Eclipse Aviation goes into Chapter 7 liquidation
Creditors of Eclipse Aviation have forced the company in to Chapter 7 liquidation after attempts to rescue the company foundered.
In a letter written to employees on 24 February, president and general manager Mike McConnell and chief financial officer Mark Borseth of Eclipse said: "We are very sad to report unexpected news today. Despite the efforts of many people at EclipseJet Aviation and Etirc to obtain necessary funding to close the purchase of the assets of Eclipse Aviation, the closing of the sale transaction has stalled and our company is out of time and money.
“Given the dire circumstances in today’s global marketplace and the lack of additional debtor-in-possession funding, the senior secured creditors of the company [Kings Road Investments, HBK Services, and Citadel Investment Group] filed a motion today in US Bankruptcy Court in Delaware to convert the Chapter 11 case to a Chapter 7 liquidation. This action, under the circumstances, is being supported by the directors of Eclipse.”
© Eclipse |
Eclipse says it is unable to its payroll commitments to employees: "Most regrettably, you will not be paid the paycheck due on Thursday 5 March, nor is any vacation pay available. You may have certain rights to seek payment in the bankruptcy proceeding, you may receive additional information about that from the bankruptcy court, which will likely appoint a Chapter 7 trustee in our case within 30 days."
The trustee will control all assets of Eclipse and will seek to sell them.
Eclipse entered Chapter 11 bankruptcy protection on 28 November and the sale the company's assets to a new company EclipseJet Aviation - formed by chief executive Roel Pieper - for $28 million in cash and $160 million in promissory notes and equity took place on 20 January. A number of caveats prevented the sale from being finalised at the time, however, including the resolution of a lawsuit by a group of former customers seeking to get their deposits returned.
Earlier this month Eclipse was forced to furlough most of its remaining 800 employees, but signalled its intention to recall the workers imminently, saying the sale "was absolutely within reach".
