Eclipse Aviation, the New Mexico manufacturer of small jet aircraft, filed for bankruptcy in Delaware on November 25, 2008. As stated in the Affidavit in Support of Eclipse’s Bankruptcy Motions, Eclipse was started 10 years as a manufacturer of aircraft ideal for individual pilots, small companies seeking corporate aircraft and air taxi services serving smaller hubs. In order to produce affordable aircraft, Eclipse created a “manufacturing strategy” based upon low production costs and high volume.
Over time, Eclipse was unable to meet the production goals necessary to sustain a positive cash flow. Eclipse tried to increase production through additional financing and increase its revenue by raising its prices. When neither were successful, Eclipse began to lay off employees and seek a buyer. After looking at all its options, Eclipse decided that a sale of its assets under section 363 of the Bankruptcy Code was the best way to proceed.
Following negotiations with potential buyers, Eclipse entered into an agreement to sell its assets to ETIRC Aviation. ETIRC is the largest shareholder of Eclipse and the exclusive distributor of Eclipse aircraft in Europe, Russia and the former Soviet Republics. According to the Eclipse Sale Motion, ETIRC offers to purchase Eclipse for $28 million in cash, $160 million in secured notes and 15% of ETIRC stock.
Eclipse’s Sale Motion also includes bid procedures for qualified bidders. The proposed deadline for qualified bids is January 6, 2009, followed by a tentative auction scheduled for January 7th. Through its Sale Motion, Eclipse requests the Bankruptcy Court schedule a sale hearing on or before January 8th.