ALBUQUERQUE, N.M. (AP) -- A federal bankruptcy judge has verbally granted a motion to convert troubled jet manufacturer Eclipse Aviation to Chapter 7 bankruptcy, ending a decade of business that led to the production of 260 Eclipse 500s.
The order has yet to be signed, but a document filed in U.S. Bankruptcy Court in Delaware says U.S. Bankruptcy Judge Mary Walrath "orally granted" a motion converting a Chapter 11 restructuring process intended to move the Albuquerque manufacturer into a Chapter 7 liquidation of the company's assets.
"It's unfortunate. It's tragic. It's horrible for all the employees," Michael McConnell, a longtime marketing and sales executive for Eclipse, said Wednesday.
Secured noteholders had requested the company be converted from Chapter 11 restructuring to Chapter 7 bankruptcy in February after a company that had hoped to buy Eclipse, European-based EclipseJet Aviation International Inc., failed to obtain financing.
EclipseJet Aviation International is an affiliate of Eclipse's largest shareholder, Luxembourg-based ETIRC Aviation.
Eclipse Aviation did not oppose the motion, which unsecured creditors later joined.
A copy of the order to be signed was filed by Eclipse's attorneys late Wednesday. McConnell said in an e-mail that Eclipse closed its doors and the nine remaining employees had worked their last day.
He wrote that Walrath was expected to sign the order Thursday and a trustee was expected to be appointed this week.
Eclipse has 15 days to file its unpaid debts and the names of its creditors. Within 30 days, the company must file a final report and account to the trustee, the order said.
Eclipse employees remaining in Albuquerque still held out hope that a buyer would purchase Eclipse's assets and keep the company going in some form, either by relaunching production or by creating a company that would service and maintain the 259 Eclipse 500 very light jets that were delivered.
At least two business executives have announced plans to purchase all or part of Eclipse, and one hopes to relaunch production of the light jet in 2011.
McConnell cautioned former Eclipse workers, saying "My guidance to all employees is to take care of your family, take care of yourself. There is no silver bullet."
According to court documents, ETIRC chairman Roel Pieper repeatedly had assured investors that Russia's state-owned Vnesheconombank would provide funding for Eclipse, which had planned to build an assembly plant in Ulyanovsk, Russia.
Pieper has not returned telephone messages seeking comment.
A spokesman for Vnesheconombank has declined to say whether financing for Eclipse was coming or not.
Dmitry Shikov, a spokesman for the governor of the Ulyanovsk region where the assembly plant was to have been built, said he does not know what is happening with the financing of the construction, but said there are no signs of the halt.
"As far as I know, the project has not been suspended," he said.
Eclipse's supporters have hailed the company for creating a market for the light jet, which are twin-engine jets with five or six seats that have been likened to SUVs with wings.
Its critics have said the company's business model of producing airplanes at a high volume to support a low price that beat its competitors was abysmal and the jet was conventional in its flying capabilities.
Doug Royce, an aerospace analyst for Connecticut-based Forecast International Inc., which had forecast last fall that Eclipse's production would end this year, said late last week that one thing that led to the company's failure was that Eclipse founder Vern Raburn overpromised on what the company could deliver.
"He was always on a high wire act, and he stayed up a lot longer than a lot of people," Royce said.
McConnell created an automated e-mail reply before leaving work Wednesday.
It said: "I never thought Eclipse would come to this. However, if the best product does indeed win, then this little jet will live on in some way."
Associated Press writer Nataliya Vasilyeva in Moscow contributed to this report.
