Time to reflect

UPDATED SUNDAY 7th December 00.23 GMT

Eclipse Refunds: For The Ten-Percent Deposit Holders

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

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

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

So let's tally the 'good vibes'

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

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

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

First, an appeal

It appears that there is a willingness to support the depositor/owner group from within the blog. While I laud this sentiment, I would remind ALL of you that one man stood up for this blog when we were threatened by EAC in April of this year. I should also remind you that an EAC employee who's only failing was to speak the truth was also picked on by Wedge at the same time. I speak of course of Brian Skupa. If anyone wishes to make a contribution to any of the above causes, please route it though Gunner

a.k.a.

Rich Lucibella

Publisher
SWAT Magazine
5011 N. Ocean Blvd
Suite 5
Ocean Ridge, FL 33435
Tel: 800.665.7928 Ext 704
Tel/Fax: 561.337.1551

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

Update for creditors

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

The latest AD

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

Ex employees of the company

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

An eBay auction

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

The 'mythical' s/n 266

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

A personal observation

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

And finally (for this post)

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

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

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

Shane