Oh, and thanks to ColdWetMackeralofReality, who is the actual author of the piece.
The Nuclear Option
A Motion to Compel under Title 11, Chapter 3, Subchapter IV, Sec 365 of the bankruptcy law has been filed to force the Eclipse Bankruptcy Trustee to release all ground and airborne software related to Avio and other embedded software (essentially the most valuable intellectual property related to the TC) directly to the owners.
This move has been some time in the making and yes, yours truly played a small part. I have been working with several owners for the past several months examining real-world solutions to the various problems faced by the owner community and of all the things accomplished, this and a recent meeting of the minds are the highlights that I believe will soon have a profound impact on the future of this saga. Of course, I want to remind everyone I am not a lawyer, this is my understanding of the legal issue from having participated at arm’s length.
Several weeks ago a demand letter was sent to the Trustee quoting the above section of law and demanding that the Trustee release all IP related to Avio and the ACS as required under current BK law. Thanks to the rise of software and the ever increasing pervasive nature of ‘embedded’ software in the items we use every day, Congress has made significant changes to the BK law with respect to license rights and proprietary software.
Essentially, the Trustee failed to act on (or even acknowledge) the demand letter in a timely manner so the motion to compel has been filed directly with the BK court to compel release of what amounts to all software related to Avio and other embedded software, directly to the owners. According to the law, if the trustee fails to comply the owners will essentially be able to get the software by any means (from other owners or experienced service providers for example).
This motion, if granted, is the divorce I have been advocating for months now, that separates the owners from needing to compete in the cash incineration contest to purchase the IP and just as importantly, it frees capable third parties to actively engage in the development and certification of fixes for the known and suspected issues without being held hostage by a hostile IP owner. If it plays out as expected, the owners will no longer have to fear being a captive market, they will own the critical IP, and best of all they will not have had to fork over tens of millions to get it.
Background - When Eclipse sold the aircraft they issued a ‘a personal, non-exclusive, perpetual and non-transferable (except in connection with a permitted transfer or sale of the subject aircraft) license to use any computer software or other intellectual property incorporated in the aircraft that is not the subject of a separate license agreement between Eclipse and Purchasers or the owner of such intellectual property ("Aircraft Intellectual Property") – quoted from Aircraft Purchase Agreement. Eclipse further committed to release this and related IP with their IOU’s when delivering incomplete aircraft (Post Delivery Commitment).
The executed Purchase Agreements and Post Delivery Commitments, and the rights they convey upon the purchaser, are apparently not erased by the BK proceedings, therefore all current owners will have the same rights if the motion is upheld by the BK court.
To that end, I have been developing an updated proposal that retains the possibility of moving the PW-610’s to an alternate airframe (the Excel Jet SportJet-610 previously discussed), while also defining four regional specialist centers with extensive Eclipse specific experience, training and support equipment, spares, and AOG Tiger Teams. Current thinking based on fleet distribution is East Coast, Midwest, Southeast, and West.
This will be enhanced with an expanded network of existing facilities for North America (US, Canada and Mexico - likely 2 Heavy Mod facilities, and perhaps 2 dozen FBO/light maintenance facilities) as well as an existing network for outside North America (dozen or so facilities in Europe, Asia and the Middle East). I have also been in contact with a training provider that has FAA approval for all necessary training (initial type rating, recurrent, etc.), as well as insurers. This will also include working with the existing suppliers/vendors where possible but also in qualifying alternate vendors where PMA is not practical or possible given the original supplier/vendor.
Expect to see a focus on AOG and low-hanging fruit almost immediately (tires and brakes, actuators) – including an effort to end the interference with PMA activities that is currently ongoing from at least one of the bidding parties (we have heard from multiple sources that someone is actively working to prevent willing and interested vendors from seeking PMA to provide parts right now to customers who need them).
As I have mentioned on other occasions, my belief based on discussions with owners and maintainers is that many of the issues observed are more quality escapes than design issues, therefore the service and support entity I envision would take on the development and certification of comprehensive fixes, modifications and upgrades. This would tackle the design and certification efforts including development of what would in essence be a ‘delivery spec’ or ‘completion’ STC and the much needed Service Life Extension Program. This also allows for the development of an updated ‘hot-items’ inspection to identify known quality/assembly/rigging issues that can be issued as a Service Information Letter or other mechanism, to direct attention at known areas before they become widespread problems and potentially lead to FAA action.
At this point, the best outcome is for a bifurcated or two-party solution that allows one party to acquire the assets and retain rights to future production, with a second party taking on the support of the currently fielded fleet. If these two parties work together obviously prices for parts can come down over time but any potential bidder must know and understand that alternatives will exist for both quality of service as well as parts pricing for the current owners.
This approach allows the owner community to focus their attention and their dollars on completing, supporting , and most importantly safely enjoying their own aircraft without getting tied up in the old cliché about how to make a small fortune in aviation.
Of similar importance is that the recent high-level meeting of the minds I mentioned, combined with the development re: the IP may result in far more elegant fixes for many of the current series of band-aid fixes applied to the various aircraft. Assuming that the fixes developed in support of the currently flying planes are of interest, they can potentially be sold or licensed to the party seeking the TC allowing the owners to recover some of the costs related to the development and certification of any fixes.
My team and I have already identified several potential partners for the regional specialist centers and we are ready to begin serious talks with currently identified domestic and international service partners, current and potential vendors, as well as key former Eclipse employees and managers whom we have been in contact with if we receive the support of enough of the owner community.
As always, I can be reached at ColdWetMack@gmail.com.