Restructuring firm Development Specialists is seeking bids for the assets of Aerion Corp., developer of the AS2 supersonic jet, as part of a court-approved liquidation sale to pay back creditors tens of millions of dollars owed.
The assets will likely be sold to multiple buyers rather than to a single entity.
DSI is overseeing the bidding process in accordance with the terms and procedures in the court order, dated July 12. Joseph Luzinski, DSI senior managing director, is managing the asset sale through an assignment for the benefit of creditors.
Aerion owes creditors, which include vendors, service providers and various aviation companies working with the company, more than $80 million in all, Luzinski told The Weekly of Business Aviation.
Interested parties must submit bids to DSI by 4 p.m. Sept. 7, 2022. The sale is a court-supervised insolvency proceeding similar to a bankruptcy but performed under Florida statues, not federal bankruptcy law.
“This is a complicated series of assets and events,” Luzinski says.
DSI first marketed the assets in their entirely seeking a single buyer.
“But we didn’t receive sufficient interest in doing it that way,” Luzinski says, so “we put our pencils down on that process and retooled.”
Now, DSI is marketing the assets in four groups to be sold separately. The groups include system-level patents related to aircraft systems, component level patents related to the more detailed functional aspects of the aircraft, system design-related patents related to software Aerion was developing to help model iterations of laminar flow over the wings, and finally, aircraft design-related patents related to strategies to mitigate sonic booms over land.
“That’s the key everyone would like to solve for in the short term,” Luzinski says of work to mitigate the sonic boom.
Companies specializing in certain areas may be interested in a single asset category.
“We’re hopeful we’ll be in a position to allow the market to assess all of those pieces and only bid on the ones they are most interested in,” Luzinski says. The market will decide the outcome.
The majority of those expressing interest thus far are based in the U.S. However, several foreign companies with U.S.-based subsidiaries or operations have also expressed interest. Having U.S. operations allow companies outside the U.S. to work through complex export control and ITAR (International Traffic in Arms Regulations) issues, he says.
In a surprise move, Aerion, formed in 2003, ceased business in June 2021 when it failed to raise additional capital to continue the development of the AS2 supersonic business jet, finalize its transition into production and fund other future growth.
The action followed a March 2021 unveiling of the AS3TM, a 50-passenger commercial airliner that would fly at speed Mach 4 or faster and a follow-on to the AS2.
In 2020, Aerion officials selected a site in Melbourne, Florida, for its corporate offices and received an incentive package of about $480 million from local governments to open an aircraft manufacturing facility there employing at least 675 workers. The company maintained an engineering office in Reno, Nevada.
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