ONE Aviation files for Chapter 11 bankruptcy
Eclipse parent firm wants to restructure $199M in debt
ONE Aviation Corp., which owns Eclipse Aerospace in Albuquerque, filed for Chapter 11 bankruptcy on Oct. 9.
The company wants to restructure $198.8 million in outstanding debt obligations to keep developing its EA700 Series aircraft.
That’s the next generation of the Eclipse Aviation very light jet originally built by the company’s predecessor, Eclipse Aviation Corp., which went bankrupt in 2008. Eclipse Aerospace bought the assets of the old jet maker out of bankruptcy for pennies on the dollar, and then merged with Wisconsinbased Kestrel Aviation in 2015 to relaunch as ONE Aviation.
But the new firm has suffered from low demand for general aviation aircraft and high upfront costs to build the new EA700, leading to a corporate restructuring and layoffs last year that reduced its workforce from about 200 previously to 64 now. If the court approves the company restructuring plan, 48 employees would remain with Eclipse Aerospace, which is based in Albuquerque.
As of June 30, ONE Aviation had about $222 million in total assets and $256 million in liabilities, according to its bankruptcy filing.
Of the nearly $199 million in debt obligations, about $59 million, or 30 percent, is held by one creditor, Citiking International US LLC. Another $43.3 million in secured notes, plus $24 million in unsecured notes, are held by a number of individuals and entities.
The company also owes about $53 million in government development loans, $9.2 million to suppliers of goods and services, and $10.8 million in “miscellaneous” debt obligations. That miscellaneous category includes a $254,137 debt to the City of Albuquerque for Local Economic Development Act Funding.
Under ONE Aviation’s Chapter 11 restructuring plan, 100 percent of the Citiking debt would be converted to equity holdings. Creditors’ secured notes would also be converted to equity, but at a significant discount. And unsecured notes would be discharged.
Citiking, meanwhile, would extend a new $17 million line of credit for ONE Aviation to pay off suppliers and other credit holders and allow the company to continue developing its new EA700 jet. Citiking has already agreed to the plan, but secured note holders must still vote on it, and the courts must provide final approval.
“The path to this outcome has been long and difficult,” ONE Aviation CEO Alan Klapmeier said in a prepared statement. “The management team appreciates the generous support it has received from employees, service providers, suppliers and customers throughout the process.”
The Chapter 11 filing is the latest twist in the Eclipse jet’s long, winding march to market and profitability.
The original Eclipse Aviation, launched by Vern Raburn in 1999, was considered the pioneer in very light jets – a new type of twin engine aircraft that the company believed it could produce in an assembly line process to keep prices down. That company invested about $1.4 billion in the jet’s development, producing some 260 aircraft before the firm crashed and burned in the recession.
Eclipse Aerospace bought the assets out of bankruptcy for $40 million.