August 13, 2012
The U.S. Bankruptcy Court on Aug. 14 is scheduled to consider a claim by Pilatus Aircraft that it is owed at least $1 million in royalty money by Hawker Beechcraft for the production of the Pilatus-designed airframe used for the T-6/AT-6 military trainer.
The Swiss plane maker claims that Hawker Beechcraft stopped royalty payments for the aircraft after it entered Chapter 11 bankruptcy protection in May, but should be directed to catch up and continue making the payments. Hawker Beechcraft and its creditors committee, however, are disputing this claim, saying Pilatus has failed to make its case.
Based on the Pilatus PC-9, the trainer has been used as the platform for the U.S. Air Force/Navy Joint Primary Aircraft Training System (JPATS) contract, along with a number of international programs. The aircraft also is Hawker Beechcraft’s platform for the U.S. Air Force’s Light Air Support program competition.
In court documents, Pilatus says Hawker Beechcraft uses Pilatus’s intellectual property in the production of the trainer aircraft, but that restructuring plans do not recognize this as an ongoing benefit.
Pilatus claims that under a 2004 agreement, Hawker Beechcraft (then Raytheon Aircraft) was granted the exclusive right to manufacture and market the trainer or derivative aircraft based on the design of a modified Pilatus PC-9 single turboprop. That aircraft, Pilatus says, “contain[s] the intellectual property of Pilatus.”
The agreement further conveyed the rights for Raytheon to manufacturer the T-6 for the JPATS program, along with international customers. “Without the agreement, Raytheon had no product that would have permitted it to enter into such contracts, and the trainer/attack segment of the Debtors’ business would not exist,” Pilatus says.
The agreement further calls for royalty payments to be paid to Pilatus with quarterly reports, Pilatus says, adding, however, that Hawker Beechcraft was in arrears of more than $1 million.
Hawker Beechcraft continues to produce the aircraft and receive “substantial payments” for its ongoing production, Pilatus says. “From and after the [bankruptcy filings], the debtors have sold and delivered, and are continuing to sell and deliver, the T-6 Aircraft to their customers without paying any royalties to Pilatus, as required under the agreement, and without providing Pilatus with the quarterly accounting required under the agreement,” Pilatus states. “As a result of the latter failure, Pilatus lacks information concerning and is uncertain as to the number of T-6 Aircraft sold under the agreement during the post-petition period, and the customers to which T-6 Aircraft have been delivered.”
Further, Pilatus notes the production of this aircraft is an increasingly important part of Hawker Beechcraft’s business. “These sales and deliveries are part of the debtors’ lifeblood, without which these reorganization proceedings would be futile,” Pilatus says.