A Dubai business jet manufacturer with facilities in Texas and West Virginia has filed for US bankruptcy protection and reportedly could be sold at auction next month.
In 2008, Emirates Investment and Development (Emivest) purchased 80 per cent of Sino Swearingen Aircraft's shares and renamed the firm Emivest Aerospace. A year later it vowed to inject US$1 billion (Dh3.67bn) into the company to expand its product line.
But in October, the company filed for Chapter 11 protection in the US courts. Chapter 11 of the US Bankruptcy Code allows a debtor company to be shielded from creditor claims while it reorganises its operations. Emivest listed $80 million of assets and $77m of debt.
"The global financial crisis has drastically reduced the demand for business jets, especially in the category of small and medium-sized jets, worth $4m to $24m," the company said in documents filed with the US Bankruptcy Court in the District of Delaware. "Given this current position, the company simply cannot continue to operate outside of Chapter 11," it said.
The company has asked the court to allow it to complete several aircraft under production, which it says will yield a net positive cash flow of $2.5m when the aircraft are completed within the next two years. Court documents list dozens of creditors including Action Aviation, Emivest Aerospace's Middle East sales representative. Lawyers for Emivest Aerospace and Action Aviation did not return calls for comment.
Emivest produces the SJ30, which it calls "the world's fastest, longest-range and highest-flying light jet".
It broke a world speed record for its weight class on a flight between Dubai and London in 2008, with a refuelling stopover in Istanbul. Emivest Aerospace said it had orders for more than 200 of the aircraft, with non-refundable deposits paid.The jet retails for an average price of $7.2m. During the Dubai Airshow in November last year, one of the jets was delivered to the actor Morgan Freeman.
That was one of only two jets reportedly made since Emivest acquired its controlling stake.
Before the Emivest purchase, Sino Swearingen had reportedly delivered two more of the SJ30, a model developed over 12 years at a cost of $700m, court documents show.
Jens J Dreyer, a business jet broker with Aviation Broker Germany, said the SJ30 faced competition from rivals Cessna, Eclipse and Embraer.
"There are still too many aircraft in the market," he said. "It is a risky business to be in and there can be a high rate of failure."
The legal proceedings put Emivest, which in 2008 purchased a controlling stake in Sino Swearingen from an entity affiliated with the Taiwanese government, in urgent need of assistance. Its interest in Sino Swearingen, dating back to about 2005, was one of the UAE's first aviation investments in the US.
In 2007 Dubai Aerospace Enterpriseacquired Standard Aero and Landmark Aviation, a US provider of business jet maintenance, for $1.9bn from the private-equity firm Carlyle Group.
More recently, Mubadala Development, a strategic investment company owned by the Abu Dhabi Government, has outlined plans to enter the US aviation maintenance market.