Planemaker Pacific Aerospace leaves $42m in debt
30 parties showing interest in troubled Pacific Aerospace
Thirty parties from New Zealand and overseas have expressed interest in tendering for the business or assets of iconic Waikato aircraft maker Pacific Aerospace, says the first report of the company’s liquidator.
The report, by liquidators KhovJones, shows secured creditors are owed $1.67 million and unsecured creditors $41.2m.
Of the unsecured total, $1.5m is owed to one creditor for specific IP and assets relating to the Expedition aircraft model.
Among unsecured creditors, $35m is owed to related parties, and $5.6m to third parties.
The estimated deficit before unsecured creditors has yet to be determined.
The amount owing to total preferential creditors, including staff, has yet to be determined, and the value of the company’s total assets has yet to be disclosed.
Preferential claims from employees for unpaid wages and holiday pay to February 10 were assessed to total $814,684, but assessments were continuing of staff entitlements to March 8 and redundancy claims.
On March 8 when liquidators were appointed, funds available to the company were $37,641.
The company is 50 per cent owned by Chinese company BAIC International ( Hong Kong), a subsidiary of China state-owned giant Beijing Automotive, and 50 per cent by New Zealand shareholders of Pacific Aerospace Group. Liquidation was sought by a US supplier creditor.
A designer, manufacturer, exporter and maintainer of light aircraft for 70 years, Pacific Aerospace employed 93 staff. They were sent home on February 10 when the company couldn’t make a wage payment to them.
The next day the Civil Aviation Authority, certification from which the company depends on to operate, suspended its organisational certificates, due in part to the inability to pay staff.
The company was placed into interim liquidation by the High Court on February 12. Khov Jones was given full liquidator status by the High Court on March 8.
The report said it was not practicable to estimate the completion date of the liquidation or if there will be any funds available to pay out.
The company owes the landlord of its site near Hamilton Airport lease arrears of $222,239. The arrears are understood to have accumulated since July 2020, said the report.
At least 400 aircraft produced by the company are operating globally, according to Herald sources, and its aircraft form the backbone of New Zealand’s agricultural aviation fleet.
As the report notes, the company is currently the only supplier of certified replacement parts for any of its aircraft.
The liquidators had engaged with customers, mainly based overseas, that either had unfinished aircraft builds or had paid deposits for builds yet to start, the report said. A review of work in progress and finished inventory had been undertaken. The report shows prepaid customers are owed $413,089.
Last month, New Zealand operators of Pacific Aerospace-made aircraft expressed concern they would be grounded because they could not access parts and maintenance. The CAA confirmed to the Herald those concerns aren’t limited to rural topdressing and spraying operators. Skydiving operations which had bought the company’s popular XSTOL P-750 aircraft might also feel the effects as the liquidation continues, the authority said.
Sources have told the Herald there are completed parts available on the shelves of the Hamilton manufacturing site.
The report addresses this, saying liquidators explored with CAA the possibility of the company resuming limited trading activities.
“Unfortunately the nature of the conditions required by the CAA meant that the liquidators and the company were not in a position [to] advance the matter.”
The report said the international sale process had yet to be completed and further information couldn’t be disclosed for commercial reasons.
Liquidators commissioned an Australasian accounting firm to value the company’s business as at the date of full liquidation. The result could not be disclosed for commercial reasons.
A valuation of tangible assets at the Hamilton site had also been commissioned, but again, the result could not be disclosed.
At the interim liquidation stage, KhovJones had sought funding from both shareholder groups.
Both declined. Subsequently in full liquidation, a proposal was discussed to recapitalise the business and terminate the liquidation.
“Unfortunately, no satisfactory progress has been made in this regard at the time of this report.”
There had been “reasonable” recovery from local debtors.