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3 Years : From May 2012 to May 2015
By Joseph Checkler
MANHATTAN--A judge on Thursday said creditors can vote on Hawker Beechcraft Inc.'s plan to exit bankruptcy in the hands of a group of hedge funds, as the aircraft maker continues to aim for a first-quarter-2013 exit from Chapter 11.
In putting the plan in the hands of creditors, Judge Stuart M. Bernstein of U.S. Bankruptcy Court in Manhattan overruled and pushed back objections from several parties who argued the so-called "disclosure statement" either didn't contain adequate information to make an informed decision or unfairly favors certain creditors. The disclosure statement, a plain-English version of a bankruptcy plan that creditors must ratify, is a precursor to a bankrupt company's plan confirmation hearing, where most substantial objections are handled. That hearing is tentatively set for Jan. 31, 2013.
"I'm satisfied it contains accurate information," Judge Bernstein said.
Hawker's restructuring proposal calls for hedge-fund managers Centerbridge Partners, Angelo, Gordon & Co., Capital Research & Management and Bain Capital's Sankaty Advisors to exchange $921.6 million in debt for an 81.1% equity stake in reorganized Hawker.
Senior bondholders owed $510.2 million would get between nine cents and 10 cents on the dollar, while subordinate debtholders owed $308.3 million would be wiped out. Also losing out are equity holders, including the Goldman Sachs Group Inc. (GS) private-equity group that led an ill-advised 2007 leveraged buyout of Hawker with Onex Partners.
Hawker filed for bankruptcy in May and embarked on both a sale of the company and, if that were to fall through, a strategy to exit bankruptcy as a leaner, standalone company. It eventually came close to selling its aerospace business to China's Superior Aviation Beijing Co., but the deal collapsed and Hawker late last month announced the deal to come out of bankruptcy in the hands of the hedge funds.
Hawker, of Wichita, Kan., is one of the world's largest makers of business jets but has suffered from a prolonged slump in the corporate jet market. Hawker lost $630 million in 2011, and aircraft deliveries have fallen by a third over the past two years.
The company plans to refinance a $400 million bankruptcy loan from the hedge funds with a $530 million exit loan that would pay off the existing lenders and fuel its emergence from Chapter 11. It will either spin off or close its jet products line, the company said.
(Dow Jones Daily Bankruptcy Review covers news about distressed companies and those under bankruptcy protection. Go to http://dbr.dowjones.com)
Write to Joseph Checkler at firstname.lastname@example.org. Follow him on Twitter at @JoeCheckler
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