Former Eclipse Aviation trustee must review Chapter 11 claims: judge

By Jim Witters

Wilmington, Del., June 5 - The Chapter 7 trustee for AE Liquidation, Inc. - formerly Eclipse Aviation Corp. - must conduct a review of all outstanding Chapter 11 administrative claims to prepare for distribution of proceeds at the appropriate time, a bankruptcy judge said during a June 5 status conference in the U.S. Bankruptcy Court for the District of Delaware.

Attorney Mark Minuti, representing creditor Computer Sciences Corp., called for the status conference to urge the court to move the case along more expeditiously.

Computer Sciences is owed $1.8 million for services performed post-petition, but before the case converted to Chapter 7 in 2009, Minuti said. He hoped the court would order payment of that claim.

He said Chapter 7 trustee Jeoffrey L. Burtch "is sitting on $7 million" and should pay Minuti's client, subject to disgorgement in the future.

Adam Singer, the trustee's lawyer, acknowledged that $7 million has been collected through preference actions brought by the trustee. But, he said, less than $6 million will be available for distribution after expenses are paid.

More importantly, Singer said, is a pending adversary action in which one employee is seeking class status to pursue a claim under the federal Worker Adjustment and Retraining Notification Act.

The trustee must retain the proceeds from the preference actions, because those are the only funding available to settle the WARN action, if the WARN claim is declared valid, Singer said.

He said he contemplates mediation of the dispute will occur in the fall.

Judge Mary F. Walrath instructed Singer to have the trustee review all the administrative claims remaining from the Chapter 11 case and determine which are allowed.

Taking that action now will help ensure a prompt distribution of the proceeds when the WARN action is decided, she said.

Walrath declined to force the trustee to pay Computer Sciences' claim before the WARN case concludes.

Singer said the trustee has concluded several preference actions and plans several more.

Eclipse, an Albuquerque-based aircraft manufacturer, filed for bankruptcy on Nov. 25, 2008. Its Chapter 11 case number is 08-13031.

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