Hawker Beechcraft filed for bankruptcy on Thursday after reaching a restructuring agreement that will wipe out approximately $2.5 billion in debt and $125 million in annual cash interest liabilities.
The plan includes $400 million in financing that the company says will allow it to continue meeting its financial obligations to its employees — Hawker Beech currently has around 7,400 individuals on its payroll — as well as to its venders and suppliers.
Per Chapter 11 filing requirements, more than two-thirds of the company’s major lenders have signed onto the deal.
In a statement on Thursday, Hawker Beechcraft emphasized that business operations will continue and all orders will be fulfilled as the company takes what CEO Robert Miller called this “next step forward.”
The move is the latest development in the company’s attempts to grapple with a crushing debt burden — one that totaled $2.33 billion at the end of 2011 alone — amidst ongoing weak aircraft sales. The company sustained losses of $632.8 million in 2011 and was forced to borrow close to $125 million last month to ensure production continued. Approximately 350 employees were given pink slips last week in the latest in a lengthy string of layoffs triggered by the recession.
In its bankruptcy filing, made in the state of New York, Hawker Beechcraft listed its pension benefit fund first among its largest creditors, after recently signaling to its employees that the company pension plan may become a casualty within the restructuring process.
In light of the bankruptcy filing, Kansas governor Sam Brownback said the state will work closely with the company to preserve jobs, as well as the state’s investment in the company. In 2010, Hawker Beechcraft struck a deal to stay in Wichita in exchange for $45 million in local and state incentives.