A Dubai business jet maker has been sold for less than half the price of one of its aircraft, after bankruptcy proceedings in the US.
The assets of Emivest Aerospace, the maker of the US$7.2 million (Dh26.4m) SJ30 light business jet, have been bought by Metalcraft Technologies, based in Utah, for $3.5m in cash plus liabilities.
Emivest's three-year involvement in the US business aviation industry coincided with a steep fall in demand for business jet travel during the global downturn.
The sale also brings to an end six months of US bankruptcy proceedings, a process in which Emivest estimated that its $80m in assets were counterbalanced by $77m in debt.
Emirates Investment and Development (Emivest), part-owned by the Dubai Government, entered the US aviation manufacturing market in 2008. It bought 80 per cent of the shares of Sino Swearingen Aircraft, the maker of the SJ30, and renamed the firm Emivest Aerospace.
At the time, Emivest said it would invest $150m in the company and increase production of the SJ30 as quickly as possible as well as developing other aircraft.
In 2009, Emivest went further, proposing to inject $1bn into boosting the aircraft programme's prospects.
But in October, the company filed for Chapter 11 protection in the US courts, which allows a debtor company to be shielded from creditor claims while it reorganises its operations.
Business aviation is a risky business with a high rate of failure for aircraft makers, and Emivest's purchase of the jet programme came at a time when the SJ30 was still struggling to change from a lengthy and expensive development phase into commercial production.
In its bankruptcy papers, Emivest said it suffered from "inherent production inefficiencies, and low initial production volumes, typically associated with transitioning a complex product from development to commercial production".
Metalcraft, the buyer, was a metal parts provider for the SJ30 programme. In addition to its cash offer, Metalcraft agreed to cover $1.6m in assumed liabilities relating to a down payment for one aircraft order.
The company has three months to pull manufacturing equipment and other assets from two production facilities in Texas and West Virginia, totalling 18,500 square metres of manufacturing space, which are being put up for auction.
During its spell running the SJ30, Emivest produced just two of the light jets, one of which was delivered to the US actor Morgan Freeman at the 2009 Dubai Air Show.
The aerospace company had been expected to be sold to China Aviation Industry General Aircraft, which had reportedly offered to invest "more than $100m" to restart the stalled production of the SJ30, which is said to have hundreds of orders. But that deal did not materialise.
Court documents listed dozens of creditors including Action Aviation, Emivest's Middle East sales representative.
