Hawker Beechcraft’s disclosure statement and joint plan of reorganization, which includes emerging from bankruptcy as a smaller, stand-alone company, have been approved by the U.S. Bankruptcy Court for the Southern District of New York.
The approval from the court paves the way for the company to begin soliciting approval from its creditors.
The plan is supported by the majority of its outstanding debt holders, the company said.
The voting process for creditors is to be completed by Jan. 22.
Hawker Beechcraft, which filed for Chapter 11 bankruptcy May 3, plans to seek approval from the court to emerge from bankruptcy at a confirmation hearing scheduled for Jan. 31.
When it emerges from bankruptcy, the company plans to change its name to Beechcraft Corp. focusing on its turboprop, piston, special mission and trainer and attack aircraft and on its parts, maintenance, repairs and refurbishment businesses.
Those businesses are profitable and have high growth potential, the company said.
The plan also is to exit the corporate jet business because of continued sluggish demand, high manufacturing costs and big losses on the sale of Hawker 4000 and Premier aircraft.
In October at the National Business Aviation Association’s annual convention in Orlando, company officials said that as a scaled down company, it plans to add up to four offerings to its Baron and Beechjet lines.
Development hasn’t been possible as a financially struggling company, officials said at the convention. As a well-funded stand-alone operation, it will move forward with new and upgraded products, they said.
The bankruptcy will allow the company to shed $2.5 billion in debt and stand up as a well funded entity, Hawker Beechcraft chairman Bill Boisture said at the time.
He did not say how many the new company would employ. But Hawker Beechcraft has not been building jets for several months.
In October, a deal to sell the company, except for its defense business, to Superior Aircraft Beijing in China fell apart.
That’s when Hawker Beechcraft decided to move forward with its plan for a smaller company.
Upon emergence from bankruptcy, the company plans to enter into a new financing facility of at least $525 million, which includes a term loan and a revolving line of credit.
The loan and line of credit will be used to fund operations going forward. And it will be used to repay the $400 million in credit it received at the time it entered bankruptcy to keep the company operating.
Hawker Beechcraft is represented by the law firm of Kirkland & Ellis; its financial adviser is Perella Weinberg, and its restructuring adviser is Alvarez & Marsal.