A Wichita-based aerospace supply company with a facility in Everett has filed for Chapter 11 bankruptcy protection following losses. The company blamed the COVID-19 pandemic and suspension of Boeing’s 737 MAX plane.
The Wichita Eagle reported that TECT Aerospace filed for the protection on Tuesday, which also covers the company’s facilities in Park City, Wellington, and Everett. It does not cover a facility in Nashville, Tennessee.
TECT Aerospace manufactures and assembles parts that are used in airplane flight controls, fuselage/interior structures, doors, wings, landing gear, struts and nacelles, and cockpits.
“The company experienced catastrophic financial losses stemming from the suspension of 737 MAX production (in December 2019) followed by the impact of COVID‐19 on industry production rates,” TECT said in a statement.
“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 organised Chapter 11 proceeding is in the best interest of its creditors,” the company added in its statement.
Boeing has become the Kansas company’s largest and most important secured creditor, after taking over loans totaling $41.9 million, including PNC Bank debt after TECT defaulted, and unsecured trade bills worth another $18 million, the records show.
The jet maker will lend TECT up to $22 million more in debtor-in-possession financing to continue operating during the Chapter 11 case, allowing Boeing, TECT, and investment bankers to find buyers for its assets, court records add.
TECT Aerospace said Boeing’s additional financing will allow TECT to continue operations while it uses the bankruptcy court proceeding to make “separate sales of its Washington and Kansas operations to maximise value for its creditors”.
The company said in its filings that it will continue its work during the bankruptcy reorganisation and plans to separately sell its Kansas and Washington state operations.
Court documents show among its creditors, TECT owes about $18.3 million to Boeing and $4.2 million to Spirit AeroSystems.
Article courtesy of Airlinerwatch.