Wichita aerospace company files for bankruptcy after major losses from 737, COVID
An aerospace supply company based in Wichita filed for Chapter 11 bankruptcy protection Tuesday following “catastrophic financial losses” that stemmed from the suspension of Boeing’s 737 Max production and the impact of COVID-19.
TECT Aerospace is headquartered in Wichita with facilities in Park City and Wellington. The Chapter 11 filing also includes TECT Aerospace facilities in Everett, Washington, but not its location in Nashville. A location in Kent, Washington closed in January.
“Following (15) months of diligent work with its lenders, customers and suppliers and after exhausting all efforts to restructure out of court, TECT has concluded that an orderly and organized Chapter 11 proceeding is in the best interest of its creditors,” a company administrator said in a prepared statement.
Chapter 11 bankruptcy protection is meant to rehabilitate a business and allow it to reorganize its finances through a court-approved plan. The bankruptcy keeps the company free from creditors’ lawsuits while it restructures itself.
The aviation manufacturing company will continue its work during the reorganization. TECT plans to separately sell its Kansas and Washington state operations.
TECT Aerospace manufactures aircraft structural components, among other aviation parts. The aviation supply chain, which plays a major role in the Wichita area’s local economy, has struggled with the one-two punch of the grounding of the 737 Max plane and the COVID-19 recession that pushed lower demand for aerospace production.
According to court documents, TECT owes about $18.3 million to Boeing and $4.2 million to Spirit AeroSystems. Other aerospace supply chain companies and Wichita businesses lined up as creditors in the bankruptcy case. The company has between 1,000 and 5,000 creditors overall.
Spirit sued TECT Aerospace last summer, according to the Wichita Business Journal, alleging that the supplier demanded price increases for parts to help cover costs it owed to other vendors.
The 737 Max was originally grounded in early 2019 after two deadly crashes. Boeing’s program is largely important to Wichita, as workers at Spirit AeroSystems build structure on the plane.
Boeing’s order to halt production last year lead to thousands of local layoffs at Spirit — difficulties that are felt throughout the aviation supply chain in Wichita, even as 737 Max production has resumed.
TECT Aerospace was founded in 1995 and has between 500 and 1,000 employees, according to its LinkedIn profile.
This story was originally published April 6, 2021 at 10:34 AM.
