In November, Jeoffrey Burtch, the Chapter 7 Trustee in the AE Liquidation bankruptcy (formerly “Eclipse Aviation”), began filing preference actions against various creditors of Eclipse.  Eclipse Aviation began as a New Mexico manufacturer of small jet aircraft.  The company filed for bankruptcy in the United States Bankruptcy Court for the District of Delaware on November 25, 2008.  As stated in the Affidavit in Support of Eclipse’s Bankruptcy Motions,  Eclipse began approximately 12 years ago as a manufacturer of aircraft intended 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.

On March 5, 2009, the Eclipse bankruptcy converted from a chapter 11 reorganization to a chapter 7 liquidation.  Jeoffrey Burtch was appointed the chapter 7 trustee the same day the case converted to chapter 7.  The Trustee is represented by the law firm Cooch and Taylor, P.A.  This bankruptcy proceeding, as well as the preference actions, are before the Honorable Mary F. Walrath.  Judge Walrath previously served as the Chief Judge of the Delaware Bankruptcy Court.