Shane
Fellow Eclipse Deposit Refund Seekers
During a conference call which occurred last Friday, December 12, 2008, legal options were discussed as how to proceed with the Eclipse Aviation Bankruptcy. A firm with experience advanced a "Constructive Trust" theory. For the group's benefit we sought out opinions with three additional law firms. The three law firms were presented with the facts, contracts, refund information and associated emails. The three law firms firmly believed that the Constructive Trust theory had no legal basis and no chance of success. The phrase bandied around was "throwing good money after bad money."
The other legal option would be to become an unsecured creditor. With the amount of liabilities versus expected assets the likelihood is the unsecured creditors would not see a single cent from the sale of the assets.
This leads to the question to what is the best option available for those seeking refunds. After much consultation it appears that the least financially damaging option would be to seek reinstatement to a depositor status (withdrawing the refund request). This would allow the depositor seeking refund to join the ranks of the depositors not seeking refunds, 60% depositors and aircraft owners, which would be most likely considered executory contract holders. The Newco would then have the option of denying the executor contracts, accepting them as is or accepting them with new terms.
Being treated as a depositor would allow you to have more options to realize value if ETIRC or another asset purchaser is successful. The recent EASA certification may also create value for position holders.
The E5C board has been working diligently to pre-negotiate the status of those contracts which are likely to be considered executory contracts. E5C has created an Ad-Hoc committee which has representation of those individuals seeking refunds.
If you have not joined the E5C you should do so immediately: www.eclipse500club.org. The individuals that have 60% deposits and aircrafts have much more to lose financially than those with 10% deposits. The 60% depositors and aircraft owners have been asked to contribute $4500 to the group for legal/financial representation. This new group is called the Ad Hoc Customers Committee. Those of us that have 10% deposits (both seeking refunds and not seeking refunds) have been asked to contribute $2250 towards the fund. Since this would appear to be the best legal option you are urged to join the club and contribute towards the legal fund. The Ad Hoc Customers Committee is committed to protecting all our interests.
Sincerely,
Alex Amor
70 comments:
Wow.
As for Ken's latest post, I wonder if he realizes that his endless shilling may well create a personal liability?
Ken, how do all the individual subscriptions and support concepts compare to the 'low' cost of JetInComplete?
You know, the costs that were originally part of JetInComplete but which you are now on the hook for - things like Jepp, wheels and tires and brakes, actuators, Avio NfG, fuel (with no AvCard discount), etc.?
And how about those upgrades you need to be able to fully utilize your plane, FIKI, NfG 1.5, etc?
Are you flying on expired Jepp data?
How much more does it cost to operate the plane now?
Why in the world would either the Debtor (EAC) or Newco have any interest in changing any refund requester's status? As it stands, they are simply unsecured creditors who get zip. Why give them anything at all?
Of course, the same can be said for the deposit holders. That money is gone gone gone.
I want to take this opportunity to address emails and postings that have been sent out by representatives of the E5C and specifically Mr. Alex Amor. It appears that on behalf of E5C , Mr. Amor is attempting to bring the refund deposit holders back into the E5C camp by espousing that we are pursuing a "constructive trust" theory of recovery, that such theory of recovery has no merit and, therefore, that you are "throwing good money after bad money." Mr. Amor states that for refund deposit holders your "least financially damaging option would be to seek reinstatement to a depositor status (withdrawing the refund request). This would allow the depositor seeking refund to join the ranks of depositors not seeking refunds, 60% depositors and aircraft owners, which would be most likely considered executory contract holders. The Newco would then have the option of denying the executor[y] contracts, accepting them as is or accepting them with new terms."
First, let me state that while we talked about a "constructive trust" theory of recovery it was only one of many theories that was discussed. Second, I am sure that you understand that deposit holders that requested a refund prior to the bankruptcy are not holders of executory contracts. For that reason, E5C has proposed that deposit holders that requested a refund should attempt to withdraw their refund request in the hopes that Eclipse will assume their contracts, which would thereby require the deposit holder to purchase the aircraft. Whether a non-executory contract can be returned to the status of an executory contract when there is an intervening bankruptcy is an issue that E5C will need to sort out. In short, if you want an aircraft you need to work with E5C. The clients that my firm and I are representing simply want their money back.
Timothy McCulloch
Because by doing so, the refund requests are converted back into orders. Having orders on the books is a good thing. They've then converted an unsecured debt into an asset.
So an "order" at a yet to be negotiated price is an asset? Sounds like more creative accounting to run up the "order" book. If the deposits are honored, those are liabilities, not assets. The only way an order is an asset is if the company has a way to force the sale to go through, thus realizing the revenue. None of the deposit holders have orders for a fully priced FPJ, and none of them have any obligation to pay a dime for a higher priced aircraft. So my point remains, that neither Debtor nor Newco has any reason to convert refund requests into deposits, or to honor any deposit.
Airport Lawyer,
Thanks for stopping by and sharing that with us!
While not asking for legal advice over the blog, or for you to comment on specifics involving your particular cases, I'm sure all our viewers would appreciate your learned insights as much you are able to provide, as the case progresses.
Thanks- I hope you stay with us- good luck for your clients.
Thoughts on bidders for EAC, prompted me to contemplate RP's actions: re-why did RP can Wedge? (Although Wedge, and his apologists- HA HA HA- sorry, that's a hypothetical proposition- would maintain it was not quite so direct). I certainly think he did the right thing for EAC- go bad the servile BoD didn't do it three or four years ago.
But if RP was just going to move it to Russia, I would have expected him to keep the incredible (but un-credible) mouth in place.
This makes me think maybe RP does indeed have some plans for an ongoing EAC presence in ABQ. (Thankfully for the residents of ABQ, the same cannot be said of Wedge).
And, regarding the other bidders- is there any word if The Human Torch (a.k.a. Wedge) is affiliated with those activities? (Where there's smoke, there's mirrors- I mean fire :)
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If The Human Torch wants to get involved with "Green Industry", maybe he could come up with a smokeless incinerator.
Although I guess there's not much smoke coming out of the old ones right now either...
Speaking of the Board of mis-Directors, it looks like Kresa and Poling are still there.
Why?
What investor on earth would want tweedle-dumb and tweedle-dumber to be watching the store (and balance sheets)??
There's a story to be had with these two buffoons still on the board. ABQ Journal- are you listening???
(Maybe they were just making spectacles of themselves by driving around the parking lot, and it was more convenient to keep them inside instead. But I don't think so. Surely every interest they should have been serving has been abominably corrupted, and I would suspect with minimal telegraphing by these two stooges. Why are they still there??)
"Alex Armor"?!?!?
Is this the same AlexA that shilled for Vern so frequently and vociferously?
(Coldfish, sorry for overusing "shill". It's just so apropos of the topic at hand.)
Anon, if so I wonder if Alexa (aka Alex A.) is amused now...
After much consultation it appears that the least financially damaging option would be to seek reinstatement to a depositor status (withdrawing the refund request).
The least financially damaging option is to walk away.
TBMs is right; there's no return coming to unsecured creditors (still an odd classification for a depositor that should have been in escrow)and walking away is indeed the most effective economic decision to make given the circumstances.
However, rather than just walk away from the market entirely, EAC despositors, who are airplane buyers, may want to consider approaching Cessna, Embraer, etc and seeking some consideration or discount, equal to the desposit amount lost on the E500. While these aircraft have higher nominal costs (perhaps not) they will likely have lower total cost (better residuals; lower finance costs; real support etc).
The GA market is a buyer's one now; depositors should find themselves in a strong negotiating position with competitive offerings. Add legal fees and opportunity costs associated with EAC claims, and the walk-away conversion option looks even more compelling.
Thanks to the bozo auto execs and their mishandling of the corporate jet issue, the media is now after the Wall Street firms ... and eventually every company that falls upon hard times. I can hear the Congressional flacks now ... "Must have been those jets ... Mr CEO how could you be so wasteful?"
Let's hope that NBAA, AOPA, etc can do some effective damage control or we are looking at a glut of used mid-sized jets on the market, and an almost certain user fee scenario.
With that looming, any potential bidders are probably more insane than 10% depositors who want reinstatement.
Zed,
I saw the Yahoo news blurp "Wall Street still flying corporate jets"
Wall Street Corp. Jets
It is easy for the general public to perceive these as "perks". And really, they are, for the most part. I guess we can all be grateful to TSA, and the airlines themselves, for making airline travel such a pain compared to biz plane travel.
Still, I think it would be prudent for GAMA to launch an ad compaign, pitching the benefits of biz planes (time saved, fuel efficiency, angel flights, etc). Write it for execs, but run it in the DC press.
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"any potential bidders (for EAC) are probably more insane than 10% depositors..."
Like I said, has anyone seen Wedge lately?
:)
"The three law firms firmly believed that the Constructive Trust theory had no legal basis and no chance of success."
Well, I told the group the same - right after the idea was mentioned. It is grasping at straws - and very thin ones.
People need to accept the obvious. When a company runs out of money and there are huge amounts of secured debt, unsecured creditors are just out of luck.
Best bet is to work a deal with the DIP for post BK considerations.
TBMs_R_Us said...
Why in the world would either the Debtor (EAC) or Newco have any interest in changing any refund requester's status?
To lock in a sale.
Example of a deal. "We (NewCo) will give you full credit to your deposit, if you agree to go ahead with the purchase of the EA500 at the current sale price (or some discount from that)".
Snippet time
1. Seems that DayJet Technologies have bitten the dust. Calls remain unanswered and emails are bouncing. Hardly a surprise, but sad all the same.
2. Hawker Beechcraft have been sighted lurking down ABQ way. This could make sense, if only for the 'order book' which contains a goodly measure of those prepared to pay 'something' in the region of $1.75 million for a jet.
3. Where I am now is normally flooded with Russians. Last year, Vlad himself graced us with his presence. This year, they've vanished. A straw in the wind, but interesting all the same.
Shane
Example of a deal. "We (NewCo) will give you full credit to your deposit, if you agree to go ahead with the purchase of the EA500 at the current sale price (or some discount from that)".
But Baron, that doesn't make economic sense: The deposit money is gone. What value is there in selling the aircraft at a loss? The sale price would have to be raised to above the $2.1M figure to cover the lost deposit, just for Newco to break even. For the buyer, that's like not having made a deposit.
Baron95,
I was initially thinking that EAC-2.0 would say, "so what", regarding 10% depositors, regardless of if they wanted to cancel their contracts, or uncancel their contracts. (And probably say "so what" to the 60% progress guys too, but perhaps that depends upon the progress of their aircraft- I suspect there the airplanes with 60% progress payments are about 0% finished though).
But- upon further contemplation, perhaps it will be good to "prime the order pump" by selling at a $150K reduction. (The main difference, Wedge was selling at a loss, not a reduction).
It will be interesting to see how it goes.
Hi Shane,
Thanks for keeping us updated!
I have ong thought an HBC takeover was the best fit for EAC, fit's nicely between the Baron and C90GT.
(Maybe encroaching on the C90GT price point- perhaps a good thing, allowing HBC to move the C90GT upmarket, pricing wise).
What is surprising to me is how few E500's are now listed in Controller.
Is it possible that the E500 is such a great aircraft that owners are willing to risk ending up with a boat anchor in order to keep it? Or, is it that sellers have just given up?
Show of hands, please.
Call me "nuts" but I see an opportunity here. With fewer sellers, this is a perfect opportunity to sell before the herd. Price your E500 lower than the market and get out. Take the tax loss and move on.
Unless, of course, you think some good news is going to be coming out of EAC and this bankruptcy.
9Z,
I think the owners are willing to wait it out.
Best case, EAC becomes EAC-we-love-you, and takes good cares of the fielded airplanes (and their owners).
The worst case, EAC becomes Bubba's Stir Fried Wheelbarrow factory, and the fielded airplanes are abandoned.
In this worst case, I would expect someone would come up with a Garmin solution- it would take a lot of time (maybe, 18-24 months), and a lot of money (I think Baron suggested $75M, which is about right I think); figure $300-500K per airplane conversion, or so).
A lot of time, but the owners have already waited for years, and a lot of money, but there isn't a cheaper alternative, until the SEJ's get out- which would probably still be longer than the retrofit would take).
IMHO.
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I would think there will be an ongoing EACv2.0 though, at least long enough to retrofit all the fleet, say, maybe two years- which will be enough time to see if they will survive as a new-manufacture company, or a sustaining support company- by which time maybe another 200-300 airplanes will have been delivered, making this later option more viable. And maybe both- aftermarket support for the twin, new-manufacture of the ConJet.
In this worst case, I would expect someone would come up with a Garmin solution- it would take a lot of time (maybe, 18-24 months), and a lot of money (I think Baron suggested $75M, which is about right I think); figure $300-500K per airplane conversion, or so).
You're dreaming! Someone is going to invest $75M for an opportunity to upgrade 250 aircraft, many of which won't want to invest to upgrade? That alone is $300,000 per aircraft if all 250 did it. If even half of them did it you'd be looking at something north of $750,000 per aircraft upgrade cost to the owner. This won't happen.
An Appeal
... or two.
1. Peg is still 'invisible'. Anyone any ideas?
2. I'd really like to hear from anyone who worked in 'finance' at EAC in the past year.
You know where to find me
eclipsecriticng@gmail.com
Shane
bill e.goat,
Imagine, you have the right size for the fpj - no like ED or RP with ++200 lbs - and you like the fpj.
How much money would you pass to EAC (or RP) as advance payment?
Remember those 60%er, who had to decide and "got" the partial EASA cert and the 363.
Who wants to pay for the 2009-fpj as much as for the Phenom 100
in 2009 prices? (I am thinking of the 60%er!)
I think it will be really difficult for sales reps.
What about the workforce after the auction res. 2009-01-12?
How many months are needed for a sustainable positive cash flow?
Even if you only want to buy your AVIO NG 1.5 and FIKI - you will remember the announcements in September or October advance payment....
Perhaps surprise, surprise ... deus ex machina .... and everything is "ok" ...???
Julius
TBMs,
I think the unspoken, and perhaps unperceived, reality is: with an integrated avionics suite, there has to be ongoing support. It's not a matter of swapping out an LRU in a federated system. With an integrated suite, there has to be an integrator.
The options for the fielded airplanes is going to be:
1) EAC-v2.0 supplies support
2) They convert to Brand G (or H or C or x)
3) They convert to steam gages and do retrofits on the engine controls to break them out of the integrated suite.
I would expect EACv2.0 will provide this lucrative support. If not, then the choice is a complete avionics suite swap out, or steam gages. The airplanes will be AOG within 2 or 3 years otherwise. This time frame would work out well with the development process, and there will be some extra bells and whistles to make it more palatable by then, I should think.
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Julius,
I'm with you, man, on "paying up front" for the upgrade- I wouldn't want to be the first guys to do that. And personally, I'd want to keep my own representative on-site at EAC for the entire process, just to keep an eye on things*.
(Regarding late Jan work force, I would expect it to continue more or less unaffected, if RP is successful- otherwise, he would have trimmed staff months ago. Profitability, I reckon would be late 2009, if the suppliers are charitably lenient- not lien-minded :)
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Shane,
*Regarding Peg, I think that was the express job of Peg; I suspect the BoD brought her in to keep an eye on Wedge. I believe she was/is a capable person, but don't believe her presence, or absence, is too significant for EAC v2.0. She would have been a logical choice for RP to keep in place due to program familiarity- but maybe having her in place would just rub salt in the wounds of the depositors and owners- not through her own fault, but they are bound to associate her with Wedge.
Oliver Masefield is actually a better choice I think, particularly for a down-sized EAC; Peg was a good COO for a multiple thousand employee concern, but comparing the bio's, Oliver is a bit more "techy", which would allow him to be sort of director of everything- R&D and production. In fact, if I were RP, I'd retreat to Chairman of the Board (pay back the long-suffering Mr. Mann, and get rid of the giggling, drooling idiots Kresa and Poling), and install Masefield as CEO- this would give EAC v2.0 some real credibility, I think.
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"An Appeal..or two- Peg is still 'invisible'. Anyone any ideas?"
I have an idea- lets hope Wedge stays invisible too! (I have the ill feeling he is trying to slither back into ABQ. Gadfly- please make sure the Weasel Traps are deployed. Bait them with a microphone).
The airplanes will be AOG within 2 or 3 years otherwise.
That's generous. Yes indeed, without a viable EAC V2.0, it's going to be TU for the fleet. However, the need for a viable V2.0 won't cause it to happen at any cost. My bet: TU for the fleet within 2 years.
The “Pros” and the “Cons” continue to look for something of contention . . . as the little bird of Albuquerque disappears into history. It really don’t matter much . . . this way or that . . . the bird is dead.
A real bird “bit the dust” (or “snow”) over the weekend . . . and everyone survived. (I’m guessing that the left engine failed ‘just on rotation, and the flight crew did everything proper-like, and all survived . . . I heard it almost as it happened on KOA Radio, Denver. (The “gadfly” often sleeps with “ear phones” plugged in, and wakes up in the morning with a full knowledge of the overnight news . . . KOA, KLRD, KNX . . . that sort of thing!) That “left engine failure” is just a guess on my part . . . and I’ll be curious to see what comes out of the FAA investigation. My logic? . . . the plane came down rather suddenly, and went off to the left of the runway . . . ‘giving a minimum of response time to correct to the right, and the aircraft had barely achieved liftoff . . . but then, this is just a “knee jerk” guess.) This wasn’t the first time this bird (“737") had an engine failure. ‘Built in 1994, it had an engine failure in 1995 . . . everything worked out . . . and the plane went on to good service for at least another 13 years. There was some other minor corrosion things in its’ history, but was corrected early on.
Now, I would like to bring to your attention that the fully loaded 737 essentially survived the ordeal . . . and the landing gear did NOT go punching holes through its “Wet” wings, like a certain “VLJ” that overran the runway on some place called “Brandywine” . . . the fire could have been much worse. In fact, just based on the overhead video of the scene, down the ravine, I would say that there are more recyclable parts of the “737", even percentage wise, than the “crime scene” of the Brandywine incident.
You see, even if the “Eclipse” becomes the “Phoenix” and arises from the ashes, it still remains what it is . . . or worse. Real planes will fly again . . . but the “Eclipse” is rightfully named . . . it was eclipsed by reality before it began.
In the early days, the gadfly said that not a single complete “Eclipse” will ever fly . . . and today, I am more convinced of that fact than ever before.
A couple days ago, I had the privilege of meeting with my Greek friend, who once headed up a major laser project of international importance . . . it was a success. We reviewed the events of “Eclipse”, and concluded that it is as dead as the Dodo . . . maybe more so.
We discussed the “wind tunnel” tests (???????) And some of the other farcical garbage that was handed out to the “press”, etc. Anyone with an ounce of brains could have come up with a full evaluation, years ago. But people that wish to be exploited, shall be exploited. What’s the old adage? . . . Ignorance is bliss? . . . I would add: Ignorance is extremely expensive!
Consider the entertainment value, and if it floats your boat, carry on!
But in the “real world”, it’s all over . . . Eclipse is dead.
‘Come next year . . . I’m guessing that the “hangars/facilities” will be cleared out, packed up, shipped to “who knows where and who cares . . . good riddance to bad garbage” . . . and take the governor with you . . . Please! (Don’t start the legal investigation until he’s appointed whatever he’s appointed to in DC . . . we don’t want him back . . . he’s already put the state in debt for a half billion dollars . . . the news calls it a “shortfall” . . . the real word is “shortage”, make no mistake!)
gadfly
(How much is a “stir fried welding machine” worth? . . . barely used . . . no known future application . . . but “ain’t she a beauty?” . . . nothing else quite like it! . . . fortunately.)
BEG . . . ‘Just so you know, I ain’t concerned about no “weasel traps” . . . I just got done teaching one of my grand-sons about “mouse traps” . . . how to set one, and keep from getting a smashed finger.
Seems about forty-six years ago, about this time of day (22 December 1962), my brand new wife and I were gettin’ ready to leave Chicago, and head on north . . . having been pronounced “husband and wife” a couple hours earlier. Cold? . . . you better believe it . . . down around 10 degrees. We were married on the shortest day of the year, in a snow storm . . . everything from then on got longer.
My grandpa said a man should make it a trial marriage . . . for fifty years . . . four years to go. ‘Seems the gadfly, and his beautiful little Swedish girl, are going to make it. Four kids with successful marriages, nineteen grand children . . . Blessed of God beyond imagination . . . and the excitement of a real marriage just gets better and better . . . and better!
TBMs_R_Us said...
But Baron, that doesn't make economic sense:
Hey, I agree with you. But these Eclipse depositors have shown time and time again a propensity to do things that made little economic sense.
Still, it would not hurt to hold on to the contract (the money is gone anyway). Who knows, down the line an HB or TBM can buy Eclipse and honor the contracts.
Shane,
Reckon the oil plunge has caused the Ruskies to stay home (?).
Gad,
Congrats on 46 years of marriage!
(btw, maybe you are right about the weasel traps. Set out the rat traps instead).
But regarding EAC despise, I'm a bit puzzled, either RP is keeping staff on for window dressing (a distinct possibility, to up the ante), or he really thinks they can make a go of it. I'm not sure which.
I've also been thinking about Zed's offer of remedial engineering- and will probably take his "forward swept wings" class over the holidays.
Same with EDT's "finance for MOO-rons". Maybe Wedge will take the correspondence course too. (We could be pin pals- I already stick pins in my Wedge doll, would like to try the real thing).
(BTW, if M00 is out there- join in. I'll drop the -ron's stuff. It fits me more than you anyway).
Which makes me think of Alexa, probably the same as AlexA. I'm glad he is participating in a public way, albeit with a different venue. I enjoyed his banter here. Good luck to his fellow Venue-ites.
Baron,
I hadn't thought about OTHER "fureners" trying to buy EAC (re: TBM), but it might give them a synergistic marketing and service footprint. I would think the Indians would be looking at it especially hard, although I think EAC would also be a good fit for Toyota to get into GA, and eventually small turbines. (And, maybe, Fuji or Mitsubishi). Personally, it's something I think the Indians will have wished they did, five years from now. And the US aerospace industry will probably regret the Indian encroachment, 10 years from now, or so. But along those lines, it's interesting Cessna outsourced the Skycatcher manufacture to China, instead of India...)
B-e-G,
Holy crud. I better get studying.
Eclopse seems to be keeping just enough movement on the line (present vacation excluded) and support framework to maintain the PC and EASA.
Zed
There was a time when it was rather “cute” to hang on to Confederate money . . . with the motto, “The South will Rise Again”. It was useful as a substitute for “wall paper” for a time . . . until folks recognized that even as wall-paper it weren’t all that beautiful . . . and besides, there weren’t all that much printed.
And so, the Eclipse will become an interesting foot-note on some page in a history book. The “excitement” of keeping a failure flying, or even hanging it in a local museum, or as a “playground attraction” in a local park . . . it all wears thin in a hurry, when you compare it with almost any number of other playground toys. Let’s face it: The liability insurance on one of these things . . . some little kid falls off a wing . . . whatever . . . it ain’t worth it . . . and frankly, it’s not that great a thing to excite the imagination of the younger generation.
It’s over, friend, ‘ain’t nothin’ left to see . . . unless they bring certain local politicians to task, over this travesty . . . and that ain’t likely, no-how.
gadfly
(My guess is that certain persons will wander around San Francisco, offering “post card pictures” with their genuine signatures on them . . . “Founder of Eclipse Aviation Corporation” . . . it won’t be the first time, nor the last . . . along Mission or Market Streets . . . pathetic things that walk in darkness.)
(BEG . . . You are trying too hard. It's all over . . . there's nothing left. The crew will return after the holidays (my "quess"), help pack up the remains . . . 'hope for a pay check . . . and maybe finally get the final clue to move on . . . It's all over . . . It's all over! What's left to say?)
Zed
The correct term is "Holy Crude" . . . it seems that "Sweet Crude" is the "International Tender" these days, in "One Barrel" denominations.
gadfly
(e pluribus lubricum)
"finance for MOO-rons".
Fellas, IMO Vern wrote this book....
Shane,
Peg Billson COO at Eckuose Aviation
or the source
www.linkedin.com
the young lady is still dreaming of Ec lip/kuo se or is in hope...
Otherwise she would have deleted her links to the last employer.
Julius
Julius-
From the spelling can't you tell it is a spoof by Fred?
Sooooo,
Any ideas why the D-Jet mobile showroom, a custom 18-wheeler, was parked at KABQ a few days ago? You couldn't miss it driving to EAC headquarters.
And speaking of EAC employees, a fair number of them were put on "involuntary unpaid leave" 3 weeks ago, with no guarantee of ever being called back to work. Wasn't the DIP financing supposed to maintain the current payroll?
Zed,
you should ask Fred - quite politely, if he has an idea - you know some Russians have some very special hobbies..., naturally the Americans, Chineses... as well.
BTW: If you remember PB's CV:
very fast success with MD and time to make the MB, Honeywell - not bad,
EAC - not really great.
Did she come with her own team or just compeletely alone?
Julius
EAP,
Wasn't the DIP financing supposed to maintain the current payroll?
no!
MM said, it would be iomportant for the auction/bidders to have a company ready for start after the auction - but then there must be some customers, suppliers and not only victims after the auction!
If Ken or Alexa do not trust RP who else will trust RP (or ETIRC, EAC)?
The DIP financing was used to motivate the judges to work fast and to prevent him from putting stupid questions!
RP wants/must(?) to sell this company to himself while preventing an involuntary BK by the 363. Is that the idea of an ch 11 sec. 363?
Are there any similar cases?
Julius
Julius -
Peg came in alone, although may have hired know associates once in the chair.
Recall that pre-Peg, Wedge was CEO and COO.
With Peg running day to day ops he was able to focus on finding available cash and getting it.
Zed,
COO
what is a COO? What is/was a COO
at EAC?...
I think its a nice title unless you have someone like RP.
BTW, Peg was leading the frankenstein development team
(alumni report spring 2008) ...
Could she be proud of this while knowing that EAC had a real negative cash flow?
And at the end of the year there was the Saturday late night sale show....with impact on her own reputation!
Maybe it was already too late to run away - no appropriate vacancies!
Julius
Gad,
Re your comment about local politicians and EAC building soon being empty.
A meeting was held (some wks back) with ABQ economic dev personnel and an aviation company inquiring about the space that EAC may be vacating next year.
The EDC said ALL space is full and it will remain full for a long time. EAC will be ramping up .... yada, yada ....
So, the EDC is still blocking aviation related companies out of ABQ in favor of EAC.
Of course, in the hallways it was reported that the politicians (EDC) wring their hands in anxiety over what happens if/when EAC fails.
Amazing! I feel sorry for the employees!
Don't think anything will change in ABQ until the taxpayers (employees) get the EDC/Mayor out of office. Don't really see that happening either.
What happened to the attitude: "I'm madder than hell and I'm not going to take it anymore!"
ExpAvPro,
Very interesting comment about D-Jet vehicle parked at EAC HQ!
I can't imagine D-Jet would be looking at EAC. But, who knows.
Word out of Canada (about 6-8 wks ago) was that the D-Jet had only flown once since the engine change. I think there are big issues there!
Is it possible that D-Jet is looking at the Frankenjet? Would be really SAD.... when there are some small SEJ programs that could be had for a lot less and much better product.
D-Jet has a pipeline into the Can gov for funds so anything is possible. Yep, Can just put up bailout money for the big 3, so maybe D-Jet will get bailout money also.
A D-Jet vehicle parked at EAC HQ makes inquiring minds want to know....
A glimpse into the mind/ego of a pilot...
Said pilot was one of the "lucky" few to take delivery of the A-500. The other day he got in and taxied it up and down the taxiway....sad. It is AOG.
Said pilot also took delivery of an E-500. It is also AOG...problem with the landing gear. May be strut leaking, not sure.
Offers of assistance have been made re his Adam situation. He assures all that everything is great....the owners group is going to buy the TC and all will be good.
Don't know how long this bravado will last. As you might have guessed this is one arrogant pilot. [And yes, a Dr. is attached to his name. Not of the MD variety, however.]
Not sure of his marital status, hopefully single. Can't imagine a wife putting up with all this!
Word of advice....never look at a plane with "500" in the name again! Have to start keeping it simple, actual DD or technical analysis of an aircraft is too much for many pilots.
Just one more, I promise. I'm starting to feel like BEG and Fred.
DeepBlue,
One company has a program to offer a credit for the 10% deposit holders. [Excel-Jet...small outfit, honest guys]
Not sure if any other Co's are doing same.
Zed,
"Recall that pre-Peg, Wedge was CEO and COO".
As I recall it, pre-Peg, Wedge was pegged as an idiot.
(Things haven't changed much:)
Now, regarding those forward swept wings...next week if it's a convenient time. (Remember, I like lots of color pictures :) - but I'm grateful for whatever schoool'n I can get.
Reminder for fellow students:
zed.lastletter@gmail.com
---------------------------------
Mountainhigh,
"What happened to the attitude: "I'm madder than hell and I'm not going to take it anymore!"
I think Al Mann is familiar with that attitude, and considered it an "actionable item", back in July.
Coincidently, some surfing around about mountain flying recently brought up a report of perhaps your namesake's untimely demise:
John Denver NTSB
(p.s.- that's some bad news about the Adam/EAC owner- perhaps ill luck will bring about a sense of humility however. And an appreciation of the ole' one "If it's too good to be true...").
----------------------------------
EAP,
Thanks for the report on the Diamond mobile command post being in ABQ. I think the former VP of engineering at EAC (well, one of the many former VP of engineering's) is now at Diamond. Maybe a social visit, now that Wedge is gone (?), or...
I guess the ConJet was working out okay, apparently there is some validity to the ducting concerns on the Diamond plane. Although the on-top pod design would seem to constrain aft cabin headroom in the Conjet, but maybe if it's only a 4-seater, it will work adequately.
9Z,
Some weeks back, a fellow blogger (wish I could find the post and blogger) opined that some suppliers might have to return some of their mid-2008 payments, if they came from deposits, the argument roughly being, they were being paid with stolen money.
Interesting legal argument- at the time I thought "well, I s-u-p-p-o-s-e that could happen". Sounds like it really is happening,and it will be interesting to see if it becomes an item in the EAC case. (Probably not, as there were so many entities injured in so many ways- what the HECK was the BoD doing in 2008??
(or 2007, or 2006, or 2005, or...)
Bloomberg today featured a story about the possibility of people who withdrew profits or principal from their Madoff accounts over the past 6 years, being forced to pay it back to the bankruptcy court. The idea being, the funds should be distributed equally among all the Madoff victims, and the select few that smelled a rat shouldn't be allowed to profit from their knowledge.
The 53-year-old investor, who asked not to be identified to protect his stake, took out about $600,000 this year from his $1.5 million account, using some of it to pay down a mortgage. He and other Madoff clients who withdrew funds as long as six years ago may be sued on behalf of other victims to return profits and even principal, securities and bankruptcy lawyers say.
There are a lot of similarities between the Madoff scheme and the Eclipse ponzi scheme, because aircraft of existing owners were built using funds from defrauded position holders. I wonder if the attorneys for the position holders will pick up on this and force the exisiting owners to return their aircraft to the bankruptcy court, as well as those who profited from the resales of Eclipses, so that these assets can be sold and distributed amongst all those who were defrauded by Eclipse.
Bill e. goat,
I think we're going to see it happening more and more as firms go BK.
Of course, we all know that once the assets are returned to the court, the money will never reach the people who are supposed to receive it. It will go to the lawyers, whose bills always seem to equal the amount to be distributed.
We can all learn a lesson from this:
A. Don't pay for anything in advance, especially not now.
B. Be very careful who you do business with. Do not sell anything to anyone you think might declare bankruptcy, because you may have to give the money back to the court, and
C. if it's too good to be true, it probably isn't
9Z,
Think we'll see criminal charges in the EAC debacle, once BK is over?
(and people find out just how sc#@wed they are (I reckon they've got a pretty good inkling already, but are waiting to find out for sure).
---------------------------------
Mountain High,
"Don't think anything will change in ABQ until the taxpayers (employees) get the EDC/Mayor out of office. Don't really see that happening either".
I would like to thank them for taking the most scenic spot in ABQ, the (former) airport public viewing area, that had a stunning panorama of the Valley and mountains (and airport), and turning into a parking lot for the EAC paint building.
THAT's really impressive.
I'd like to thank everyone of them. The paint hangar now is visible for miles,
WHAT AN EYESORE.
(really sad...)
Canada probably is funding a large part of the D-Jet. Just like the 100 mil they gave Pratt to develop the 610/615 engine family.
Canada wants to develop their native aerospace capability so the government is dumping a lot of money into it.....
The D-Jet mockup is currently on a sales tour. Next week it's in Mesa AZ, and then heads to Scottsdale for the Barrett-Jackson Car auction. Then it's on to Long Beach, CA.
Niner Zulu said,
I wonder if the attorneys for the position holders will pick up on this and force the exisiting owners to return their aircraft to the bankruptcy court...
***
Say what? EAC may have had a bogus biz plan from day one, but that by itself does not constitute "fraudualent conveyance." Sorry, but that really seems absurd. I suppose the parallel is the Preston Tucker story. Sure, the movie took dramatic license with the premise of Tucker's crooked right-hand man selling stock to dealers. Perhaps that could still be 'fraud' when person A had intent but person B did not... yet you can't throw B in jail just because they worked for A. We can say the same thing about Madoff since he obviously had intent to defraud his clients but that by itself does not mean that ALL his employees knew it was a sham for the last 30-40 YEARS. Rent the movie Boiler Room and you might get what I mean; there are TONS of fly-by-nite stock brokers. Once they get their Series 7 license, well, you can **usually** tell what you are dealing with just by the type of firm cold calling you (I had a Series 6 and 26 for mutual funds and annuities when I worked for John Hancock). The same can't be said about Vern OR Bernie. They both had some level of street cred in the social circles of their clients. Vern had the ability to show some progress over the last 10yrs after all. Bernie did the same by paying 10-12% returns for such a long time, even CNBC thinks he was generating 'real' returns for most of that time. Any private biz can create marketing materials for investors promising them 100% or 1000% returns; it's up to the individual investor to do the proper due dilligence before handing over cash. Eclipse WAS NOT a publically traded company, so I'm not sure if NM or Deleware state laws regulate EAC stock securities and what kind of prospectus Vern was allowed to offer potential investors. Regardless, I would be shocked if any lawyer could make securities fraud an issue with this BK.
The hard thing to parse is that the biz was "legit" in the sense that it produced a tangible product and EAC made an attempt to adhere to all relevant govt laws that pertained to its production. We may joke about the kool-aid but Vern wasn't a drug dealer trying to AVIOD the govt and sell a product that's clearly illegal. Was the plane perfect? Of course not. It would be a completely different story if the biz took in $$$ over 10 years and NEVER delivered any planes to any customers. Or if Vern pulled a DeLorean in an attempt to raise funds. I'm sure Belfast, Ireland would love to get some $$$$ back from DeLorean's estate...
So, IMO, it would be extreme for the BK court to completely eliminate the property rights of the 259 plane owners for any fuzzy idea of restitution in this case. They were lucky to get a plane but I'm sure that group can easily show they are victims too and have lost money...
e.d.t.
Well, while the news of the owners group is the topic of this thread, and the following is probably old news, I thought it "post-worthy" anyway.
I have been rather distressed over the years, at the attitude of the owners-in-waiting: dismissive, apologetic, and generally compliant.
This is the one group that should have been demanding answers and facts from EAC. Instead, they were cowed into complacency, lest the Emperor swap their positions, bump their price, or generally frown in their direction.
Bad, bad show, as consumers. The depositors should have had a class action suit years ago, and busted this scam about $2B back.
Some were guilty of wishful thinking; others, participating in the greater fool theory, I suspect.
Along those lines, I present:
"Eclipse Aviation wants to sell its assets under the terms of its bankruptcy, and customers represent a substantial proportion of the creditors. Green reported that 'the committee will also serve as the focal point for prospective purchasers to discuss preserving customer goodwill and satisfaction of customer obligations. Prospective purchasers of company assets must recognize that satisfied customers, many of whom have supported Eclipse for over eight years, can be the most effective marketing group for Eclipse aircraft. Customers are generally successful business people with significant contacts both in and out of the aviation industry. It is unlikely that any prospective purchaser would ignore the support these customers can provide.'"
Too little, too late.
...At least he didn't say please.
AOPA, David Green, Dec 18, 2008
And when it comes to looking under the floorboards, I don't think the FAA is going to say (be forced into saying) please anymore, either.
Darn straight !!
Seems the various unofficial Ad Hocs ... Owners & Depositors, Refund Deposit Holders, FrankenJet Depositors, Production Liners, etc. ... will have little impact on the sale other than making the auction process more complicated.
The should have greater sway after the sale ... if ETIRC wins and does not actually want a mid-summer Chapter 7, then organization will reduce RP's divide and conquer power ... if someone else wins, the new owners could really leverage the potential of their social network.
Either way, a complete jet will still cost somewhere north of YGBSM !
BEG,
...At least he didn't say please.
it's just like with kids - you omit "please" when you have lost your "ammo"...
Actually a sign of weakness...
These business people have lost or may lose their toys. If they tell their business friends about their experience with the wedge and RP they will earn a sweet sweet smile...and the advice (below)
Too little, too late.
Merry Christmas and a happy New Year to all!
Julius
Zed,
Either way, a complete jet will still cost somewhere north of YGBSM !
which indication to you envisage that ETIRC is aware of the price and thinks that there is rep. there will be a market on both sides of the pond?
CH 11 also is a good reason for "appropriate" headcount reductions!
Julius
Niner Zulu said...
Bill e. goat,
I think we're going to see it [pre-BK payments returned to BK] happening more and more as firms go BK
I don't. I think we will see a change in the law sooner than later. There has to be finality in financial/contractual transactions.
What happens is that because of this "look-back" provision of the B law, when a company is shaky, even COD is not good enough. That causes interruptions in the supply chain, financing, etc and quickly pushes the company over the edge.
It is just silly and counterproductive. The law should make it clear that ONLY fraudulent or unreasonably preferential asset/money transfers should be subject to recall.
But that is another story.
In the spirit of the season, regardless on which side of the fence you fall, I would like to express my wishes to each and everyone, who may read the comments of a bunch of folks who have a common love of airplanes, flying and manufacturing:
For some of us, we view this time of year as a memory and celebration of our belief in the introduction of God, by God, as Man, the “Second Adam”, to redeem a fallen race, from the “first Adam”. And in common with our brothers in a little tiny nation at the eastern end of the Mediterranean Sea, we view this event as the remarkable fulfillment of all that was promised to Adam, Abraham, and all the Jewish fathers . . . Isaac, Jacob (Israel) . . . Isaiah, etc..
And to those who hold different views of this season, we can at least join in with the family that came down to the store on Christmas morning, counted the receipts, and sang, “What a Friend We Have in Jesus!”.
So, the gadfly would like to express to each and every one of you . . . to the Christian, “God’s Blessings, Peace, and Joy be to You”, to the Jew, “Happy Hanukkah”, to those of Eastern beliefs, “Oh, Mani Padme . . . Hmmmm”, (Oh Flower of the Lotus, hmmmm), to the Atheist, “Whatever floats your boat!”, to the old Burnt-out Flower Children of the Sixties (. . . now gone to seed), “A Cool Yule and a Frantic First”, . . . and to the total Capitalists’, “Happy Swap Day”. (Did I leave anyone out? . . . It wasn’t intentional!)
gadfly
(aka: Scrooge . . . Bah, Humbug . . . poor man was a victim of "Bad Press".)
Hi Gadfly,
I Second that motion!
Good wishes for a Merry Christmas and Blessed New Year to all our blogger friends here, critic or advocate alike.
Thoughts go out especially to the employees of EAC during this holiday season- may 2009 bring happiness and stability, wherever that may be- I hope it is ABQ for those who wish it so.
Good wishes to the depositors and owners, for upgrades, and something to upgrade- good luck with BK proceedings.
Cheers to all!
-Goat
Diamond Aircraft got a $975,000 grant, and a $10 million dollar loan from the Canadian government - in relation to the D-jet development.
back in 2006.
Other than that, Diamond has been pretty much on it's own.
New post up.
I hope that everyone is enjoying the holiday season as much as I am!
Shane
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