--
Jun. 9--What's left of now-defunct Eclipse Aviation amounts to a paltry sum compared to the more than $1 billion in debt reported by the company when it entered U.S. Bankruptcy Court last November.
All the tools, equipment, computers, office supplies and furniture -- even three old pickup trucks -- add up to $63.1 million, according to a list of assets submitted by the company to bankruptcy court earlier this year. The list is posted on the Web site www.bankruptcysales.com for potential buyers to check out.
The assets could be offered for sale at auction as early as this summer.
What's not included in the list of assets are values for the Albuquerque-based jet maker's intellectual property, including all that went into the design of its Eclipse 500 very light jet. The intellectual property also includes patents on stir-friction welding and the fire-suppression system used in the jet.
After certification by the Federal Aviation Administration in October 2006, the company delivered 259 aircraft before filing for bankruptcy court protection in Delaware.
Only a handful of secured creditors are expected to ben- efit much from the asset sale. The state of New Mexico is expected to lose most if not all of its direct investment of $19 million in the company.
The value of Eclipse's intellectual property is questionable.
"Intellectual property is always depreciating in value," veteran bankruptcy attorney Bill Davis of Albuquerque told the Journal in an interview.
One reason is that, without an owner, the intellectual property has no one to defend it from pilfering and patent infringements. In addition, new technologies and design innovations are constantly in development to render Eclipse's intellectual property gradually more dated, he said.
Eclipse's original bankruptcy filing for a Chapter 11 business reorganization was converted in February to a Chapter 7 liquidation after an unsuccessful attempt to sell the privately held company to a European buyer. All but a handful of its last 800 employees were furloughed earlier that month.
No date has been set for an auction to sell Eclipse's assets, according to Adam Singer of the Cooch and Taylor law firm in Wilmington, Del., which is legal counsel to the trustee handling Eclipse's bankruptcy case.
But there's widespread speculation that an auction will be held this summer, although Davis said it's not unusual for a Chapter 7 business liquidation to take up to two years to complete.
"The trustee usually needs a significant amount of time to determine what assets would be available to sell and how those assets are encumbered," he said. "Remember, much of Eclipse's assets are probably over-encumbered and not available to be sold at a Chapter 7 auction."
The Albuquerque Economic Development Department has been promoting the city to potential buyers of Eclipse's assets in an effort to keep the business here.
In a May 15 posting on the Cooch and Taylor Web site, which has information on Eclipse's bankruptcy, the city department outlines the economic incentives available to an aircraft manufacturer. The state incentives include various tax credits and partial funding of employee wages through the Job Incentive Training Program. The main city incentive is industrial revenue bonds.
"We wanted bidders to factor these into their cost to operate," said Deirdre Firth, senior economic developer with the city department. "They would still have to qualify like anyone else."
While Firth is optimistic a buyer eventually will resurrect Eclipse as a jet manufacturer, two aviation analysts who followed Eclipse aren't so sure.
"I'd give a production restart a 1 percent chance," said Richard Aboulafia of Fairfax, Va.-based Teal Group Corp. "The cash requirement would be huge, with a highly uncertain payoff."
Doug Royce of Newtown, Conn.-based Forecast International Inc. expressed an identical view.
"I see it as highly unlikely in the current climate," he said. "Restarting production would be a very risky venture at a time when investors don't have a big appetite for risk."
Both the Teal Group and Forecast International have released bleak near-term forecasts as tight financial markets, reduced corporate profits and the stigma currently associated with business jet use will put a damper on sales.
