Emivest seeks new buyer to stave off liquidation
Emivest Aerospace’s Chapter 11 bankruptcy reorganization filing on October 20 revealed that the company has until January 14 to find a buyer or could face Chapter 7 liquidation. Any prospective buyer of the manufacturer of the SJ30 light jet would have until February 4 to close the deal. An initial Chapter 11 filing and failed reorganization followed by a Chapter 7 filing is not uncommon in the aerospace industry; it was the pattern during recent bankruptcies at now-defunct light jet makers Adam, Eclipse and Epic. However, Emivest indicated in its filing that it has several potential suitors for the company’s assets.
The maker of the $7.2 million SJ30 indicated that it could obtain up to $4 million in debtor-in-possession financing to keep its doors open and continue to support the four aircraft produced to date. Dubai-based Emivest purchased 80 percent of Sino Swearingen Aircraft in 2008 with plans to pump more than $1 billion into the company to restart serial production. While the company did deliver two aircraft in 2009, including one to actor/pilot Morgan Freeman, those grander plans never materialized and no aircraft were delivered subsequently. Three more aircraft currently are stranded on the production line.
Court documents reveal that Emivest actually infused $38.4 million into the company from a revolving credit line. More than $60 million of Emivest’s debt was accumulated over the last two years. Even if the company finds a buyer and restarts operations, it is unlikely to be able to deliver more than the three aircraft currently under construction over the next 24 months, according to documents in the bankruptcy filing.
After 16 years of development and estimated expenditures of $700 million, the SJ30 was certified in 2005. Then the company said it had orders for more than 200 aircraft. However, last month there was only one employee remaining at its Martinsburg, W.Va. plant–built with more than $2 million in state funds on the premise of creating 400 jobs–where the SJ30’s wings, fuselage and tail are made. The operation of that plant was the culmination of years of negotiations between Emivest’s former owner, Sino-Swearingen Aircraft, and U.S. Sen. Jay Rockefeller (D-W.Va.).
Emivest is continuing limited operations under the debtor-in-possession financing agreement, but that package comes with big origination, termination and redemption fees that could top $1 million as well as $40,000 per month interest. Last month the phone was still being answered at the company’s San Antonio headquarters.