Bankrupt aircraft-modification company GDC Technics may be better off liquidating, creditors say

Aircraft modification company GDC Technics has been in turmoil as it charted a course to eventually come out of bankruptcy or complete the sale of the company.

A group representing the creditors in the case said they would be better served if the company liquidated its assets in a Chapter 7 bankruptcy.

The group accuses company insiders of trying to appropriate – at the expense of creditors – any value that may remain in GDC.

GDC went bankrupt in April after Boeing Co. terminated it employment contracts on two Air Force One jets that carry U.S. presidents. GDC says its financial difficulties and filing for bankruptcy resulted from Boeing not paying its bills on time.

GDC listed $ 54.2 million in assets and 55.2 million in debt in a court file this month.

The company made its home in Port San Antonio before moving its headquarters in 2015 to Fort Worth. The company left the port last month after laying off 56 employees there in April.

The company’s departure ended its 17-year presence in the port, where it designed and installed chic custom interiors in wide-body jets for foreign heads of state, corporate figures and billionaires. .

Mohammed Alzeer is the chairman of GDC and also controls MAZAV.

Photo file

A predecessor company signed a 20-year lease at the port in 2004. Last month, Boeing assumed GDC’s lease for 312,340 square feet of hangar and workshop / manufacturing space and covered the unpaid rent. A bankruptcy case indicated that the port had an unsecured debt of $ 1.7 million.

Boeing continues work on Air Force One jets. This includes upgrades to the power supply, a communications system, a medical facility and an executive interior, a Boeing spokesperson said.

GDC recently filed an emergency request for $ 7.4 million in funding for its operations over an 18-week period.

The funding “will facilitate a successful reorganization or a going concern sale” of the business, GDC said in the motion.

The money would come from MAZAV Management, successor to MAZ Aviation, which acquired GDC in 2013. GDC was then known as Gore Design Completions.

SAAV Completions, a company owned by the Saudi Arabian Ministry of Finance, joined MAZ Aviation in the purchase, according to a bankruptcy filing.

Oriole Capital Group, a Los Angeles-based company investing in the aviation industry, announced in 2019 that it was part of a new ownership group at GDC. The group included MAZAV, led by GDC chairman Mohammed Alzeer.

The unsecured creditors committee, which has the power to investigate GDC, opposes the financing agreement with MAZAV.

The committee is made up of TranStar Aircraft Interiors of Arlington, Agent Technical of Colleyville, PAC Seating Systems Inc. of Palm City, Fla., And former GDC engineer Kingslea Stringham. The US trustee, who is part of the Justice Department overseeing the administration of bankruptcy cases, appointed the committee members.

Separately, Strigham sued GDC, alleging that it failed to give him and about 250 other former employees 60 days’ notice before their dismissal, as required by federal law.

The creditors’ committee says it is in the preliminary stages of an investigation that has already “uncovered substantial claims” against GDC insiders. Receivables may constitute the only value in the case of unsecured creditors, adds the committee.

“This is a group of insiders who bought out an insolvent company in a leveraged buyout, grossly under-capitalized it, and started dumping it to the dregs – while accumulating even larger balances on the backs of the debtor’s sellers, ”the committee said in a court filing Tuesday.

“These same insiders, who still control the debtor, are now seeking to arrogate to themselves the value that remains with the debtor, while protecting themselves from any responsibility or accountability,” he adds.

The committee has objected to various financing deals since the 2019 transaction. GDC has been forced into a series of short-term, high-fee loans, according to the committee.

For example, he says, one of GDC’s four members loaned the company $ 2.4 million for two weeks a year ago – and charged $ 480,000, or 520%. on an annualized basis.

GDC chief executive Brad Foreman explained why the company had not sought funding elsewhere to avoid the high fees, the committee said in its court file.

“We had no other source of loan,” Foreman said in a deposition, adding that GDC’s financial statements had not been audited. The statement was filed under seal but referred to in the committee’s court file.

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