Posted: August 28th, 2009 10:55 AM EDT
Aug. 26--With the consent of the majority of shareholders of Epic Air, a federal judge Tuesday ordered a receiver to be appointed for the Bend-based kit plane manufacturer.
The order also noted that Epic and two related companies will file for bankruptcy after the receiver files a final report on the company's finances. The final report should be issued within 45 days of commencement of the receivership, according to the order, which was signed by U.S. Magistrate Judge John V. Acosta.
The receiver, Conrad Myers of Myers & Co. in Portland, will take control, charge and possession of the assets and operations of Epic and its related companies, according to the order.
The order is the latest legal twist in a breach of contract suit filed June 5 in U.S. District Court in Portland against Epic and a number of co-defendants: Aircraft Completion Services LLC, a Delaware company; Aircraft Investor Resources LLC, a Nevada company; and their respective directors, Jeff Sanders, Michael Shealy and Epic's CEO, Rick Schramek.
Blue Sky Avgroup LLC, a Florida company, filed the suit after it alleged Epic and the co-defendants could not account for a jet engine that Epic was supposed to buy with funds wired from Blue Sky. The engine was slated to be installed in a plane owned by Blue Sky under assembly at Epic's Bend Municipal Airport plant.
On June 29, Blue Sky filed an emergency motion to appoint a receiver for the companies after learning of layoffs at Epic earlier in the month, according to the motion.
Staying aloft Blue Sky's director, Rich Lucibella, whose partially-completed LT model plane is still at Epic's plant, said he and other Epic plane owners want the company to survive -- though in what form, it's too soon to tell.
"The LT design is a proven design, with value for us and for others, and if we can put together a group to make this make sense , we hope so, but we don't know yet," said Lucibella, adding that a majority of the individuals who own the roughly 15 planes still under assembly at the Epic plant have filed motions to intervene in Blue Sky's suit against Epic.
"We all have an interest in seeing a company that comes out of this cloud, which can support our planes, provide spare parts and the like," Lucibella said. "We understand that our goal is to get our planes built by a reputable company, so who steps in may be a combination of ourselves, or a combination of ourselves with joint-venture partners or totally different groups."
The order does not specify under what chapter of bankruptcy protection Epic and the two related companies would file. Lucibella said reorganization under Chapter 11 "may be exactly what's required." What about the CEOs?
A message left on Schramek's cell phone was not returned. Epic's attorney, Jeff Eager, said late Tuesday he was waiting for permission from his clients to speak to the media and could not comment before then.
According to the documents in the suit, Schramek had a 42 percent membership interest in Epic and "was, until approximately July 2009," the managing member of Epic, Aircraft Completion Services and Aircraft Investor Resources.
Sanders, who is listed in the suit as a resident of California, had a 47 percent membership interest in the companies; and Shealy, also listed as a resident of California, had an 11 percent membership interest.
After the receivership order was posted, a notice of dismissal was filed later Tuesday by Michael Van Hoomissen, an attorney for Blue Sky, notifying the court that Sanders and Shealy have been dismissed from the suit.
Attempts to find contact information for Sanders and Shealy have been unsuccessful.
Reached for comment, Van Hoomissen confirmed that Sanders and Shealy have been dismissed from the suit but said he could not elaborate because he was not a party to the dismissal discussions.
Boom and bust Epic Air employed roughly 160 workers a year ago at its Bend plant, where it helped its customers assemble planes. A kit plane can be certified airworthy by the Federal Aviation Administration if the owner assembles at least 51 percent of the plane.
The company landed in Bend in 2004 and at one time said it hoped to create 4,000 jobs, according to The Bulletin's archives. The recession, however, has hit aviation manufacturers especially hard, and a number of them have filed for bankruptcy.
Cessna Aircraft Co. cited declining orders in its decision announced earlier this year to close its Bend plant and move production closer to its main plant in Kansas to save money.
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