FAA OBJECTIONS TO THE BANKRUPTCY BID PROCEDURE IN ONE AVIATION CORP.’S CHAPTER 11 REORGANIZATION
August 23, 2019
The FAA has objected to the bidding procedures proposed by bankrupt aircraft maker One Aviation Corp. that would transfer the company’s aircraft and repair station certificates to the highest bidder. FAA certificates allow the holder to manufacture certain types of aircraft and airplane parts and to perform repairs and maintenance on those vehicles.
The certificates come with restrictions on how and when they can be transferred to another person or entity, and the FAA has argued that the One Aviation has not satisfied the stringent requirements that would allow the certificates to be given to the buyer of its assets. In its objection, the FAA stated that anyone or any entity seeking to receive a certificate to approve a specific type of aircraft design must provide substantial information to the FAA and then must apply for and receive a production certificate to begin manufacturing the craft.
In the agreement proposed by One Aviation, the manufacturer stated that it would cooperate with the purchaser of its assets in seeking new certificates and that the buyer bears the risk of not receiving the certificate. However, the FAA believes that the agreement treats the transfer of the assets as a certainty. The FAA has asked for new provisions to be included in the bidding procedures that preserve the agency’s sole authority to transfer or issue new certificates.
If you have any questions, please contact Evelyn Sahr (esahr@eckertseamans.com or 202-659-6622); Drew Derco (dderco@eckertseamans.com or 202-659-6665), or Alexander Matthews (amatthews@eckertseamans.com or 202-659-6633).
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