Eclipse sold to Pieper spin-off

By John Croft

A federal bankruptcy judge in Delaware on 20 January approved the sale of Eclipse Aviation to EclipseJet Aviation, a new subsidiary created by Eclipse chief executive Roel Pieper, after an auction the week before failed to draw any outside bidders.

The purchase, for $28 million in cash, plus $160 million in plus-promissory notes and equity for the company's assets, was complete except for a pending agreement between Pieper and owners whose Eclipse 500 very light jets are on the production line in Albuquerque. Eclipse entered Chapter 11 bankruptcy protection on 25 November, just days after receiving European certification, and has been operating with debtor-in-possession financing since then.

Agreements with secured lenders and second priority note holders, who have more than $500 million invested and will receive only $30 million from the sale, are complete and not being contested, says a lawyer representing unsecured creditors.

An ad hoc group representing 200 Eclipse 500 VLJ owners, deposit holders, refund holders and Eclipse 400 personal jet deposit holders in the court proceedings is also largely in agreement with the sale, although it continues to refine proposals for how the new company will handle customers going forward, says David Green, an Eclipse 500 owner and head of the group.

Eclipse had delivered 260 aircraft at the time of bankruptcy and had orders for 1,100 aircraft, according to Pieper.

The judge also required EclipseJet to set aside $3.2 million in the event that a group of 32 Eclipse 400 owners, not represented by the ad hoc group, wins a lawsuit to get their $100,000 deposits back.

Copyright © 2009 Aviation News Release