In Re Hawker Beechcraft, Inc.

479 B.R. 308 (2012)

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Nature of the Case

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Facts

P is in the business of manufacturing and servicing business jets, trainer/attack aircraft, and propeller and piston aircraft under the Hawker and Beechcraft brands. P had entered into a Restructuring Support Agreement (RSA) with the majority of their creditors which, would convert 100% of their prepetition debt into equity. P also agreed in contemplation of bankruptcy to (a) file a plan of reorganization and disclosure statement by June 30, 2012, (b) obtain an order approving the disclosure statement by August 31, 2012, (c) confirm the plan by November 15, 2012, and (d) consummate the plan by December 15, 2012. The RSA did not preclude P from engaging in a marketing process to pursue a sale or other strategic transaction with a third party. On or about July 2, 2012, P received a Second Revised Proposal from Superior Aviation Beijing, Co., Ltd. (Superior) to purchase substantially all of the Debtors' assets (excluding its defense business) on a cash-free, debt-free basis for $1.79 billion in cash. On July 10, 2012, P filed an Exclusivity Motion which sought Court authorization to grant the 45-day exclusivity sought by Superior. The International Associations of Machinists and Aerospace Workers, AFL-CIO (IAM), which represented 45% of P's workforce as of the Petition Date objected to the Superior deal. P developed a senior management incentive program. The KEIP applies to eight 'insiders' within the meaning of §101(31), denominated as the senior leadership team, or SLT. To be eligible to receive payment of any award, the SLT member must be employed on the effective date of the plan unless the SLT member has been terminated without cause or resigned for good reason prior to the date that payment is due. Each member can earn up to 200% of his annual base salary, or the aggregate amount of $5,328,000, in the event P's consummate the Standalone Plan. The KEIP includes a separate set of incentives if P consummates a plan based on a Third-Party Transaction. Each member of the SLT would receive a sale bonus of 200% of his base salary. P also developed a non-insider key employee retention plan (the KERP).