MD Helicopters files bankruptcy, eyes sale to Bardin, MBIA-led group

By Sarah Lizee

Olympia, Wash., March 30 – MD Helicopters, Inc. filed Chapter 11 bankruptcy on Wednesday in the U.S. Bankruptcy Court for the District of Delaware, according to a press release.

MD was one if the companies controlled by Lynn Tilton’s Patriarch Partners, LLC and financed by her Zohar entities, six collateralized loan obligation funds that went bankrupt in March 2018.

Tilton was appointed as MD’s sole director in 2005 and became its chief executive officer in 2006. She later resigned from both positions in 2020. Since then, MD said it has been trying to find a buyer.

The company announced Wednesday that it has entered into an asset purchase agreement with a consortium led by Bardin Hill and MBIA Insurance Corp., creditors of the Zohar funds.

The creditor consortium has agreed to acquire nearly all of the company’s assets and provide new capital to strengthen MD’s financial position and support the company’s continued ability to manufacture and service helicopters.

MD said filing Chapter 11 provides a forum that will allow for a quick and orderly sale of the company, with the creditor consortium serving as the stalking horse bidder. The stalking horse deal is subject to higher or otherwise better offers, court approval and other customary conditions.

“Since last year, we have been exploring a potential sale of the company that would enable us to move forward with new ownership to support MD’s continued manufacturing operations and maintenance services long into the future, as well as deleverage our capital structure,” Alan Carr, director and chairman of the board of MD Helicopters, said in the release.

“After a thorough review of the options available to us, we believe this transaction and court-supervised process will help achieve our objective and create the best path forward for MD and all of our stakeholders.”

The company has received a commitment of about $60 million in debtor-in-possession financing from accounts managed by Bardin Hill and MB Global Partners. The new financing, together with cash generated from MD’s ongoing operations, is expected to support the business throughout the sale process.

The company is also seeking court approval to access the cash collateral of its secured creditors.

MD said it expects to continue its regular course of operations throughout the sale process and remains focused on serving its civil and military customers and working with suppliers as normal.

The company listed $100 million to $500 million in both assets and liabilities.

Its largest unsecured creditor is the Fraud Section of the Civil Division of the Department of Justice, based in Washington, D.C., with a $108.73 million litigation claim. This relates to a judgment placed on the company in 2021 that found MD had defrauded the U.S. military.

Latham & Watkins LLP is serving as MD’s legal counsel, Moelis & Co. LLC is serving as investment banker and AlixPartners LLP is serving as financial and restructuring adviser to the company.

The creditor consortium is advised by aerospace executives Ed Dolanski and Brad Pedersen.

The Mesa, Ariz.-based helicopter manufacturer filed Chapter 11 bankruptcy under case number 22-10263.

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