One Aviation withdrew its motion yesterday for a Section 363 sale of the bankrupt company's assets to Florida-based real estate holding firm SE Falcon, three days after the Office of the U.S. Trustee objected to the proposal and questioned its legality. What the withdrawal could mean for the Eclipse 500/550 support provider and one-time manufacturer's ability to successfully reorganize under Chapter 11 bankruptcy remains unclear.
Efforts to culminate that deal had been cleared to proceed by U.S. Bankruptcy Court Judge Christopher Sontchi in early September. In the objection filed earlier this week, U.S. Trustee Andrew Vara noted while the proposed $13 million sale amount would have compensated several major creditors, it wasn’t enough to fully cover One Aviation's outstanding administrative or priority claims, a violation of U.S. bankruptcy laws.
The trustee's objection followed subpoenas issued by former debtor-in-possession Citiking International—which One Aviation motioned to have dismissed from the case after failure to fulfill its own court-approved bankruptcy emergence plan—for documents related to the SE Falcon sale.
A twice-delayed October 14 hearing before Sontchi, originally intended to review and approve SE Falcon’s purchase of One Aviation, will now proceed as a status conference.