By Karen Di Piazza
Centennial Airport-based Adam Aircraft Inc. filed for Chapter 7 bankruptcy on Feb. 15, after failing to secure additional funding to remain in business to produce its all-composite aircraft products.
The A700, Adam’s twin-engine very light jet, made its maiden flight on Feb. 6, 2006. It received its first Federal Aviation Administration type inspection authorization on Dec. 6, 2007, enabling the VLJ to begin flight-testing for certification credit. At the time of bankruptcy filing, Adam was in the process of conducting flight tests on four of its A700 VLJs, in hopes of obtaining a type certificate in 2008 from the FAA.
The company’s A500, a piston twin-engine, received certification on May 11, 2005; prior to filing Chapter 7, Adam delivered about a dozen to customers. The company built the A500 for the pre-A700 certification, as the A700 shared commonalities with the piston plane.
According to Adam’s bankruptcy filing, it listed assets of $1 million to $10 million and debt between $50 million and $100 million. Its bankruptcy filing lists more than 850 creditors, including the Colorado Department of Revenue, the Hyatt Regency Tech Center, Qwest and the city of Pueblo, Colo. The Adam bankruptcy trustee requested the U.S. Bankruptcy Court to schedule April 15 as the auction date to sell off the company’s assets in bulk. The court has also been asked to list as creditors the nearly 400 customers who paid $125,000 each in unsecured deposits for A500 and A700 planes. The first creditor hearing was scheduled for March 12.
On Jan. 15, more than a third of Adam’s workforce was laid off. Of the 800 employees, 170 of 500 employed at Centennial Airport (APA) were laid off, as well as 80 in Pueblo and 50 in Ogden, Utah. Since the company’s bankruptcy, the remaining 500 employees were let go; many have found employment with other aircraft manufacturers in various states.
Adam tried to secure $30.5 million in short-term financing until its lender, Citibank, could procure long-term financing of up to $150 million. The company needed this to happen by Jan. 31. On Feb. 11, Adam announced suspension of its operations.
George F. “Rick” Adam Jr. founded the company in 1998, but stepped down as chairman and CEO on Aug. 6, 2007. According to former spokesperson Shelly Simi, the company’s founder had invested $26 million in Adam Aircraft. He retained one seat on the company’s board of directors.
Upon his departure, John Wolf replaced Adam. Wolf resigned Feb. 15, according to Adam’s bankruptcy filing.
Robert Olislagers, Centennial Airport director, said Adam Aircraft had a long-term lease at the airport, which has nearly 35 years left, with the remaining lease amount valued at $1.4 million.
Although the company’s financial woes led to bankruptcy, an investor could still buy the company’s assets, perhaps restarting Adam’s production of aircraft. Cessna Aircraft Company did that after Columbia filed bankruptcy.
“I expect some spirited bidding for what’s left of Adam,” Olislagers said.