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Alabama Aircraft Litigation Against Boeing Moves Forward

Accuses Aviation Giant Of Denying Smaller Company Its Day In Court

The Litigation Trustee for Alabama Aircraft Industries, Inc. (AAI), Joseph Ryan, announced Thursday that AAI, through its litigation trust, has this week responded to Boeing's appeal of the Delaware Bankruptcy Court's determination which permitted AAI's litigation in federal court in Alabama against Boeing to proceed. The Alabama litigation, being carried out through the Litigation Trust under the direction of the Litigation Trustee, seeks up to $100 million in damages from Boeing for fraudulent and unfair business practices, which culminated in bankruptcy of the company.

The Litigation Trustee holds that the apparent reason for Boeing's appeal is that Boeing does not wish to give Alabama Aircraft Industries its day in court. As a result of the most recent events in AAI's bankruptcy proceeding, the principal litigation against Boeing continues to move forward in the United States District Court for the Northern District of Alabama. The Alabama federal Court recently allowed AAI to file a Second Amended Complaint.

Joseph Ryan, Litigation Trustee, stated the following:  "Boeing continues its desperate efforts to avoid answering through the American justice system for its actions in destroying AAI. At the time of Boeing's actions, AAI was Boeing's most vigorous competitor for the more than $1.1 billion Air Force tanker maintenance contract."  Ryan added, "In its latest filing, Boeing argued that the bankruptcy sale of AAI should not have included the Litigation Trust that is backing the lawsuit aimed at requiring Boeing to pay for the damages caused by its breach of contract and theft of intellectual property, all of which caused AAI to lose the tanker maintenance contract to Boeing."

According to the Litigation Trust, Boeing has repeatedly:

  • Sought to deny AAI crucial funds during the bankruptcy proceedings that was needed to keep AAI operating;
  • Misrepresented to the public that the issues in the lawsuit had all been previously considered by prior forums which found in Boeing's favor;
  • Misrepresented to the media that the cancellation of the agreement between Boeing and AAI was by "mutual agreement."
  • Undertaken nearly every conceivable legal maneuver to increase the costs of the litigation and to deny AAI's day in court;
  • Deliberately avoided using the single legal step which would have delayed the bankruptcy court sale and finally destroyed AAI due to lack of operating cash, that is, the step of a Boeing request for a "stay" by the bankruptcy court. Boeing did not make that request for a stay, because in order for it to do so, Boeing would have been forced to post a bond to cover damages owed, if it is ultimately found liable. A collection on the bond would effectively make Boeing pay for the destruction of AAI it had sought so fervently.

The Delaware court records show that, despite the efforts of the prominent international investment bank of Macquarie & Company, not one bidder was willing to buy AAI's operating assets unless they also included the right to sue Boeing for its egregious and illegal behavior. As litigation trustee Ryan explained today, such bidder conditions resulted from the fact that Boeing had so disabled AAI's business, it was clear and well known that rebuilding the company from the effects of Boeing's misconduct will require millions of dollars, and the best source of recouping such investment would be the lawsuit recovery against Boeing for its past misdeeds.

Ryan further pointed out that the public record of the federal court litigation in Birmingham, Alabama reveals the great legal and financial exposure that Boeing faces for its past misdeeds against AAI (and will reveal other events involving similar patterns and practices of misconduct), and that, for those reasons, Boeing has undertaken a "limitless budget" legal war to delay its day of reckoning.

Alabama Aircraft Industries, Inc. is currently in Chapter 7 bankruptcy proceedings in Delaware.

FMI: www.alabamaaircraft.com 

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