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Tue, Feb 24, 2009

Aero-News Alert: It's OVER! Eclipse Heads Into Chapter 7 Liquidation

Is This REALLY The End?

ANN REALTIME UPDATE, 02.24.09, 2011 EST: The following memo has just been sent out to affected employees and associates of Eclipse/EclipseJet/ETIRC, et al, by Mike McConnell and Mark Borseth...

It is reproduced below, unedited.

Tuesday February 24, 2009

Dear Eclipsers:

We are very sad to report unexpected news today. Despite the efforts of many people at EclipseJet Aviation and ETIRC to obtain necessary funding to close the purchase of the assets of Eclipse Aviation, the closing of the sale transaction has stalled and our company is out of time and money. Given the dire circumstances in today's global marketplace and the lack of additional debtor-in-possession funding, the senior secured creditors of the Company filed a motion today in US Bankruptcy Court in Delaware to convert the Chapter 11 case to a Chapter 7 liquidation. This action, under the circumstances, is being supported by the directors of Eclipse.

What does this mean for each employee? The furlough converted to a layoff effective Thursday, February 19, 2009. Most regrettably, you will not be paid the paycheck due on Thursday, March 5, 2009 nor is any vacation pay available. You may have certain rights to seek payment in the bankruptcy proceeding; you may receive additional information about that from the bankruptcy court.

As it stands today, all benefits coverage will end at midnight on February 28, 2009. COBRA benefits will be available for the month of March if you wish to sign up for medical, dental and/or vision coverage. Later this week you will receive a termination package in the mail which will have information regarding all of your benefits.

The Bankruptcy Court will likely appoint a Chapter 7 trustee in our case within 30 days, at which time the trustee will control all assets of Eclipse and will seek to sell them. We cannot comment at this early stage on any liquidation path that might be pursued or possible interest from potential buyers.

We have times set aside on Wednesday and Thursday for each department to come in and collect their personal belongings in their cubes.

Building Schedule for Employee Access

  • HQ Wednesday 10 to noon
  • SP 2 Wednesday 1pm to 3pm
  • SP 3 Wednesday 3pm to 5pm
  • SP 4 Thursday 9am to 11am
  • SP 9 Thursday 9am to 11am
  • SP 10 Thursday 1pm to 3pm
  • DEII Thursday 1pm to 3pm
  • SP 11 Thursday 3pm to 5pm
  • Gainesville Wednesday 10am to noon
  • Albany Wednesday 10am to noon

All of the executive management team at Eclipse gives you our most sincere and heartfelt thanks for your tenacity and perseverance in trying to deliver this dream we know as the Eclipse 500. We gave it one heck of a try. We are sorry that it came to this today.

Mark Borseth
Michael McConnell

Original Report, 02.24.09, 1612 EST: ANN has received copies of court filings that suggest that an "Ad Hoc Committee" consisting of Kings Road Investments, Ltd., HBK Services LLC and Citadel Investment Group, L.L.C., is in the process of forcing long ailing Eclipse Aviation into a Chapter 7 Liquidation proceeding. As many promises and commitments seem to have come and gone on the part of ETIRC's attempted purchase of the assets, this newest development is not surprising -- nor unexpected. 

Citing numerous issues with the much promised and undelivered resurrection of Eclipse by ETIRC's Roel Pieper, the attempt to convert the Eclipse situation from Chapter 11 (Reorganization) to Chapter 7 (Liquidation) is based on their belief that, "there is no reasonable likelihood of rehabilitation in these Bankruptcy Cases because (a) Eclipse Aviation Corporation and Eclipse IRB Sunport, LLC (the "Debtors") are administratively insolvent and (b) the sale of the Debtors' assets to EclipseJet Aviation International, Inc. ("EclipseJet"), which was approved by this Court on January 23, 2009, has not closed because EclipseJet has not been able to obtain the requisite financing. After the delays EclipseJet has experienced in obtaining financing over the past month, the Ad Hoc Committee is convinced that it will not succeed in the near term. The Debtors can no longer wait: they are now literally out of cash, and as of February 18, 2009 had furloughed virtually all employees without pay. To conserve whatever value may still remain in the Debtor's assets the cases must promptly be converted to cases under chapter 7. Cause exists to convert these cases because the Debtors' estates are diminishing with no reasonable likelihood of rehabilitation."

The legal pleadings note, time after time, deadlines that have come and gone, promises made by Pieper that have not been kept and a bewildering series of excuses that have not allowed the sale of Eclipse to proceed. "On February 20, 2009, the Ad Hoc Committee held a conference call with Mr. Pieper to inform him that, because of his failure to procure financing, it seemed there was no alternative but to have these cases converted to Chapter 7. Mr. Pieper once again stated that important meetings were to be held in Russia "tomorrow" and scheduled a call for Saturday afternoon, February 21, 2009 to report to the Ad Hoc Committee on the results of that meeting. Mr. Pieper did not show up for the Saturday call, and on Sunday advised the Ad Hoc Committee that problems appeared to have arisen with the financing in Russia. On Monday, February 23, 2009, Mr. Pieper asked for one more day, but on Tuesday, the financing was still not in place. It seems to the Ad Hoc Committee that there is no longer any probability that the financing will occur."

The comittee is also asking Bankruptcy Judge Mary J. Walrath to expedite the process in order to minimize further danger to the assets and concerns of those involved.

ANN is monitoring the matter closely and will update the story as appropriate.

FMI: www.eclipseaviation.com

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