A perusal of the first
rounds of court documents filed in the Chapter 7 Bankruptcy of
Skystar Aircraft reveals a company that was dealing with massive
debt and some business practices that appear, at the least,
problematic.
A number of Skystar customers report having bought Rotax engines
from Skystar in the past year, but had been delayed weeks or
months in delivery... even though Rotax tends to deliver engines
fairly quickly -- so long as they are paid.
The documents reveal a company in severe disarray, and with
virtually no hope of recovery in its's current form. Listing assets
valued at $1,149,624.48, the records indicate that some $400K of
that amount is invested in intellectual property such as design
properties (Engineering data and business intangibles), and another
$400K in inventoried parts. Tooling and jigs were valued at
$200K.
These three valuations (comprising $1M) have been deemed
"optimistic" by industry observers -- especially the engineering
data and tooling values.
Far more disturbing are
the lists of debts... over 200 entities in all, many of them
customers who had paid for kits oo components, and often well into
the five figure range. Only two creditors are UCC secured (giving
them first shot at any funds arising from the eventual liquidation
of the company).
Former Skystar owner Phil Reed and Mimi Plumb are credited
with secured debts totaling $588,750. None of the industry
observers we've talked with feel that the assets will fetch
anywhere near that amount of money... leaving Reed and Plumb pretty
much to take whatever the auction gets.
Even if there is anything left over, there are two priority
non-secured claims that will be paid before any of the other
creditors get a taste... the IRS and the State of Idaho tax
authorities.
In other words,
unsecured creditors are pretty much left with expectations of
little or no compensation... the usual case in such turbulent
bankruptcies.
The records do bring up a lot of questions. The ultimate
indebtedness of this company appears to be approximately
$1,679,558.66. It's obviously been in big trouble for quite a
while, and one wonders why engine orders were taken, and not
shipped for so long, and whether such big-ticket items were
propping the company up.
It seems a legitimate question... One abandoned customer
complained on a Kitfox email list, "Who else was told a few
months ago by Crystal Loveland that our Rotaxs were a few months
from delivery? Being that my listed claim amount over on the lazair
website is nothing near the cost of the engine, does this mean my
engine money is in the hands of Rotax? And I would assume that when
my engine (that my money paid for) arrives in Idaho, it will be
sold off to give me a few bucks and cover the lawyer
fees."
While there is the possibility that some customers with engine
orders and the like, may be allowed to get some priority for their
claims, those claims would be subject to challenge, and are
unlikely to be very easy to pursue. In the meantime, there are a
number of questions that are unlikely to be answered before the
first hearing on this matter takes place next month. How this
company got so messed up, and why it was allowed to become so
debt-loaded, are likely to be questions that creditors will pursue
-- though the answers they receive are hardly likely to mollify
them.
ANN will have more information shortly.