from all parts of the globe, who will probably remember what Roel did to them today for a very long time. This brand is now toast in the financial community, and will make the next GA startup effort even more difficult.
4. Yet another job fair took place in ABQ today. I'm pretty sure that it will prove impossible to hold onto any staff worth having over the next few months. I predict that we will hear in January that Roel can't restart production in any viable manner, and that he's taking the TC away to Russia, from whence we will hear little or nothing ever again.
5. One source claims that these events were planned prior to the EASA cert. If that turns out to be true, I can imagine how eager the boys and girls in Cologne will be to add commercial operations to the current certificate.
6. Some of the 'customers' owed money look more like distributors or agents. I'm checking on this, but if my hunch is right, there goes a significant channel to market, forever.
That's enough for tonight. It's been a long day, and Shane needs his zzzzz's.
Shane
5. One source claims that these events were planned prior to the EASA cert.
My speculation all along. Roel is cratering businesses and individuals all over the world as part of a scheme, but I don't think his scheme will work. Would you buy a used car from Roel? Would you sell Roel a used car on credit? $1 billion dollars leaves an awfully big mark and this is set to hit worldwide and people wont soon forget. Eclipse 2.0 under Roel is already severely tarnished and it hasn't even started yet.
"Assets listed are in the ballpark. I think I estimated between $250M and $350M previously."
If these assets include TC, PC and parts unique to the EA50, etc, I'd bet the realizable value is more like one tenth of this amount.
Hampson on the other hand is like one of those hand me down aprons that should have been left in the UK
Yet Eclipse made the decision to use them. Blaming the supplier simply doesn't help Eclipse, but rather it hurts Eclipse. Why partner with Eclipse? They don't order the volume they say, they don't pay for what they have ordered and they publicly throw you under the bus...not exactly an inviting business prospect to risk having your company's finances dented and have your customer give you bad PR.
They "Hampson" have been receiving their share of cash over the last few months since the lawsuit - they have been paid MORE than any other supplier
Yet Eclipse still hasn't paid their bills.
Production Certificates are not transferable (FAR 21.155) so the new entity will need to reapply.
Just wondering what it will take for the FAA to grant a new one?
One last thing for today.
A 'usually reliable' source tells me that Mike McConnell is phoning around vendors personally to 'test the waters' and see who will stay on side.
I see little point, myself. This TC and the EASA cert are heading to Russia in January.
Or Chapter 7, as well.
Shane
Charles...
Minor details...
Obtain the company and keep the TC
That's why they did not just take "some assets"...
I hope to never see another Hampson product !
-AND_
they were the chosen supplier to EAC..
what does that tell you?
precisely
Sparky said...
Baron,
You’re clearly insane…….
.... long dissertation of past problems... and everything looks good????
Easy, Sparky.
The comments were that the CH11 situation looks good. Much better than I thought. Having $12-20M in DIP lined up at filing time.
Sparky, you have to realize that the people putting in the $12-20M KNOW A WHOLE LOT MORE THAN YOU OR ME.
Ask yourself, why intelligent people, that have all the inside info, are putting $12M-$20M into this thing.
What is the answer? It can only be that they want to continue the business. And that is awesome news for current Eclipse owners. The alternative is what happened to Adam - filed, got no DIP, no post-liquidation financing, dead. Current A500 owners all 6 of them ;) out of luck.
So chill out dude. Even on a corporate disaster there are good news.
Assuming this CH11 goes as can be expected, are you not able to recognize that Eclipse 2.0 will clearly be better off without $1B+ in debt and a cool $12-20M in unencumbered cash to "try" to start over? Is that concept so hard to comprehend?
These guys (Mann and RP) are likely to walk away with $2B worth of investments (prob a net $250-350M net value) for $50M or so. That is a genius play. 5x to 7x ROI in today's financial markets. How cool is that.
As for the vendors, people companies don't look in the rear view mirror too often. Each one of these companies have sales people with sales quota. If they can retire that quota by selling to Eclipse 2.0, you can bet the sales people will be making a stink about closing the deal. And trust me, you don't want to piss-off your sales force with "silly revenge sentiments".
And you can BET YOUR BEHIND that Eclipse will EASILY find a replacement for Hampson. They have the blueprints and the construction technique, they can outsource that to say Mooney, on a dime. And Mooney would jump on it with both feet. Same for any other vendor, PWC being prop the only one with a significant bargaining power. Still, worst case, PWC will sell PW610s COD to Eclipse 2.0. It costs them nothing to run a batch through the line instead of 615s or 617s.
Dave is spot on with his "watch the suppliers for this fully integrated" airplane comment.
Roel is playing on the ignorance of the judge... or should I say praying for the ...
If the judge figures out there's a hornets nest of problems due to the integrated nature of the plane and the lack of supplier support, he will conclude they are DOA.
Roel will use EAC to try to rasie money n far away places... based also on ignorance.
Anyone who knows the story, really will stay far far away.
The judge needs to be aware.
Just wondering what it will take for the FAA to grant a new one?
Secretary of Con-merce Richardson will plead with the FAA to "save the company."
"Sparky, you have to realize that the people putting in the $12-20M KNOW A WHOLE LOT MORE THAN YOU OR ME."
UHHHH...
these guys invested in EAC before, and NO, they do not know more than us... they know LESS.
They also think they can find people who know EVEN LESS...
Wake up.
Dave said...
Would you buy a used car from Roel? Would you sell Roel a used car on credit? $1 billion dollars leaves an awfully big mark and this is set to hit worldwide and people wont soon forget. Eclipse 2.0 under Roel is already severely tarnished and it hasn't even started yet.
Dave, I think you are reading this all wrong. You are focusing on the guy (RP) delivering the "bad" news, that everyone knew was coming anyway, instead of focusing on the guy that created the mess (VR) and took the money.
RP will lose about $150 out of his original+top-off investments in EAC, just like the other creditors. His line is very simple to all vendors, customers, creditors. "Yep, like you, I bought the VR BS, lost $150M, more than any of you lost. I'm giving you guys a few pennies on the $, and a bit of equity stake in Eclipse 2.0. Stay with me and lets see if this dog can hunt with a back-to-basics business plan. No guarantees, but I think we have a shot."
Simple, clean. You are too concerned by past history, and holding grudges. Companies don't act like that. They already knew they had lost. The only question is "do they have a shot at recovering some of it if they go along with the 363?". That is the only question. And if RP is the only guy coming forward with "the shot", then it is a no brainer.
"These guys (Mann and RP) are likely to walk away with $2B worth of investments (prob a net $250-350M net value) for $50M or so. That is a genius play. 5x to 7x ROI in today's financial markets. How cool is that."
"...Mooney... build...."
Baron, reread your posts tomorrow, and then delete them, its embarassing.
Bottom line is they SPENT +/-$3B.
The value of what they have is closer to ZERO than your figures. They want to believe there's some value, but guess what - you cannot make money with this plane.
NO WAY.
Starting again from scratch is a better economic decision. BY FAR.
Anyhow, the numbers game you play in your head, is exactly what Roel is hoping for.
Tell you what, we'll meet here again in a year - and IF a judge is crazy enough to let these jerks continue to burn money... in a year and another $500M... it WILL all be over.
I do not think a judge will allow the company to continue. Its too much dammage, and too little prospect.
Its like the Automakers asking for a bailout, and Washington telling them: "well, what are you going to do differently so customers want your products and so you can make money?"
Concentrate not on the can of beans pricing, greater fool investments/ etc....
Look at the reality:
Pieper says the business model is DOA.. just what I have said for a long time.
What can they do, after stiffing everyone in BK, to make money and become a thriving business?
The product appeals to "Kens" and Kens only - there are not enough Kens... for that business to be successful, anyways...
Pretty much if any of the key vendors (landing gear, avionics, FADEC, or engines) takes their ball and go home, it's game over.
ATM said...and NO, they do not know more than us... they know LESS
Come on ATM. The circular and reinforcing blog discussion is over inflating your airspeed - check your Mmo, please.
"We" said EASA would never happen. "We" said FAA cert review would find major issues. "We" said FIKI, Avio NG 1.5 "final" config would never happen. "We" said Eclipse would never get a PC. "We" said Eclipse would never produce EA500s in volume. "We" said no-one else would invest in Eclipse, and said that multiple times. "We" said, multiple times, that EAC would be shutting down after every major holiday for the past 2 years.
All wrong.
On the other hand..
"We" have no idea how many hours it takes to build an EA500. "We" have no idea what the burdened hourly rate is at ABQ and would be in Russia. "We" have no idea what the parts cost. "We' have no idea of how much $$$ EP and Mann can and want to invest and/or raise. "We" have no idea of what Putin committed to RP.
In reality, "We" know squat. We simply predict doom and fraud and crime at every turn, "We" are wrong most of the time, but forget, but "We" always remember and self-congratulate when, by sheer law of probabilities, one of those things happens.
If I predict every day, that one of you will be dead before the next holiday, sooner or later (and I hope it is much, much later) I'll be right. And in good form for this blog, I should jump with joy and say, "see, I called that one back in June".
Modesty, please. It goes a long way. For Eclipse and for us, BOTH.
"Yep, like you, I bought the VR BS, lost $150M, more than any of you lost. I'm giving you guys a few pennies on the $, and a bit of equity stake in Eclipse 2.0. Stay with me and lets see if this dog can hunt with a back-to-basics business plan. No guarantees, but I think we have a shot."
Really?
I say your stupid no money deal with Vern for the international rights and no money down "hundreds of orders" actually helped STIFF ME...
How about you go back to Europe or give us your 65% of the company and shut the f*%$k up.
Baron, you have this one all wrong, buddy - this guy scammed the market with Vern, and you want to paint his as some decent guy...
I would say, "Roel, put up $900k per plane (all 300 of your euro-trash orders) and agree to pay the remaining price at $2.15 million... a recent statement that there are 1100 order for Europe-land and all at the $2.xM price... and then we can talk.
Then pay a market price for the international rights....
Then find $500M to jump start the company.
This guy is Vern 2.0
Holy Effing Crap!!!
Yes, I guessed the date correctly ( though for the wrong reasons ), but as the past couple of weeks unfolded I figured I'd be off by a little teeny bit.
Anybody else want to say that the blog is wrong about everything? Kenny? Turn&Vern? Bueller?
Anybody want some stock picks ( and the wrong reasons why they're going to go up )?
Say au revoir to any meaningfulness to EASA certification - if Ecorpse can't make ISS & Hampson whole - on the vendors' terms - they're not going to play along with Roel.
Off I run, to find out more details.
Pull around to the eleventh window,
DI
Dave, I think you are reading this all wrong. You are focusing on the guy (RP) delivering the "bad" news, that everyone knew was coming anyway, instead of focusing on the guy that created the mess (VR) and took the money.
Roel was and is the CEO. I've watched what he's done. You and I have disagreed over what exactly he has and hasn't done, but with my perception of Roel, Roel was much more than just the messenger. I see him as a big part of the problem.
RP will lose about $150 out of his original+top-off investments in EAC, just like the other creditors. His line is very simple to all vendors, customers, creditors. "Yep, like you, I bought the VR BS, lost $150M, more than any of you lost. I'm giving you guys a few pennies on the $, and a bit of equity stake in Eclipse 2.0. Stay with me and lets see if this dog can hunt with a back-to-basics business plan. No guarantees, but I think we have a shot."
Simple, clean. You are too concerned by past history, and holding grudges. Companies don't act like that. They already knew they had lost. The only question is "do they have a shot at recovering some of it if they go along with the 363?". That is the only question. And if RP is the only guy coming forward with "the shot", then it is a no brainer.
No Baron, just reading the papers filed today - not yesterday, not last week, not last year - Eclipse under Roel as CEO is still touting the same flawed business plan (high volume, low price) in their legal filings and touting it as a competitive advantage. If I believed Roel had tried or would try for "bact to the basics," then I would be more inclined to see him as a solution, but instead I see him as being part of the problem. I see the production slowdown happening despite Roel, not because of Roel. I see Roel as having tied himself onto basing the business on volume. Also in regards to past actions, credit rating agencies look at the past 7 years and so I'm doing no different. There's a reason for looking at past history as it determines future credit actions.
Baron,
You are truly insane....
ATM said...
"...Mooney... build...."
Baron, reread your posts tomorrow, and then delete them, its embarassing.
I'm sure you know that Mooney has been a long time supplier to Boeing building, what else, empennage subassemblies. (note: I don't know the current status of that relationship).
FYI,
Everyone who invested in EAC was more wrong than us... just becasue they continue to try to save their asses, does not make them better informed - actually, it just makes them more desperate.
I have basically been involved in a few hard points:
1- the plane does not make sense for air taxi
2- Dayjet was never going to make it
3- EAC's order book was BS
4- they spent $2B or more... always refuted by faithful
5- and I predicted the conjet
A few details along the way, provided by me... like never count Vern's ability to raise money out -never. No one can say when the insanity will end, becasue Vern is terrific at conning people into investing in this busines -which Roel now admits is a huge failure.
Personally, I think anyone who invested inthis business was crazy. It really never had a shot -ever. And now, we have Roel admitting the plan is dead... long live the new plan: OK, where is it?
Sorry if you don't like the FACT that all the "insiders" are wrong -they lost their ass.
If you think because they invested they are smarter than us - you are nuts.
Given the facts, they lost their asses.
Wouldn't it be funny if Vern put in an unsolicited higher bid to buy the assets?
Let's consider this if Eclipse 2.0 does go to low volume...is Roel as distributor going to clean out his orders for 240 units and undermine his own credibility? If he does re-affirm the 240 units, what price is he going to charge himself? Where will he get the money to not only finance Eclipse 2.0 but to pay for his hundreds of orders? A plant operating at 150 units per year would spend nearly 2 years filling orders that it had received from itself. Something has to give or someone else will get burned big time. Roel through MyJet is doing an exact cut-and-paste of the DayJet business model and we've seen how that worked out.
ATM said... airtaximan said...
I say... How about you go back to Europe or give us your 65% of the company and shut the f*%$k up.
Yes, ATM. You'd say that, because you see nothing to gain. Now, lets say you are one of those suppliers like IS&S and Hampson that have half our revenue forecast for 2009 tied to Eclipse and facing bankruptcy yourself, and RP shows up with a $15M check and says... here to make up to you, I'm pre-buying 30 ship-sets.
Again, this is not high-school folks. It is about making money or losing less money. Money talks, grudges walk.
Also, for those claiming that if the judge doesn't like the plan he will force Ch 7 and screw RP. You need to get your facts straight.
RP is going for a 363 asset purchase. It makes LITTLE DIFFERENCE to him if he gets if via Ch7 or Ch11. The fact that he is putting DIP money in to do it via CH11 is a *HUGE* plus for the judge, the courts, the employees, etc, as it is less disruptive. It is just a touch of icing on the cake, but RP (or someone who outbids him) will get and eat the cake regardless.
Now, I would not buy that cake. It is made with tofu and is "toxic" to use a current word.
But hey, I would not have invested $1 in EAC (but apparently $2,000,000,000.00 other bucks found their way there). So there is an appetite for all sorts of things.
Who am I to question it. In my mind, it is yet another overseas buck financing the American GA dream. The more the merrier. If they lose another $2B trying, I'm totally cool with it.
Wouldn't it be funny if Vern put in an unsolicited higher bid to buy the assets?
What would be funny if Vern - as a creditor - made some filings that embarassed Roel et al. Any number of people can cause problems for Roel...given how Eclipse has over 5000 listed creditors (and potentially more that are unlisted), trouble can ensue.
Also, for those claiming that if the judge doesn't like the plan he will force Ch 7 and screw RP. You need to get your facts straight.
RP is going for a 363 asset purchase. It makes LITTLE DIFFERENCE to him if he gets if via Ch7 or Ch11. The fact that he is putting DIP money in to do it via CH11 is a *HUGE* plus for the judge, the courts, the employees, etc, as it is less disruptive. It is just a touch of icing on the cake, but RP (or someone who outbids him) will get and eat the cake regardless.
It is up to the judge and creditors have their say (and even tiny creditors can be quite vocal). I think much would depend on how the suppliers and debt creditors feel. Roel could as you say flash $15 million each to different suppliers, but you can still have the suppliers not being interested or have the suppliers be interested but get yourself in the same situation of paying more for producting a unit than you sell the unit for. Most anyone would work being paid COD and for extra dollars than what the part sells for to others, but just because you can make such arrangements, it doesn't mean you'll have a profitable or sustainable business.
The simple fact of the matter is that Eclipses it's major suppliers more money than other companies would have spent designing and certifying the plane in the first place.
Say what you will about Hampson, or even IS&S, but P&WC is a big dog in a small pen, without Pratt it's over - will Pratt take a 50% or better hit on product ALREADY DELIVERED for the possibility of a future relationship with the same company that screwed them? What if there is no engine supplier?
IS&S essentially wrote the program off last week - what if there is no avionics supplier?
We already know there is no aft fuselage and empennage supplier.
And what of the incredible shrinking order book?
Eclipse has NEVER sold anywhere near enough planes to cover their self-proclaimed break-even requirement, even when the plane cost HALF as much as it does now. They are, today, somewhere near 3,000 planes behind their needed breakeven number - and it's a good thing too, they have spent somewhere between $11-15M each (my back of the napkin calc) for every airplane delivered - AND NONE OF THEM WERE COMPLETE OR FULLY FUNCTIONAL!
Who is going to put down good money on a jet with a company that is likely to screw over as many 250 customers about promised upgrades and IOU's?
What will the jet cost at a rational rate of production?
Let RP walk away with the whole shooting match for $2, he will still lose his ass - these folks simply do not comprehend what they are doing or what their responsibilities are for supporting the product.
ABQ or Russia macht's nicht.
The safest thing to do is park them all in the desert and pull a Starship execution.
I'll bring the popcorn.
Regarding the Federal bankruptcy judge ....does anyone know if there is any precedent for the FAA to have a seat at the table? In other words, to 'educate' the judge to the technical integration of all the parts? I'm sure these guys n gals chat on the golf course or whatnot... so one way or another, the judge will likely get briefed on the gory details.
On the other hand, this isn't GM or Ford going bust. If a vendor is sick of General Motors, well, GM can just find any other 2nd or 3rd tier supplier. But if Hampson or PWC no longer want to be involved, won't that affect TC? Even if the bankruptcy judge can't get all the children to play in the sandbox ....if someone is determined to tell Roel/Eclipse 2.0 to drop dead ....it will be even more $$$ to burn to get a supplemental type cert. Yes??? Who wants to spend another 2+ YEARS certifying a new engine??? In that scenario, it's PWC that has Eclipse by the balls. EAC would have to certify they have vetted a new vendor and the new vendors' Quality system. Hmmmm.... I bet all the Supplier Quality Engineers will be the first ones to bail. Ha!!
I've SEEN the $180K invoices for the wings. So imagine if all the vendors have to accept 50 cents on the dollar for anything not yet paid. You could then expect them to double or tripple the cost for new items and COD would be the rule, not the exception. What does that do to the economics of the FPJ if wings cost $400,000? At 50-100 planes per year, the FPJ price will have to increase one way or another. The POS pilot and co-pilot windows from Nordham are $8K EACH!!! Volume pricing had to be factored into that, as previously discussed on the blog. Maybe EAC won't be so inclined to scrap them for "distortion" if they suddenly cost $16K each...
Only way this might work is with a totally new supplier base in Russia. CH11 BK might just turn into CH7, but that is just my opinion...
And won't EAC have to show the judge the REAL order book now??? The one that shows who put $$$ down up to the 60%. Bankruptcy is a unique event of "perfect information." I suspect none of the vendors will show their hand until they see the size of the deposit-backed orders.
e.d.t.
CW said ... will Pratt take a 50% or better hit on product ALREADY DELIVERED for the possibility of a future relationship with the same company that screwed them?
CW, Am I missing something? You talk like PWC had a choice. Read - ALL THE UNSECURED CREDITORS will end up with close to ZERO, regardless.
Now, once PWC and the other vendors accept this fact, then they have a choice. Do they want to sell there wares to Eclipse 2.0.
The first one is a fait accompli - they will get stiffed regardless. Now EAC as the filer and the Creditors Committee can ask the court to make slight adjustments on how any 363 asset sale $$$ are alocated, but in the end it is pennies on the $$$ or even a fraction of a penny.
The second one is a real choice. Do I want to sell to EAC 2.0 and under what terms. Yes PWC can refuse to sell another engine to EAC 2.0, but what do they have to gain in doing that? Instead, they can sell COD, they can sell on credit with a lien, they can say they will only sell flat-rated 615s to reduce repo risks, they can do all sorts of things. But in the end, they have more to gain by selling engines than by not selling engines.
The people that have received money from Eclipse in the last three months are in for a surprise. in BK any one that was paid money for something by the Bk company will need to give it back. we found this out the hard way, shipped a machine, got paid for it, they went BK and we had to give the money back and they got to keep the machine.
I bet hampton et al will be very unhappy when they need to give money back.
EDT said...So imagine if all the vendors have to accept 50 cents on the dollar for anything not yet paid.
EDT, if a vendor could get 50c on the $, they'd be celebrating for a week like it was Carnival, the 4th of July, Christmas, Bastile Day, New Year's and Marti Gras combined.
Most, if not all, already came to terms with getting between ZERO and $0.02 or so. That is old discounted news.
The only new news is that there is $12-20M in DIP and an offer to buy the assets with proceeds to be divided between the creditors. Every vendor will be just looking to find out how much they can salvage and how much they can sell in the future. Simple as that.
You guys talk like this is the first CH11 in history. It is done ALL the time. Employees, Vendors, Investors get stiffed, and the next day they are doing business as usual.
Look at Piper. Filed for CH11, stiffed a bunch of vendors, week after was doing business as usual with Lycoming, Alcoa, Hartzel, STEC, etc not a beat missed, not one supplier walked.
Mooney - through all their multiple filings. Same thing. etc, etc, etc.
Regarding the Federal bankruptcy judge ....does anyone know if there is any precedent for the FAA to have a seat at the table? In other words, to 'educate' the judge to the technical integration of all the parts? I'm sure these guys n gals chat on the golf course or whatnot... so one way or another, the judge will likely get briefed on the gory details.
It would depend on what grounds. The FAA perhaps could speak as an expert witness regarding the integration of Avio and how that impacts certification.
Even if the bankruptcy judge can't get all the children to play in the sandbox ....if someone is determined to tell Roel/Eclipse 2.0 to drop dead ....it will be even more $$$ to burn to get a supplemental type cert. Yes??? Who wants to spend another 2+ YEARS certifying a new engine??? In that scenario, it's PWC that has Eclipse by the balls. EAC would have to certify they have vetted a new vendor and the new vendors' Quality system. Hmmmm.... I bet all the Supplier Quality Engineers will be the first ones to bail. Ha!!
Yes, along with the avionics suppliers, whom Eclipse was kind enough to make crystal clear that you have to stick with those parts or else the aircraft could lose its airworthiness certificate. The integration of Avio along with the requirements for certification really put vendors in the driver's seat. They can ream Eclipse and make them pay COD where that way they make money no matter what or they can just tell Eclipse to go pound sound...neither of which is a pretty picture for Eclipse and in one scenario the supplier makes money.
Only way this might work is with a totally new supplier base in Russia
Which would mean lots of $$$ for going back to the FAA and EASA.
And won't EAC have to show the judge the REAL order book now??? The one that shows who put $$$ down up to the 60%. Bankruptcy is a unique event of "perfect information." I suspect none of the vendors will show their hand until they see the size of the deposit-backed orders.
There might be some egg on Roel right when he needs his credibility. I think for Eclipse big european orders placed by Roel himself that the deposits were a gigantic $25K+/- per unit. Also seeing DayJet listed as a creditor, I'm wondering if they asked for a refund from Eclipse for their 1400 unit order.
I will post more on the First Day Filings later, and get some docs to Shane to post, but ...
The $20M bridge facility comes from Roel and Al Mann alone.
You guys talk like this is the first CH11 in history. It is done ALL the time. Employees, Vendors, Investors get stiffed, and the next day they are doing business as usual.
No Baron. I've followed the SCO case closely, which is now in BK. Different BKs go different ways. Yes, sometimes suppliers get back with a post-BK company, just as sometimes they don't. I'm not ruling it out that it wont happen in a sufficient amount, nor am I saying that Eclipse 2.0 couldn't be tied up due to insufficient vendor buy-in.
eclipse_deep_throat said...
....does anyone know if there is any precedent for the FAA to have a seat at the table? In other words, to 'educate' the judge to the technical integration of all the parts?
The court could care less about the technical detail. Again, this is a CH11 363 asset sale. It is like a CH7 liquidation asset sale, except that there is DIP to keep the company operating until the sale is complete. The judge in this case DOES NOT need to make any determination as to the viability of the company or reorg plan. As a matter of fact, someone correct me if I am wrong, but I believe a reorg plan does not need to be filed [note: I could be way off on this].
To the second part of your question, yes, both the FAA and the EASA have a history of intervening on behalf of A/C owners in a BK and post-BK situation. They (both) are VERY accommodating to do all in their power to keep the planes in the field airworthy. The FAA will even take over the TC in BK and sell it to an organization to support the plane.
I'm pretty sure that with such a large fleet of 250+ $1M+ planes that will not be an issue. But if the TC were truly orphaned, the FAA would step in.
Dave said... No Baron. I've followed the SCO case closely, which is now in BK.
Dave, with all due respect.... SCO .... a g a i n?
Who are critical suppliers to SCO anyway? Their SW/IP requires no parts. Which critical SCO supplier walked? None? That is what I thought and just reinforces my point.
The court could care less about the technical detail. Again, this is a CH11 363 asset sale. It is like a CH7 liquidation asset sale, except that there is DIP to keep the company operating until the sale is complete. The judge in this case DOES NOT need to make any determination as to the viability of the company or reorg plan. As a matter of fact, someone correct me if I am wrong, but I believe a reorg plan does not need to be filed [note: I could be way off on this].
It is not some technical detail, but a key matter to show that the business can be a going concern (this is afterall Chapter 11 instead of Chapter 7). Eclipse themselves have shown this to be important by filing a separate "Critical Vendor" filing, so Eclipse seems to consider the matter more than just some technical detail not worthy of the judge's time. A creditor who is a vendor could say they are through with Eclipse and as such the importance of that vendor as it relates to Eclipse being Chapter 11 or Chapter 7 could come into play.
Dave said ... Eclipse themselves have shown this to be important by filing a separate "Critical Vendor" filing, ...
Dave, come on. I have a feeling you know better. That is a standard filing, as I said before. That is the vehicle by which Eclipse tells the court, "If you have to disburse $$$ from the asset sale, these are the creditors that should have priority"
AND
Those same creditors HAVE A VESTED interest in stipulating to the court that YES they will continue on as suppliers in order to get priority.
ANY CRITICAL VENDOR that fails to stipulate to the court that they will continue to supply Eclipse will be immediately put last on the list by the court and the Creditors Committee.
Dave, I am sure, you know how the game is played.
Please tell us, if your understanding is different than what I just said.
Shane,
Very well done.
Sleep well!
Stan,
I hope your vacation is going well.
Care to make a statement for the cameras?
Rich (a.k.a. Gunner),
Thanks again for your support of the blog!
These three guys have contributed an enormous amount of time and energy to help "us" get to this point.
I feel for everyone that has been hurt by the Dream/Scam/Fraud (take your pick) that was EAC, and am not gloating over the damage done.
But I AM gloating that a not-for-profit blog of aviation enthusiasts WAS able to chronicle the proceedings of the past 2+ years, and helped educate society at large on aviation and business.
And particularly so in light of being challenged by a $2B company, with a deluded CEO bent upon suppression of truth and reason- the very things that the blog stands for.
Three cheers for these three fine gentlemen!
Because of all the time differences here, I like to take this opportunity to wish everyone a Happy Thanksgiving!
Because we can all meet here to discuss...Be Thankful
"Those same creditors HAVE A VESTED interest in stipulating to the court that YES they will continue on as suppliers in order to get priority.:
This si not how it works...
First roel and the other secured creditor rank.. then the suppliers... and nope, if you discontinue supplying EAC, it will not hurt you one bit in the courts eyes.
In fact, this has nothing to do with anything...BUT, Roel can make better deals with suppliers who stay on as opposed to those who decide to stop burning good cash after bad.
BUT, if enough folks say NO to his deal, he's SOL.
My problem with Roel is, he is a perp. He trumped up orders...that were relly ot orders, and helped Vern scam the suppliers. He shoud be told to make good on his orders BEFORE anyone agrees to any deal.
I'd love to see him squirm out of this : Nope, sorry I really DON't want the planes... or sorry your honor, I DON't have the deposit money or wherewithall to buy 300 planes"...
What a joke.
I wonder what the order book looks like when under the scruitiny of a judge - if they misrepresent the orders, they could face pergury...
This should be good - I hope the FACTS come out, so everyone know what a scam this has really been.
Flygurl,
so EAC chose Hampson out of all the qualifed supplier worldwide... and stuck with them for years... and ts going to be simple to replace them -
Noodle a bit and riddle us this:
If they were so Sh&T, why did EAC pick them? Why continue for years with them?
If its so easy to replace them, why hasn't EAC done so?
Use your head.
Eclipso,
Thanks for your great posts over the past few days!
You must be REALLY far away if it's already Thanksgiving where you are (somewhere "really out there" in that non-linear, disruptive, new age Wedge-ian time/space/finance continuum .), but I second your sentiments, with prayers for those potentially affected by today's events.
Have a nice Thanksgiving!
Flygurl,
Welcome to the blog.
"Hampson is a major player in the downfall of this comapany!!"
I look forward to learning more, but I must observe: Hampson sued Eclipse, rather than the other way around-
What gives with that?
Thanks.
perjury..
its late
Baron95,
I'm putting you on 10-hour time out!
I appreciate your arguments (about the vendors acting rationally, which -probably- means as you say, going along with Fait Accompali), and don't want you to get burned out- because I want you to save some energy for the rest of the week!
(I might only agree with half of what you're saying tonight, but makes me your biggest supporter, by far !:)
You are the only one elucidating (with some eloquence, I might add) that the sky might not be falling and there might be a tomorrow for EAC.
(Personally, reading the blog tonight, I'm starting to give the sky a somewhat greater than 50% chance of falling, but I appreciate the thought behind your propositions, and don't want them to become compromised by exhaustion and frustration).
Thanks- I'm going to bed too. See 'ya tomorrow!
As they should! Hampson couldnt support the rate EAC needed!
I thought Eclipse needed to slow down production, not speed up production.
The UK division making the details didnt measure anything so tell me how in a stack up is there product good? Hampson is a major player in the downfall of this comapany!!
Well, Eclipse picked them and Eclipse stuck with them. If as you say it is so easy to replace them, why let them be a major player in the first place. If you're going to claim finding a Hampson replacement is a piece of cake, then the major player[s] responsible for the downfall of Eclipse are internal to within Eclipse; If Hampson isn't easy to replace nor is Hampson viable as a supplier, that would indicate Chapter 7 is the more viable option for Eclipse. It has been just under 5 years since Eclipse signed the $380 million dollar contract with Hampson, yet Eclipse didn't replace Hampson...
Baron, I bet 3 creditors place EAC in BK for real, and its over.
Roel does not have the experience or the funding to make a go of this, not to mention its DOA based on economic realities, anyway.
The creditors will not just walk. They fall into to groups:
Dreamers who think maybe Roel can do something, an they are willing to lose more time and money trying....
or -
the FEDs - these guys are fed up, and will no longer support the program, and IF there is money, they want their bills paid.
A judge WILL have a say, that's why it's in court.
You are the only one elucidating (with some eloquence, I might add) that the sky might not be falling and there might be a tomorrow for EAC.
In that regard I will second Baron in that the sky might not be falling. My odds are closer to yours than to Baron's, but I'm not going to categorically say that Eclipse 2.0 can't succeed. I see Roel as part of the problem rather than part of the solution, but I could be wrong.
Maybe I am getting on the bus to late in the game, but Vern - as I read many of you dont like him, he did alot in making this company...Hampson is a sucky supplier
Wasn't it Vern who signed with Hampson - or is Vern not responsible for his own actions?
The truth is when EAC applied for TC/PC the FAA had no experienced inspectors.. just a bunch of legends.. in there own minds..
So what was Vern's experience in TC/PC certification...or was Vern a legend in his own mind? How about Bill Bonder or Todd Fierro?
What is the purpose of this site? Does Boeing or Cessna have the equivalent?
Why don't you start one?
Baron, I bet 3 creditors place EAC in BK for real, and its over.
That's why I feel the odds are against Eclipse...particularly due to the creditor/vendors. Roel needs buy-in from suppliers to be a going concern, while critical suppliers have literally already written Eclipse out of the picture and moved on. Yes, many of them could decide to do business with Eclipse 2.0, but many or most might not be enough unless it is all.
Also keep in mind there may be more shoes to drop regarding the Eclipse aircraft. The AD issued could for instance result in Eclipse having to undo the FADEC/performance mods in future aircraft manufactured, resulting in Eclipse having aircraft that have less performance going forward or having to have an expensive redesign.
let's get one thing straight... EAC 2.0 CANNOT succeed.
The plane appeals to a small niche, yet requires scale production econmics to even meet that market regarding price.
The joke is over.
Most of the orders that provided volume were BS. Including Roels "orders"...
So, lets face facts.
Dayjet is dead
EAC is Bankrupt - the trade is owed $B
There hasn't been a net new order in many years
The admit they cannot even come close to breaking even on the plane as sold
Wake up.
its nice to congratulate EAC for EASA and AVIONG 1.5 - but we must be realistic about this plane and this company - its a huge failure.
If the courts allow Pieper to fleece more nvestors, it will just add to the problem, and I personally do not think a judge will allow this.
I thnk its ballgame over - Pieper said it - failed business model.
$3Billion is enough - let it go.
Tme, money and talent will be put to use where some value will in fact be created.
flygurl,
read 2 years of bloggin history and find a few things:
1- EAC IS in fact responsible for chosing suppliers - they are an integrator, and if the supplier sucks, its EAC fault. That IS their job.
2- the company is based ona premise that is now PROVEN false - Roel admitted it, so quit balming others, its EAC fault for trying to prove the product can appeal to a large market AND be made for vey little money. Both have been proven wrong - not by HAmpson.
Hampson WON a suit against EAC or at leat it was settled in Hampsons favor...
Bottom line, EC sucks, and they promoted a failed business model to the tune of $3B... for 12 years
GIVE IT UP
Wasnt it up to Hampson UK to follow through? Didnt they build the first empannage for EAC?
If Hampson was as bad as you say, Vern as CEO was responsible for finding a replacement. He had literally years to do so and didn't.
What is your point? I have no beef to start a blog against old companies..
Then why did you bring them up in relation to Eclipse? You're the one who tied them together in regards to blogs.
Are you against new markets? New ideas? OR are you just stuck on critisizing?
Leaving billion dollar craters tends to hamper new markets rather than encouring investment in new ideas and new markets. Eclipse has caused damaged to new groups who come along who wants to start an aircraft manufacturing business...once bitten, twice shy.
ATM,
How did we get to $3B?
Must be the new new math. Please show all work. Partial credit may apply.
:-)
Zed
EAC has several top notch employees .. for all their hard work, dedication and loyalty I hope and pray that all the naysayers are wrong.
I firmly belive Todd F needs to go home.. Detroit is calling.
No doubt they do have several top notch employees, but like with Todd F, well that hiring happened under Vern and he's still there with Roel. If you hire and employee or supplier and keep them on for years, you can't very well lay the blame on them because you kept them on.
Zed,
Approximately $2B raised, $250M in sales revenue, and $1B in the hole = $2.75B - $3.25B.
Hi Peg, oops, I mean Flygurl. How are ya doing? Talking about Fidel, LOL. Unnecessary name dropping, that is funny. Bill Bonder and Todd Fierro? Sure they are idiots and one has to wonder WHO hired them. But really, isn't this an exercise in futility now?
Take a vacation. Play with your Ford Mustang(s). Have some fun in your life. Get EAC out of your system. You have better things to do now, yes? No need to defend Vern and all the mistakes of the past. Fly fly away...
e.d.t.
OK.. I have asked Roel to ditch Todd.. Lets see what happens.
I expect that Todd and many others will go, but it is a matter of too little too late. Todd came up in regards to your criticism of the FAA certification process and Vern, Todd, et al were "legends in their own mind" with their complete lack of experience in certification.
Flygurl,
Should we say "Welcome Peg"!
We appreciate your counsel to RP to can TF. If you had his ear, and the power you imply, why isn't TF long gone by now?
But I digress ...
Universal blog etiquite ... know the subject, learn the history, don't ask the blog to explain or clarify itself, etc.
And our unwritten rule ... don't mock Shane, Stan, or Rich.
You seem to think most of Eclipse leadership is/was shite, but that the company remains virtuous.
You seem to think that Hampson delivered 250+ nonconforming tails, but the airplane is great.
You must be one of Ken's alts, or his copilot, or maybe an unsecured equity investor still in denial.
Irregardless. Constructive discussion is always welcome.
Before I go away for 'a long winters nap', I thought I should tweak The Faithful for possibly the last time...
What's the difference between these two sets of airplanes?
- DHC Beaver
- Learjet 35
- C-47
vs
- Hawker 1000
- Sino, er Emivest SJ-30
- Beech Starship
Which group would you lump the FPJ into?
--------
We've been told the FPJ is really cheap to operate, that it gets better than book numbers, that it flys like a dream...
--------
One of these categories of a/c contains a/c that are still sought after, even after 60 years, one that re-invented a category and one that a company started building again after ?? years of being out of production because of the awesome design.
The other one contains a/c that were either orphaned after short production runs, bought back and scrapped by the manufacturer and even a good design that just never seemed to get off the ground...
--------
Besides the obvious cost and manufacturing problems, the FPJ just has too much 'baggage' to allow it to become a long term success story. The avionics, engines, weight growth, tire/brakes/MLG, etc are just too many problems to try to solve with this design. Whether you get rid of the debts or not, there are only so many things you can change on an airplane before things start to unravel, and the FPJ has crossed that line.
ATM said... If the courts allow Pieper to fleece more nvestors, it will just add to the problem, and I personally do not think a judge will allow this.
ATM, I'm not picking on you, just using your quote as representative of the blog's intelligencia opinion.
You guys need to take a break and look at reality. Seriously.
On one hand you say that Eclipse is dead, can't succeed and that the assets are worth close to ZERO.
That being the case there will be NO BIDDERS for Eclipse's assets and ALL the creditors get ZERO.
OK - so please accept that YOUR OPINION as a Fait Acompli.
Now, along come a little fairy (RP and Mann) and say...
"Errr, Excuse me your honor.... since no one wants the assets, I'm willing to bid $50M for them, with the following conditions:
a) critical suppliers agree to continue to sell parts and services at current prices and terms.
b) all debt and liabilities be discharged."
So tell me, given the choice of ending up with ZERO or a share of $50M+future biz, which Major Creditor, Vendor or judge would even have to think twice.
It is a no brainer.
You guys are in high-school philosophy land. You still think that the option is between paying the creditors/vendors all that is owed or not.
WAKE UP PEOPLE!!! That is NOT and HASN'T BEEN A CHOICE FOR A LONG TIME.
It is RP's 363 asset buyout or NOTHING.
P.S. That is of course assuming that the intelligencia is right and Eclipse is worthless and no other bidders will surface.
Dave said...
My odds are closer to yours than to Baron's, but I'm not going to categorically say that Eclipse 2.0 can't succeed.
Whoah, Whoah - not so fast. My comments are directed at the Ch11 363 strategy and the chance to bring a bit more money in and live to fight another day as EAC 2.0.
I make no such assumptions as to EAC 2.0 being "successful" whatever that means.
NO independent GA company is "successful". They are ALL either bankrupt, limping along, or extinct. That is just how it is.
That is just another truism you folks need to accept. EAC or ANY other independent GA company being "successful" and "profitable" should not even be debatable. It can't be done.
The only question is: "Can EAC be one more GA company that can limp along, like Piper, Mooney, Lear, Columbia, or does it die like Adam et all"
That is it folks. As much as Dave wants to debate if Eclipse will built 1,200 or 2,400 planes/year and be "successful" or not, most grown ups in this industry know that the only choices for independent GA companies are:
a) limp alone, go through CH11, get acquired, get sold, stop production, start production, limp some more.
or
b) Die for good, then go through a resurrection attempt, then become a zombie, then die again.
That is IT.
baron said:
Sparky, you have to realize that the people putting in the $12-20M KNOW A WHOLE LOT MORE THAN YOU OR ME.
I bet the guys that put the 1.5 BILLION thought that way to.....
Same for the guys that dumped 200 million into dayjet.....
Baron, large amounts of cash and high IQ's are not mutually exclusive....obviously.
Go back to the AD that was recently issued, carbon build-up. Another issue of teething pains, or just the normal stresses of trying to push the envelope too far? Kind of like the tires...and the windscreen issues....and the pitot/static problems....and the flight control actuator issues...and the autopilot issues...and the transponder issues...and the avionics integration issues...and supplier issues. It’s becoming quite evident that these guys don’t know shit.
Despite the company being over ten years old, this is a very young airframe, and it's exhibiting WAY too many problems. This goes deeper than just a defunct avionics suite. The entire program is falling apart.
Before this most recent AD, the main argument was to replace the avionics...now it looks like it needs to be re-engined also. Does this lead to bigger tip tanks? Or maybe we go the military route and use drop tanks...
Anybody do the math and figure what the fuel burn and range just went down to?
This program is rapidly losing any rational reason to go on. Actually, this program lost that right about the time they swapped engines the first time. But I guess the all those guys with all the money saw something we didn’t. I would bet that they didn’t see BK coming….how bright did you imply them to be again…..
This airframe is only two
Oh Mann
An issue for further speculation ...
Besides an early MAJOR stake in Pronto/Eclipse that is now diluted to ~10% ...
What does Al Mann see that has him part of the DIP and Bridge Loan to Nowhere?
Is he just saying "I am in for $_00M, what's another 15 to try to recoup something"??
P.S. That is of course assuming that the intelligencia is right and Eclipse is worthless and no other bidders will surface.
No matter what something will be sold, but it is question of what and to who. The first road block is of course the vendor/creditors who could force Chapter 7, then there are the other creditors who could also force Chapter 7 (this I see as less the case as this category has nothing more at risk with keeping Eclipse going, unlike vendor creditors) and then even assuming that it is bought, it doesn't mean it is viable. As I've said before, I think Eclipse's assets are costume jewelry. Someone could come along and offer $500M and outbid Roel, but just because that happens, it doesn't mean Eclipse 2.0 will be a viable sustainable business. Then there is aircraft ADs and whatnot that could come along and further lessen the value of the aircraft themselves and/or increase the expenses of new aircraft production. It is not outside the realm of possibility for Eclipse 2.0 to become a viable sustainable business, just I see the deck is stacked against Eclipse 2.0 becoming an aircraft manufacturing business that operates in the black instead of in the red (I've previously said that I thought there was a future as a servicer and that I see as much more viable business if that and that alone is done). Unless and until Eclipse stops calling their flawed business model their competitive advantage, I don't see this happening...and maybe someone will come along and outbid Roel as well as dump the high volume, low price model.
We'll know in a couple months what or who is a no brainer.
Here is my view into the future...
I think the winning bid will be less than $60M, call it $52-55M - the $20M DIP will be used up by January, the order book will be less than 400.
More than one critical vendor will bail on the program during the proceedings - the whole thing will be done perhaps as early as Feb '09.
No aircraft beyond S/N 266 will be produced - and there will be limited vendor support at high prices.
Several owners will band together to buy tooling and spares (possibly led by Ken), but costs will escalate until the plane is effectively grounded due to lack of EAC spares - mid-late '09.
That is it folks. As much as Dave wants to debate if Eclipse will built 1,200 or 2,400 planes/year and be "successful" or not, most grown ups
Baron, I suggest you act like a grown up and not falsely state where I stand. I hate repeating myself, but I say it over and over again "flawed business model." I've said it over and over and over again that Eclipse wouldn't be successful doing that. For Eclipse to be successful (as in be out of the red), I've considered you on the high end with your 150 units. In the past I've said 150 at the best and my range has been 50-150 units. I just don't get it why when I criticize Eclipse's business model you somehow think I'm its cheerleader.
Flygurl said...
Are you against new markets? New ideas? OR are you just stuck on critisizing?
Oh, I like her ;)
Now tell us how you really feel Flygurl. If you are a flyer and a girl, you can be my co-pilot anytime. I'll let you handle the radios with NY Approach. I bet you you'll manage to get me to fly V16 over Kennedy at 8'000 NW bound and descend PD to BDR, no restrictions. They would not mess with you.
Welcome to the blog. If you have inside info, share more. We have enough "We know more than RP" attitudes here.
I on the other hand know NOTHING first hand about EAC - just voice my opinion in the interest of advancing the cause of GA evolution.
Dave said.. I hate repeating myself, but I say it over and over again "flawed business model."
I'm sorry Dave - I was just trying to be funny - why does everyone always take me so seriously. All my jokes backfire.
Back to the point. Could you please name ANY independent GA company that is successful (as in stable and profitable)?
Note: Independent GA. Not the likes of Cessna that is part of Textron and before that GD and on top of all is a Biz Av company with a tiny side line of GA.
Is Mooney successful? Is Piper? Is Diamond? Is Cirrus? How much profit do they generate? How many times have they collectively been in bankruptcy? How many times have they been on the brink? How many times have they cut employment?
That is just how it is in GA. If you exclude "flawed business model" from GA, there is no GA. Flight schools lose money, FBOs lose money, Manufacturers lose money, supplier lose money. Some of us know that and are just thrilled when someone comes along and say "I'll raise $1B and will launch a new class of planes and go IPO in 5 years". We know they won't make it, but we are thrilled they'll bring money, attention and a little step forward in product and competition.
Flygurl said:
I firmly belive Todd F needs to go home.. Detroit is calling.
Let's see...
He mustered out of Ford, which is staving off bankruptcy.
He landed at Ecorpse, which is in bankruptcy.
Detroit's calling? Not unless there's an "executive" opening with the Bankruptcy Court there...
Would you like some cheese with your whine?
DI
CW. I think Ken is quiet because he is preparing his bid for the assets ;)
7 ... 11 ... 363 ... What's in a Number?
Some chat amongst the vendor friends (Eclipse's extended family) today has been to force a Chapter 7 vice 363 as the only hope of seeing pennies.
One line of reason says if, the big if, the group can show the possibility of collusion and/or fraud in the structure and approval of ETIRC's sweet financing deals, the court might reject the simple 363, shut the place down, and send it to liquidation.
Roel got too many sweetheart deals, conversions, option buys, back-end interest, triggered defaults, etc. that diluted everyone else. His board buddy Big Al spends his cash in Sep-Nov to float the Poseidon, and gets a piece of the DIP game.
Growing undercurrent is "if we are getting f__d by Roel, let's f__ him back" and "if the vendors, employees, and owners are getting nothing, let's collaborate to ensure RP gets nothing".
And as expected, there are the calls for fellony charges to really liven things up ...
Back to the point. Could you please name ANY independent GA company that is successful (as in stable and profitable)?
Eclipse 2.0 wont fall into that category - whether Roel buys it or someone else (unless it is some rich investor who buys Eclipse as a separate company rather than to add to an existing company).
Growing undercurrent is "if we are getting f__d by Roel, let's f__ him back" and "if the vendors, employees, and owners are getting nothing, let's collaborate to ensure RP gets nothing".
In some respects I understand what Baron is saying acting rationally (assuming it would be rational to do business with Eclipse in the first place) rather than emotionally, but as we've seen with Wall Street booms and busts, markets don't behave rationally. People do seek revenge even if it isn't in their economic (or penal) interest to do so. Look no further than the "Billionaire Boys Club" who committed murder out of revenge because they had been scammed out of money (nevermind that they were scammers themselves) in a business transaction.
Maule, American Champion, Commander Premier, Piper, Hawker-Beechcraft, Robinson Helicopter to name a few - Cirrus and Diamond are doing far better having delivered more, and more complete aircraft, on a fraction of the money Eclipse wasted (combined).
Expanding the horizon a little, Lancair, Glasair, Epic, Van's, Velocity, Sonex, Mustang Aero, Titan, Flight Design, Zenith.
Adam, FWIW, is not dead, they have placed the A-700 on standby given the economic situation and are offering their composite design and manufacturing expertise as a product in the interim - not a bad idea.
Dave,
Concur with the concept of rational engagement.
Discussion touched on the reality that between 25 Nov 08 and 09 Jan 09 there are less than 30 business days (even less effective days for those with use/loose vacation) and 3 major holidays ...
RP has forced irrational and emotional behavior ... and may in fact be counting upon it.
Zed, thanks for the info.... but...
That assumes that some other tooth fairy will pay more for Eclipse assets than RP. Remember, in the end, liquidation is an auction. If only RP shows up to the party, it is all his regardless.
Not to mention the fact that once the courts approve the DIP, any other suitor will have to pay the DIP lenders FIRST and in full before paying any other creditor.
In reality there are few ways if any to (further) screw RP or EAC.
In reality there are few ways if any to (further) screw RP or EAC.
Actually the vendors (unlike customers, owners, equity creditors or other debt creditors) are one of the few areas where Roel could get screwed. If important vendors don't want Roel to get Eclipse 2.0 the Business, they could force there to be a straight out liquidation of the Assets, which would be open to anyone...there could be an auction for all the different individual pieces down to the office furniture. If you are seeking revenge and you've got good enough leverage in your position into causing all sorts of problems. If people/businesses are so inclined and they aren't thinking about what is best for their pocketbook and instead are thinking of revenge, they can cause all sorts of problems.
Al Petrovksy who occasionally posts here actually shows what can be done even though he puts more money and time into it than he could ever hope to recover financially. Al has bought token amounts of stock prior to the companies filing for BK and because he has done that, that has made him a creditor, so BK courts basically have to listen to him and he does get motions in his favor even though from a rational standpoint his time and money spent wont be paid back. It is simply a matter of motivation where ordinally those who aren't owed much aren't motivated to participate in court proceedings, but just because people don't usually participate, it doesn't mean they can't participate and even influence the outcome.
Also I know you think I'm not living in the real world when speaking of fraud, but I actually speak with personal experience regarding the federal BK courts. The family business that I'm involved with has fought (and won) in federal BK court to stop a debt owed to us being discharged via BK due to fraud. To this day the business that owed us the money is long gone, but the former owners are still making payments to us on a debt that cannot be discharged. To prove fraud in BK court, someone doesn't have to be led away in handcuffs let alone convicted of anything.
There are many things that can be done in BK court, but it doesn't mean they rationally should be done or that they normally are done. If there's debtors with otherwise deep pocketbooks who want to seek revenge, don't underestimate what they can do in BK court - particularly when the Chapter 11 reorg plan depends on them.
Today, Eclipse Aviation started a new era in its relatively 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, 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.
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.
Customer who have asked for a refund:
Customers who have asked for a refund are now an unsecured creditor of Eclipse Aviation.
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.
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
----------------------------------------------------
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®, 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.
About Eclipse Aviation
Eclipse Aviation is the world's leading very light jet (VLJ) manufacturer, producing innovative, affordable jets that are revolutionizing air transportation. The company created the VLJ category with the design, certification and delivery of the Eclipse 500 -- the industry's first VLJ. Eclipse applies advanced technologies, manufacturing processes and business practices to create high-performance aircraft that cost a fraction of other jets, and provide the lowest cost of jet ownership ever achieved. By changing the value proposition for private jet travel, Eclipse is allowing more pilots to enter the world of jet-powered aviation and enabling a new generation of entrepreneurs to help business travelers move between cities on a quick, affordable and convenient basis. Contact Eclipse at www.eclipseaviation.com.
###
Eclipse Aviation Corporation, Eclipse and Eclipse 500 are trademarks of Eclipse Aviation Corporation.
----------------------------------------------------
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.
About Eclipse Aviation
Eclipse Aviation is the world's leading very light jet (VLJ) manufacturer, producing innovative, affordable jets that are revolutionizing air transportation. The company created the VLJ category with the design, certification and delivery of the Eclipse 500 -- the industry's first VLJ. Eclipse applies advanced technologies, manufacturing processes and business practices to create high-performance aircraft that cost a fraction of other jets, and provide the lowest cost of jet ownership ever achieved. By changing the value proposition for private jet travel, Eclipse is allowing more pilots to enter the world of jet-powered aviation and enabling a new generation of entrepreneurs to help business travelers move between cities on a quick, affordable and convenient basis. Contact Eclipse at www.eclipseaviation.com.
###
Eclipse Aviation Corporation, Eclipse and Eclipse 500 are trademarks of Eclipse Aviation Corporation.
Eclipse Aviation Proprietary Information All information and data contained herein are the property of Eclipse Aviation Corporation and are not to be duplicated or disclosed to others for any purpose without the consent of Eclipse Aviation Corporation, Albuquerque, NM. If you are not the intended recipient, please delete this email immediately.
Read the EAC press release (Alana McCarraher):
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.
RP/AM do not dare to name the "stalking horse" and its structure? ETIRC has a Delaware LLC!....
What will be actual price for the first delivery after running under CH11 sec. 363?
BTW: How many hard core owners applied
for the AVIONfG 1.5 upgrade with an advanced payment - and CH (7,11)
was not ante portas!
Julius
B.E.G.
Not too way out there...Thanksgiving not until tomorrow, but don't know where I'll be....again...Happy Thanksgiving to all!!!
At one time.....we considered an Eclipse, glad we held off.....I really...REALLY feel bad for the people that put their money out there for an aircraft. My grandmother had an old saying(God rest her soul..)
"A fool and their money are soon parted..."
And Ken Myer...I'd REALLY like to hear your take on this Vaseline job on your back side that was so expertly done in lue of your past pontification of this whole fiasco?
I know just from the outside looking in, as they say in my Catholic church, I have unclean thoughts about the individuals responsible for this mess.
I can just immagine the individuals that are directly affected by the rape of their assets. There are many of them and Vern and Roel are probably living very carefully for their are some people in this world that feel no compunction about evening things out.....As in the case of Frank Lorenzo's family, they are the ones that will really suffer in the end by their association with undesirable family members....
Flygurl said:
"They (Hampson) were using antiquated tools made of wood and could meet design requirements. The UK division making the details didnt measure anything so tell me how in a stack up is there product good? Hampson is a major player in the downfall of this comapany!!"
The drill blankets and fixtures that Hampson used were owned by EAC. They were also prototype tools not production tools. EAC would not spend the money to have these fixed or replaced.
How can you gripe about tolerance stack-ups, when engineering never used any dimensional control techniques? There were no check fixtures, CMM, etc...
In my humble opinion I don't think that FLYGURL is Peg. The content of some comments in the postings do not fit with the knowledge that Peg had.
Happy Thanksgiving to all.
If my ancestors had a better immigration policy, we would not have a Thanksgiving.
"Could you please name ANY independent GA company that is successful (as in stable and profitable)?"
Robinson Helicopter.
'So long and thanks for all the cash!'
The Non-OEM at the End of the Universe.
Don't Panic.
No warranty will be honored.
JetInComplete will not be honored.
No IOU's will be honored.
No deposits will be honored.
Hope you had already gotten rid of that 2nd position Ken - I really mean it.
Sorry Baron, Eclipse VX.X simply cannot offer a 'value proposition' that will overcome the taste of what they did to EVERYBODY.
Cost vs. rate does not favor them, and actual sales performance has been surprisingly lackluster - far less than even I expected. To-date they are averaging ~20% of the needed volume, and that is when they were promising to fix things at cost and when the plane cost half what it does today.
The order book is stagnant - they found all the Ken's already and have probably delivered, realistically, around half of all the real orders they ever had - and they are now telling the claimed remaining 1,100 orders -thanks for your money, 'F' you.
There is no sustainable business model and RP is still spouting the same 'poised for aggresive growth' BS-plan.
Over $1B is owed to THOUSANDS of businesses and individuals - there is no way this is done by January.
Commentary from Russ Niles at AvWEB - with reader comments.
Baron,
The 363 offer is not a gimme for Etrick, and objectors to it don't necessarily have to have a "larger" bid in hand to challenge it effectively. This is an action in Delaware, not Southern Dist of NY - count on any proposed breakup fees to be challenged, reduced and/or eliminated from consideration. Creditors and/or equity shareholders need only question the validity of the offer on the table - primarily by nailing down whether or not the stalking horse actually exists ( in the legal sense ), or has the actual means to perform.
You don't need to so much be concerned with an "activist" BK judge - impetus for challenging Etrick's 363 offer will fall to other creditors, and to counsel for the U.S. Trustee. Past performance suggests that the Wilmington court will ignore any artificially imposed deadlines ( such as January 9th ), if any creditor objects.
Would you like to Super Size it?
DI
Maybe the Blog should file an Amicus curiae brief.....
Zis, you do know that it only takes 3 creditors to force involuntary BK right?
RP may be trying to prevent that with his CH-11 filing and 363 Sale trick - and the BK Judge may see that - but the treatment of all current creditors appears to me to be intended to cause more problems then it solves.
The Judge and US Trustee decide what will happen now, the DIP amount only amounts to operating cash for the 7 weeks until RP's arbitrary sale date which as has been pointed out above, means nothing.
Switching to COD for every part, and dealing with low-volume pricing for every part is a non-starter - the financial burden of trying to build planes that way will keep Eclipse VX.X from ever getting off the ground.
Selling $3M worth of parts and labor, for $2.1M is essentially the same thing they have been doing all along, only going forward it will all be paid for up front. Where does that $200M come from?
Near as I can figure, they stiffed Pratt for somewhere between about 120 and 200 engines (60-100 shipsets), Hampson for around 100 tail assemblies, and IS&S for maybe 30-40 shipsets of avionics - $200M in trade defaults creates bad blood and destroys the case for doing business with someone - fool me once shame on you, fool me twice....
Again, no tail supplier, apparently no avionics supplier, potentially no engine supplier - what of actuators, cables, landing gear, etc.
If P&WC was not getting paid does anyone think the smaller guys were getting paid?
Not enough sales to even approach break even.
Now screwing over a thousand depositors AND all of the current owners.
Why would anyone do business with the damaged goods that will, potentially, emerge from this BK?
To expand on my point above,
It looks like, from the admittedly limited amount of info available, that Eclipse built around 50 of the planes this year, 1/3 of the production, without paying for the major components.
If Eclipse could not be profitable by taking money for planes, and NOT paying for the major parts, how will they be profitable if they not only have to pay for all the parts, but they have to pay UP FRONT?
DOA
If Eclipse could not be profitable by taking money for planes, and NOT paying for the major parts, how will they be profitable if they not only have to pay for all the parts, but they have to pay UP FRONT?
Have a skeleton crew in ABQ creating kits to be sent for Russia for final assembly of the Elcipski. Not that I think this will work, but I think that is the plan. I guess Eclipse would also make whole aircraft there for domestic orders, but I don't see much much demand for kit built european orders completed by ETIRC's factory nor whole aircraft from ABQ. I'm not saying it can't be done, just Roel should drop his business model and reduce planned production by at least a power of 10 (I think much more).
A few comments about EAC prospects in a C11.
In my experience (fairly extensive), I have never seen a company go into C11 and then acutally "come out" refinanced and back in the market, unless:
1. it already had a significant current business pre-C11, with significant top line revenue based on +10 years of operating history with real repeating customers and with very strong free cash flow capability, but for its expense base, including debt servicing (hence the reason C11 "works" as it reorganizes costs, while allowing exisiting revenue to drop down to positive operating and net income). Examples of this working include some large airlines (generally); telecom, banking, certain commercial real estate (hotels); some auto. One might say that C11 is really for mature corporations, not ventures.
However,
2. EAC has no such revenue; 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.
As for trying to read the current actions at EAC, I don't think this new development is really any different than any others that have ever occured at this venture: it is reactive to failure with no adaptation to success possible.
Lastly, it may be instructive in BK generally to see who the players are that line up around the event.
In my experience, if it is a relatively small bridge financier like ETIRC, one taking a bet, by themsleves, on some exit or re-start, it never works, because the real heavy lift industrial partners and the necessary institutional capital partners have already taken a creditor role (not an ownership/bidder role) and have already written off the investment. Without them, there is no successful exit from C11.
UBS is obviously exited and ETIRC has been forced to go way down the financial food chain to some little "boutique" that will play for advance advisory fees.
This whole EAC project has always been a supply story; never has the demand side been clarified nor has it ever materialzed. All businesses are demand-side driven, not supply side driven (volume, features etc). And a C11 needs more than anythying else, an overwhelming demand element, already proven, already actually still buying while the entity is in C11 (airlines like UAL; Delta; for example; some casinos have worked as well).
EAC has nothing on the "demand" side except demand for refunds; demands for litigation; demand for trade payments; demand for debt servicing; demands for payroll; demand for a viable plan.
Also here's something to keep in mind with the DIP financing. It isn't just done because Roel believes in Eclipse, but because it serves his self-interest whether he ends up buying Eclipse or not. Creditor[s] should clarify to the court that ETIRC wont own the rights to any re-design that comes about for european commercial certification. If ETIRC ends up buying Ecliipse that would of course transfer to them as part of the business sale, but if, then those european design plans can be put up for sale and ETIRC would have to pay for those design rights separately. I think Roel wants everyone to forget about this piece and hopes that he rushes things so fast that other creditors don't have to exercise their rights or think about what is going on.
with regards to the deposits on the -400, weren't these supposed to be held in escrow until eac decided on wether or not to build the single?
UPDATED HEADLINE
Key points from Mike McConnells letter to customers:-
You're shafted.
It's clear that a job fair held locally had more than the average number of enquiries from EAC staff.
So, even if Roel hangs onto the TC and PC in ABQ, he might struggle to maintain the trained staff to make anything...
Shane
Also to follow along those same lines as my previous post vendor creditors in particular could do the reverse of what Roel is trying to do to them. Roel has filed a motion to create to "Critical Vendors" list and basically toss out previous vendor contracts no matter when they were signed. Those same vendor creditors could file a similar motion and say that Eclipse would be more valuable if ETIRC's previous agreements with Eclipse were tossed and all Eclipse's operations were centralized in the US or at least if there's a foreign factory to be built, let new buyers make their own deal that is based on a production capacity closer to 80 than 800 units per year. Eclipse itself isn't on the hook to the Russians, but rather ETIRC is, so that would further be a reason to just ETIRC off. I do think this would be a legitimate issue to raise because having two factories (the way ETIRC has talked about them) is inefficient and it creates even more supply chain havok then there is now. A judge might dismiss Roel's attempts to re-do the contracts with vendors, just as a judge might dismiss attempts to expunge the ETIRC deals, but you don't know if you don't try and ETIRC is already trying for their part.
What a sad way to start the Holiday season for the workers that have given a lot to this project. I wish them the best and hope that something good comes of this. Looks like if you own a plane you just became your own warranty provider. Those who paid for Jet Complete up front, $30K, lost that. The IOU's are pretty much history. I read on the owners site that some guy with a 600+ number said he had his 60% up. And another guy had 2 750K deposits up and his lawyer told him to forget about that money. There are going to be a bunch of guys explaining to their spouses how not only their dream went away but with it a large chunk of change. 400 deposit holders with 250MM in or should I say gone. Thats going to leave a mark.
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.
Well somebody is going to have to show a plan for Eclipse. That is actually why you're in Chapter 11 rather than Chapter 7 because you have to show a plan or have th judge put you in Chapter 7. You can't have it both ways saying "we're in reorganization not liquidation" and "we wont tell anyone how or even if we are being reorganized." Eclipse has to show their plan for how the creditors will be better off with their plan than a liquidiation sale.
There are going to be a bunch of guys explaining to their spouses how not only their dream went away but with it a large chunk of change.
However, if Roel et al have hurt enough people, you'll get some who are after revenge and have the financial means to do so whether or not it is a good financial action to take. They can seek to make Roel, Vern and others personally liable and not let the debts be discharged in BK. I imagine it would be extremely difficult and expensive, but they could try and get Roel's Favonius yacht. Vern can find himself forcefully dragged back into this along with others unless they want to be found personally liable.
Re: everybody getting screwed...
Somehow, 'we told you so' doesn't even begin to come close - the magnitude and attitude of this choke down is disheartening, even for folks who were warned well in advance.
Well somebody is going to have to show a plan for Eclipse. That is actually why you're in Chapter 11 rather than Chapter 7 because you have to show a plan or have th judge put you in Chapter 7.
Dave, Is that really true with a 363 sale? I thought all they have to do is win the auction, and not need to put forward any plan of reorg. Granted, the court may not go along with the 363 plan, or may force aspects of it to be renegotiated. But isn't a 363 sale basically a mechanism to force the sale of the entire enterprise to the highest bidder?
Sparky,
with regards to the deposits on the -400, weren't these supposed to be held in escrow until eac decided on wether or not to build the single?
My understanding was the same, until I was 'educated' by one of my EAC people.
The contract stated that the 'fresh' deposits would be held in a separate account, until the company decided go/no go on the project. At that point, the company muddied the waters by offering FPJ customers the chance to change to the ConJet, but under slightly different terms.
To cap it all, almost half of the 'fresh' money requested a refund when it became clear the ConJet was 'parked' when The Wedge was fired.
Most of these people got a refund, but a small number (less than 5) are in no mans land now.
Or something like that...
Shane
CW,
Nice post... I am in shock.
You would think that ETRICK (great name I coined) would at least "propose" that the intention is to honor... but prior to the sale, if you want these services, you will pay for them...
Anyhow, there goes the business, right down the toilet. The low DOC based on deflated Maintenace is GONE... any good will the company had, any, is GONE.
This is just bad decision-making pure and simple, and reflects a total lack of understanding of the business.
I guess the real cost of the plane is now better understood.
Year-1 depreciation is close to 100%
Acuasition cost is the discounted price paid, PLUS all costs to actually have a conforming finsihed plane - probably closer to 2X what you thought you paid...
Etc...
How many of the shafter position-holders will just sue, instead of taking a plane under these conditions? A LOT.
Chickens come home to roost....
Dave, Is that really true with a 363 sale? I thought all they have to do is win the auction, and not need to put forward any plan of reorg.
I think that from a practical standpoint they will given Roel's position along with the possibility that creditors might be hostile. In theory it could be a breeze, but I think a BK judge would be considered negligent in doing their job if Roel's unique position wasn't at least questioned and additional details sought even if creditors weren't hostile.
I think it is possible that Pieper will offer the 60% depositor class some rights. Conceivably, $300K "credit" towards the purchase of a new craft at a the new list price of $2.6MM.
The value of the old deposit holders as customers/pigeons is likely at least that amount; otherwise Pieper will have to regenerate an order book among a very reduced buying public.
Ken, why so quiet now???
The owners group needs to get organized like the Columbia group did during their debacle. They found representation within their group and raised funds to mount a legal action that got them on the creditors comm. The problem here is that there are two owners groups with different goals. They are already bickering on the owners board. One group, the plane owners want the company to survive and give them some sort of structure on the other side to allow them to continue to fly their planes. Many understand that it will be at their expense for future upgrades and maintanence but they just want to have something other than a 1mm homebuilt. The other group have deposits up but no planes. They want their money and everyone else can eat sh_t and die. They want blood in large amounts. I don't see them getting together and mounting a unified effort. The guy I feel for is the owner of 266. He can see his plane through the window but can't touch it. They were going to flip it and take a Mustang but got caught in the middle.
I think that from a practical standpoint they will given Roel's position along with the possibility that creditors might be hostile. In theory it could be a breeze, but I think a BK judge would be considered negligent in doing their job if Roel's unique position wasn't at least questioned and additional details sought even if creditors weren't hostile.
Time will tell, but it seems pretty well conceived. I don't think Roel's position as CEO means that ETIRC affiliate is automatically disqualified or even subject to unusual scrutiny by the court. If no other bidder shows up (likely, in my view), then by definition the creditors are getting the most possible. Creditors complaining about it won't get them more money if there are no other bidders. If they try to stop the 363 sale, they are not going to get any more from a Chap. 7 liquidation. Look how much Adam creditors got: $10M. Granted, the Adam creditors claims were not as large. But, the size of the claims has nothing to do with the value of the carcass.
As to whether or not there is a viable business after a 363 sale, I think the answer to that is very obvious: NO WAY!
Something else has just occured to me, but I think someone else pointed this out earlier. Roel doesn't want any other bidders and he's put Eclipse in a position and the APA in such an arrangement that it wont allow for competive bidding. Reading Eclipse talk about it outside their legal filings, ETIRC isn't just a "stalking horse," but Eclipse talks about Roel is just being the buyer like Eclipse doesn't want higher bids. Only giving a few weeks for someone else to conduct due diligence (which would require the co-operation of Roel BTW), arrange financing and write up a bid takes most anyone else out of the market. Creditors should really take on Eclipse's actions under Roel ahd challenge him because they might find Eclipse more valuable with Roel and ETIRC out of the picture. Roel may very well end up with the sale, but creditors should make it as expensive on him as possible because right now it doesn't look like he's been doing what's best for the creditor (aside from himself) ever since he took over and now he's trying to shove this deal on them and shaft them.
Time will tell, but it seems pretty well conceived. I don't think Roel's position as CEO means that ETIRC affiliate is automatically disqualified or even subject to unusual scrutiny by the court.
I've said nothing about Roel being automatically disqualified, but one of the things BK judges look at in 363 sales is self-dealing.
If no other bidder shows up (likely, in my view), then by definition the creditors are getting the most possible. Creditors complaining about it won't get them more money if there are no other bidders.
The parts can be worth more than the whole, particularly if ETIRC is taken out of the picture in the same way Roel is looking at taking vendor's prior contracts out of the picture. Eclipse's previous deals with ETIRC take away value from Eclipse. Besides how can you know if there wouldn't be other bidders, if no other bidders are given the time needed to forumulate a bid?
If they try to stop the 363 sale, they are not going to get any more from a Chap. 7 liquidation. Look how much Adam creditors got: $10M.
Who knows, they could extract more from Roel if nothing else.
Dave,
That's the way a 363 works! The stalking horse has a huge advantage over any other potential bidder for the reasons you state. Roel's argument would be that he was basically duped by Wedge, figured that out, fired Vern, and stepped into a mess going down the tubes. 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). Now, he's still attempting to rescue the business by setting up a 363 sale, an arguably responsible thing to do. As for all of the owners and depositors and suppliers getting shafted in the process, that was built in by Wedge, and is exactly what BK is supposed to do. It's too bad that people lost what they put it, but, caveat emptor for the customers, and all of the suppliers were big boys who could look out for themselves.
The parts can be worth more than the whole, particularly if ETIRC is taken out of the picture in the same way Roel is looking at taking vendor's prior contracts out of the picture.
I'm sorry, but which parts have any value outside a going concern???
Shane said in the headline...Just so everyone is clear that customers, suppliers, depositors and yes, staff, are indeed 'skewered' by Chapter 11
Hey Shane. Is there any particular reason why you left out from the above the group that will lose by far the most in Ch11?
It appears that in this filing, the groups you so carefully listed stand to lose about 10% of the total liabilities of Eclipse, while you conveniently left out the group that stands to lose the bulk 90%+- of the liabilities.
Who could that be Shane? Don't you want your readers to be well informed?
Could it be the investors? Nawh, I think not. They didn't lose a penny worth mentioning. They didn't take any risks. Their money (90%) of liabilities is not nearly as important as the other 10%. Clearly not worth mentioning. After all, investors are villains, they are bad, bad, people. We don't care about them.
Oh well.
Ken is airborne.
Snippet Time
1. The 'FL370' AD has been more damaging than we thought. Seems there is no simple fix, and no urgency to find one.
2. Talk of 'infighting' on E5C over the direction that owners and depositors should take is unfair. Both groups are toast, and are slowly coming round to that point of view.
3. Loads of EAC staff attended the Dassault job fair in ABQ yesterday. A number took up job offers on the spot. Key people are leaving, every day.
4. I'm hearing disturbing news from Japan. Seems Fuji are pretty annoyed at being lied to, and are considering their position. Don't know about you lot, but an FPJ with no tail or wings will be pretty hard to fly.
5. S/N 260 will be the 'last' FPJ completed, or so I'm told.
In the end, Gadfly has been proved correct.
Eclipse Aviation Corporation will NEVER finish one complete FPJ as per original spec.
Well done Gad. Your pint of Guinness awaits...
Shane
Baron,
At least every single investor signed a waiver stating that they knew their entire investment was at risk and might be lost, and that they could afford to lose it.
Baron,
Sorry, you are of course correct.
Being a simple Irish businessman, I presumed people would know that shareholders, in any bankruptcy type, are toast.
So, just to be clear:-
EAC shareholders, YOU ARE TOAST, OFFICIAL
Is that enough, Baron, or should I rub it in a bit more?
Shane
WTF Baron? Are you on some kind of experimental mood control drug lately?
Almost $200M of the $701M reported are trade debts - that is 24%, JUST for vendors.
Then there are the 1100 customers in waiting, and ALL of the 250 current owners.
Yes, there is about $490M in IRB holders, and an as yet untold number of investors - but it is no Shane who is giving them short shrift.
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, damaged hundreds of vendors, called into question the certification process in the US and Europe, and created a poor example of the possibilities for ROI in aviation that will sour future investment for EVERYBODY.
Get a grip man.
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