Story ID: 123nov18
One Aviation Enters Chapter 11 Restructuring
By: Rob Finfrock
Caption: Company intends to maintain support for Eclipse jets and continue development of the Eclipse 700 follow-on aircraft.
Word Count: 539
Following a year of financial setbacks and lawsuits against the company, on October 10 One Aviation and 11 subsidiaries "entered into a consensual restructuring" arrangement that included a Chapter 11 bankruptcy filing and a badly needed capital infusion.

One Aviation first hinted at a probable Chapter 11 filing earlier this year in documents outlining negotiations with officials in Albuquerque, New Mexico, regarding its presence at the city’s airport (ABQ). While bankruptcy isn't often considered a positive development, One Aviation CEO Alan Klapmeier told AIN the Chapter 11 filing—and the accompanying infusion of approximately $18 million in short-term funding—is “very good news toward building a stronger company.

"Securing financing [as part of the bankruptcy process] has been a long time coming," he continued. "The purpose of this process is to have a company in the future," to continue maintenance and support for the current fleet of Eclipse 500 and Eclipse 550 small jets, bring the larger Eclipse 700 to fruition and develop additional aircraft.

Court documents indicate through June 2018 One Aviation held $222 million in assets, against liabilities totaling approximately $256 million. The court subsequently granted the company permission to remain in business through the bankruptcy process with One Aviation "authorized, but not directed" to honor existing customer warranties, service contracts, and other outstanding business commitments, pending subsequent court decisions.

Klapmeier emphasized the importance of that stipulation. "Aviation is a very small community; you cannot invalidate your commitment to customers and expect to keep their support going forward," he continued. "Many people view exiting bankruptcy as the end result of this process, [but] we're trying to take a very ethical and logical approach to having a successful business in the future. This is all about the future."
Restructuring Backed by Chinese Interests
Whatever that future may hold, it will almost certainly involve Citiking International US LLC, a Delaware-based investment entity formed last year. Backed by several unnamed Chinese interests, Citiking paid the City of Albuquerque more than $1 million earlier this year to pay off months of unpaid rent and other fees after officials moved to evict One Aviation from its facilities at ABQ.

"[Citiking] is investing in what they expect will be their company," Klapmeier said. "They believe aviation will be an extremely large market in the future for China." While the restructuring agreement leaves open the possibility another entity could make a play for One Aviation's assets, such a move appears unlikely; court documents indicate One Aviation solicited purchase offers in January 2018, but the first round resulted in "no viable bids for the debtor's business or assets."

One question left unclear concerns what future, if any, remains for the Kestrel K350 turboprop that Klapmeier brought to the One Aviation partnership. The subsidiary faces lawsuits in Wisconsin and Maine over various state and municipal incentives tied to hiring numbers that never materialized.

Nevertheless, Klapmeier remains bullish on the aircraft's future. "We still believe in the logical business plan that was the basis of forming One Aviation, and that includes being a multi-product company," he concluded. "I don't know what the outcome of the Kestrel assets will be, but our philosophy hasn't changed. I still believe in the Kestrel."
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