The US Bankruptcy Court for the District of Delaware has accepted a motion by Jeoffrey Burtch, trustee for insolvent Eclipse Aviation, to set Thursday, Aug. 20 as the date for a sales hearing for the assets of the insolvent VLJ start-up, according to court documents. The bankruptcy court's decision follows Burtch's acceptance last week of the $40-million lead or "stalking horse" bid for Eclipse Aviation's assets offered by Mason Holland's Eclipse Aerospace.

The asset sale process now is accelerating because time is of the essence. Eclipse Aviation rapidly is burning through its last $300,000 in cash reserves. Friday, Aug. 14, 2009, Burtch will start accepting competitive bids for the assets. Eclipse Aerospace's stalking horse bid requires that potential competitors offer at least $42-million and $5-million cash down as earnest money, plus equal or better terms, to qualify for the auction sale. Tuesday, Aug. 18, 2009, Burtch will decide on the auction sale winner. If no other qualified bids are received, Eclipse Aerospace will win the auction by default. Barring objections, Burtch will ask the bankruptcy court to approve the results of the auction sale on Thursday, Aug. 20, 2009. A week or so later, the sale should close, leaving Eclipse Aerospace or a more qualified bidder as the new owner of the $1-billion-plus VLJ program.

Notably, court documents indicate that potential auction bidders to Eclipse Aerospace were not represented by legal counsel at Monday's hearing. However, sources close to the program said that two other firms have expressed interest in competing in the auction sale. If they want to participate, they'll have to move fast. In light of Eclipse Aviation's critical cash position, it's unlikely that Burtch will delay the auction process to give potential competitors more time to assemble their bids.

Holland, as a result, believes Eclipse Aerospace will emerge as the winning bidder. Barring objections, the sale could close as soon as Aug.24, 2009, he predicts. "By September, we expect to be supporting the existing fleet with parts and service. Then, we'll work on offering upgrades to bring up the fleet to a common standard." Holland said that if he wins the auction next week, he will then announce Eclipse Aerospace's senior management team.

Photo credit: Frances Fiorino