The end of January was not a good one for two GA manufacturers.
The companies, Tiger Aircraft and Symphony Aircraft Industries, entered bankruptcy. Both companies have been shut down and their assets will be liquidated to pay off creditors.
Tiger Aircraft, based in Martinsburg, W.Va., filed for Chapter 7 bankruptcy Jan. 16. The company listed assets of about $3.2 million and debts totaling $929,000. Tools worth more than $2.2 million account for the bulk of Tiger’s assets. Other assets include the Type Certificates for its aircraft.
The company, which once employed about 60 people, owes its former president, Gene Criss, about $150,000 in back pay. He left Tiger last August, after a July 31 resolution by the company’s board of directors that bankruptcy was the best option.
The company’s business plan when it opened its doors in 2001 was to produce 70 aircraft a year in a $30 million manufacturing facility employing 400. That, of course, never happened. In its best year — 2004 — sales reached $3.1 million. In 2005, that dropped to $1.6 million and then $708,000 in 2006, when only three planes were delivered.
According to Tiger’s bankruptcy filing, 70% of the company is owned by three Taiwanese investors. Its only U.S. investor, Teleflex Inc., of Limerick, Pa., also is its biggest creditor. Tiger owes Teleflex some $356,000.
It also owes about $115,000 in unpaid taxes.
Just a few days after Tiger declared bankruptcy, Symphony Aircraft Industries was forced into liquidation by its creditors.
The company, based in Quebec, had filed for the Canadian version of Chapter 11 bankruptcy in July. Since then, company officials had been scrambling to find new capital, but those efforts failed, according to a letter sent to Symphony customers from former CEO Paul Costanzo.
A new lead investor pulled out of the deal Jan. 19 after reviewing the company’s revised funding plan, which had been modified by a co-investor and some of the company’s secured creditors. “This has had dire consequences,” Costanzo wrote.
While in court on Jan. 22 to have a Plan of Arrangement with its creditors ratified, the company’s secured creditors filed a petition of bankruptcy.
“As a result, the court rescinded Symphony’s protection from its creditors, which in turn resulted in the company being declared bankrupt this morning,” Costanzo said. “A trustee has been appointed to oversee the bankruptcy proceedings, with the mandate to sell all of the assets of Symphony.”
The trustee, Eric Pronovost, was not available for comment before press time.
“The SAI facility is no longer open — all employment at SAI was terminated,” Costanzo continued in his letter.
Customer deposits will be treated as unsecured debts, he said, adding “It is extremely unlikely that the proceeds of liquidation will be sufficient to pay the secured creditors, and as such the entirety of these deposit amounts will more than likely be lost.”
The bankruptcy is just the latest twist in a long and winding road to bring the Symphony 160 to market.
The two-seat airplane came on the scene in early 2000, evolving out of the Glastar design. A court battle followed, in which New GlaStar said that OMF Symphony copied its design. The companies reached an agreement in 2003 that allowed them both to continue producing their versions of the design, but later that year OMF declared bankruptcy in Germany.
Costanzo, president of the company’s North American operations, put together a new company to buy the Symphony assets. He chose to stay in Quebec because the plant was already there, but lack of available capital in the area proved detrimental, he said last July when the company filed under C-36 of the Creditors Arrangement Act. Similar to Chapter 11 bankruptcy in the U.S, the filing protected Symphony while officials looked for a capital infusion of at least $5.5 million.
When a deal couldn’t be struck, the secured creditors pushed for the liquidation of the company. Costanzo noted in July that many of those creditors were non-GA suppliers, “who have less patience.”