Bankruptcy Judge Approves Hawker Beechcraft Chapter 11 Reorganization Plan

Bankruptcy Judge Approves Hawker Beechcraft Chapter 11 Reorganization Plan

Kansas-based aircraft manufacturer Hawker Beechcraft will be permitted to move forward with its Chapter 11 reorganization plan, a U.S. Bankruptcy Court has said.

After reviewing the company’s Chapter 11 Joint Plan of Reorganization and hearing no major complaints from creditors, Judge Stuart Bernstein said that he saw no issues with the plan, which would allow the manufacturer to emerge from protection under bankruptcy law in February. The company filed for Chapter 11 protection last May as a result of declining sales and activity in the business jet market.

As part of its reorganization plan, the company will change its name to Beechcraft Corp. In addition, the plan enables the company to reduce costs by having the Pension Benefit Guarantee Corp. take over two of its retirement programs, according to The Associated Press. The labor agreements will enable the company to continue employing thousands of workers.

The terms of the reorganization plan also allow for secured bank debt, unsecured bond debt, and certain unsecured claims to be canceled so long as creditors receive equity in the new company, the AP reports. Following its exit from bankruptcy, the company will focus its efforts on turboprop, piston, and special mission and trainer/attack aircraft, which are expected to be more profitable.

“Today’s ruling marks the final significant step in the restructuring process,” said Hawker Beechcraft CEO Robert Miller, according to United Press International. “Throughout this process, we have been guided by the goal of emerging in a strong operational and financial position, with an enhanced ability to compete well into the future. Our recapitalization and dramatically reduced debt load will allow us to do exactly that.”

Hawker Beechcraft obtained $600 million in exit financing from J.P. Morgan Chase and Credit Suisse. In addition, a new board of directors will be formed once the company formally emerges from bankruptcy proceedings.