Still No Viable Bidders for Eclipse Assets
Fred George fgeorge@san.rr.com
There are still no viable bidders for Eclipse Aviation nearly 90 days after its creditors petitioned the U.S. Bankruptcy Court for the District of Delaware on Feb. 24 to liquidate the Albuquerque VLJ start-up's assets in accordance with Chapter 7 of the federal bankruptcy laws.
The action followed Eclipse's failed attempt to reorganize under Chapter 11. Subsequently, at least four entities entertained the feasibility of bidding for Eclipse's assets. Of note, Daher-Socata is one of the firms that informed Jeoffrey Burtch, the U.S. Bankruptcy Court trustee appointed for Eclipse, of its interest in purchasing the insolvent firm's assets, according to company insiders. Daher-Socata conducted comprehensive pre-purchase due diligence research that even included a senior leadership team member flying an EA 500 demonstrator aircraft, the same sources disclosed.
But none of the bidders has yet fielded a proposal to the liking of company creditors and other stakeholders, thus diminishing each day the odds of Eclipse's being brought back to life under new ownership. Various blogs have erroneously reported that Burtch set June 24 as the proposed date for the auction of Eclipse's assets. While Burtch could not be reached for comment, three of the potential bidders, including David Green representing the Eclipse Owners Group, Peter Reed of New Eclipse Acquisition LLC, and Mike Press, a co-founder of Eclipse Aerospace, said no firm auction date has been set. A June 24 court hearing date has been reserved by Burtch, but that's more pro forma than substantive. The various stakeholders apparently are holding out for a better offer.
Meanwhile, Eclipse Aviation's key engineers, technicians and software gurus continue to drain out from Albuquerque, making it increasingly unlikely that there will be sufficient technical support needed to maintain and upgrade the current fleet of 259 aircraft, let alone restart new aircraft production.
Of looming importance, company insiders say, Eclipse has a very large regulatory skeleton hidden in its Albuquerque closet that will impede a new firm's attempt to earn a production certificate. While last year's rigorous special certification review failed to uncover any serious deficiencies in the EA 500 type certification process, it did find dozens of lapses in Eclipse's production line quality control systems. All of those quality control deficiencies will have to be corrected before the FAA re-issues an EA 500 production certificate, company insiders said.
Most qualified potential bidders already know they'll have to invest $50-million-plus to resume new aircraft production. With the need to fix the recently uncovered production line quality control snags, the downsides are daunting for most would-be suitors. Few bidders, outside of general aviation powerhouse Daher-Socata, have the resources to undertake such a challenge. Absent a sweet bid from Daher-Socata in the next few weeks, Eclipse's creditors may have to face the bitter reality that the insolvent company is dead and cannot be brought back to life. What remains of Eclipse's $1-billion-plus investment is only worth what the market now is willing to offer. And that's not much more than one to two cents on the dollar, according to most of the bidders.
Photo credit: Eclipse Aviation
