On May 3, 2012, major business aircraft manufacturer Hawker Beechcraft Corporation and its parent and affiliated companies (HBC) filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the Southern District of New York. HBC and its affiliated companies have requested the cases be consolidated under Hawker Beechcraft, Inc. Case No. 12-11873 (SMB).
According to an HBC press release, HBC has “reached an agreement with a significant number of its senior secured lenders and senior bondholders on the terms of a financial restructuring plan that will strengthen the company for the future and eliminate approximately $2.5 billion in debt and approximately $125 million of annual cash interest expense.” HBC intends to file a Chapter 11 reorganization plan implementing the agreement with its creditors, which has received support of holders of more than two-thirds of its bank and senior bond debt, according to HBC.
HBC also announced that it obtained a commitment for $400 million in Debtor-in-Possession (DIP) financing to continue operations, which it believes is “sufficient to maintain adequate and stable working capital and liquidity positions.”
HBC also announced that it “will continue its operations without interruption and meet its ongoing commitments to customers” during the Chapter 11 case. HBC specifically announced that “deposits and progress payments [for purchases of aircraft and services] will be secure and all customer orders for available products will be fulfilled.”
HBC has filed a motion with the court to allow it to honor warranty and maintenance programs (such as Support Plus), technical support programs, training programs, the upgrade and enhancement program to already-delivered Hawker 4000 customers, discount programs, sale-leaseback arrangements with customers, deposits for purchases of aircraft, parts, and services. Aero Law Group assumes that this motion has the support of HBC’s major creditors and is part of its overall restructuring plan. HBC’s motion was approved on an interim basis by the court on May 4, 2012, and a final hearing on the motion will be heard on May 30, 2012.
Documents on the HBC bankruptcy case can be obtained at http://dm.epiq11.com/HBC/Project.