On October 20, 2010, Emivest Aerospace Corporation (“Emivest”) filed a petition for bankruptcy in the United States Bankruptcy Court for the District of Delaware. Emivest manufactures the SJ30 business jet, which according to the company is “the world’s fastest, highest flying and longest range, light business jet.” See Debtors’ Declaration in Support of Chapter 11 Petition and First Day Pleadings at p. 3 the “Declaration”). Based in San Antonio, Texas, Emivest currently has three jets that are under production and orders for an additional 200 planes. Decl. at p. 4.
Emivest was founded by Ed Swearingen in 1958, under the name Swearingen Aircraft. Swearingen started a new company in 1995, Sino Swearingen Aircraft Corporation (“SSAC”). SSAC was funded primarily by entities affiliated with government of Taiwan. From this investment came the production of the SJ30 aircraft. In 2005, Emivest Aviation LLC acquired a controlling interest in SSAC. As a result of this merger, SSAC changed its name to Emivest Aerospace Corporation. Decl. at p. 3.
In November of 2009, an arbitration award was entered against Emivest in favor of Wells Fargo Securities LLC. The arbitration award resulted from claims by Wells Fargo that Emivest owed it a transaction fee for an equity transaction. An arbitration panel agreed with Wells Fargo and awarded it over $4.2 million. In June of this year, Emivest and Wells Fargo entered into a forbearance agreement whereby Wells Fargo would not collect on the arbitration award. In return, Emivest agreed to pay $700,000 in monthly installments. As of the date of filing for bankruptcy, Emivest had paid Wells Fargo $225,000 under the agreement. Decl. at p. 7-8.
Aside from the arbitration award, Emivest has also suffered from a lack of sufficient funding. According to Emivest, the company suffers from significant write-downs that are the result of “inherent production inefficiencies and low initial production volumes typically associated with transitioning a complex product from development to commercial production.” Decl. at p. 8. In the months prior to bankruptcy, Emivest realized that its large debt and lack of liquidity would require it to seek protection under chapter 11 of the Bankruptcy Code. Working with its financial advisors, Emivest will explore in bankruptcy new financing, re-financing its current debt and/or selling part or all of the company under section 363 of the Bankruptcy Code.
This bankruptcy proceeding is before the Honorable Mary F. Walrath, a former Chief Judge of the Delaware Bankruptcy Court. Emivest’s bankruptcy counsel is Morris, Nichols, Arsht & Tunnell LLP.