But Company Still Hopes Funding Will Come Through

A bad situation appears to be growing ever-worse for Grob Aerospace. Company CEO Niall Olver announced Thursday the storied planemaker has filed for full insolvency... and starting Monday, most Grob employees will be laid off.

"As we already announced, Grob Aerospace GmbH was forced to enter the preliminary insolvency process on August 18, 2008," reads a statement attributed to Olver on the Grob website. "Since this time all of our efforts have been towards researching a new investor to allow continuing our business in the best possible way.

"Despite a number of on-going promising negotiations with various parties, we have unfortunately not been able to secure a new investor within the timeframe allowed by German law.

"To ensure the August to October salary payments for all employees in Mattsies, Grob Aerospace GmbH will now have to file for insolvency this week. From November 3, 2008, most employees will be released from work. A core team will remain in Mattsies to keep business activities running on a minimum scale. The remaining management team of Grob Aerospace GmbH together with the Grob Aerospace AG in Zurich are continuing the ongoing discussions with potential investors."

As ANN reported, Olver initially expressed confidence in a successful outcome... but with venture capital markets largely shut down in response to a global financial crisis, there's little money to go around for companies like Grob.

Additionally, Grob's attractiveness as an investment has taken a severe hit, with the loss of a contract with Bombardier to fabricate the composite primary and secondary structures for that company's upcoming Learjet 85. Development of Grob's sPn light jet appears to be in limbo, as well.

Despite a bleak outlook, Olver still holds out hope a savior for Grob will be found. "We hope that a new investor will get on board and will be in a position to re-hire most of the employees," he said. "We deeply regret this unavoidable step and thank everyone who has supported the company."

FMI: www.grob-aerospace.net