CASE SUMMARY: Aerospace Manufacturer GDC Technics Seeks to Restructure in Wake of Boeing’s ‘Abrupt,’ ‘Improper’ Termination of Contracts Related to Air Force One

Relevant Documents:
Voluntary Petition
20 Largest Unsecured Creditors
First Day Declaration
DIP Financing Motion
Cash Collateral Motion
First Day Hearing Agenda

Summary
GDC Technics is an aerospace manufacturing and engineering company which recently had primary contracts with Boeing
Filed in the wake of Boeing’s alleged “abrupt, unilateral, and improper” termination of contracts with the debtor
Seeks to restructure around its remaining business lines; case would be funded with $500,000 of DIP financing from indirect membership owner MAZAV Management

GDC Technics, LLC, a Fort Worth, Texas-based aerospace manufacturing and engineering company which recently had contracts with Boeing to update and refurbish the interiors of Air Force One and engineer interiors for the next generation Air Force One aircraft, filed for chapter 11 protection on April 26 in the Bankruptcy Court for the Western District of Texas. The debtor seeks to “restructure around its remaining business lines to emerge from bankruptcy right-sized and prepared to pursue its best opportunities while preserving jobs for those employees the GDC will need to return to profitable operations.” The debtor notes that its connectivity business “may provide significant value that can be used to provide meaningful distributions to creditors in this case.” For access to the relevant documents above as well as our First Day by Reorg team's coverage of all U.S. chapter 11 cases filed since 2012 with over $10 million in liabilities including the GDC Technics chapter 11 filing Request a Trial here.

The case would be funded with $500,000 in DIP financing from MAZAV Management, LLC, which “holds both an indirect membership interest in the Debtor through its partial ownership of Oriole Aviation, LLC, the Debtor’s sole member, and a participant in Investco, in which capacity MAZAV Management, LLC also serves as prepetition lender to the Debtor.”

The first day hearing has been scheduled for tomorrow, Tuesday, May 4, at 2:30 p.m. ET.

The company’s prepetition capital structure includes:

• Secured debt:
  
  
  
  • GDC Investco, LP term loan: $19.4 million (including interest)
  
  
  
  


• Unsecured debt:
  
  
  
  • Boeing notes: $6 million (including interest)
  
  
  • General unsecured debt: $35 million (“substantial portion” of which relates to Boeing contracts that GDC says it anticipates Boeing may satisfy in full or in part)
  
  
  
  

The term loan was entered into with Oriole Aviation, LLC, the debtor’s sole member, and the debtor guaranteed the payment. GDC Investco sold participations in the debt to “the other equity investors in ORAV (i.e., Mazav Management, LLC and Oriole Capital Group LLC).”

The Boeing notes are a result of Boeing agreeing to loan the debtor money (on March 10 and again on April 6) in “an apparent effort to address Boeing’s late payments and mitigate the growing liquidity crisis GDC was experiencing as a result of Boeing’s refusal to pay.” The funds were used to pay employee salaries and payroll and vendors directly engaged in servicing the Boeing contracts.

The company attributes the bankruptcy filing to Boeing’s “abrupt, unilateral, and improper” termination of contracts with the debtor. According to GDC, on April 7, Boeing notified the company it was terminating the contracts and “seven hours later” sued the debtor in Texas state court. Boeing has alleged that GDC defaulted under the Boeing contracts because it is financially insolvent, but the debtor counters that the “cause of GDC’s financial stress is Boeing’s refusal to pay over $20 million in payments that should be paid to GDC from Boeing for workscope additions and changes directed by Boeing and GDC’s performance under the Boeing Contracts.” Boeing obtained a temporary restraining order requiring GDC to return various materials, and GDC says it has complied, but has also filed a counterclaim for breach of contract, business disparagement and for GDC’s attorney’s fees.

The debtor says it has taken steps to right-size its business, including the termination of more than 200 employees that were solely or primarily engaged in servicing the Boeing contracts. In mid-April, the debtor also retained Carl Moore as CRO to navigate the debtor’s “new reality of sharply reduced operations and headcount and concomitantly reduced revenues.”

The debtors are represented by Wick Phillips Gould & Martin in Dallas. The case has been assigned to Judge Craig A. Gargotta (case no. 21-50484).

Background

GDC, founded in 2000 as Gore Design Completions, is a global aerospace company with extensive expertise in engineering & technical services, modifications, electronic systems, research and development and maintenance, repair and overhaul services. GDC has a long-standing relationship with Boeing that began in 2016, when the two parties entered into contracts for GDC to perform maintenance upgrades on Air Force One, followed by further contracts in 2018 for GDC to design, engineer and build interiors for the next-generation Air Force One contract. GDC was also contracted for similar services with respect to aircraft for the Indian Head of State. Boeing contracts accounted for approximately two thirds of GDC’s workforce and an equivalent amount of the debtor’s revenue as recently as April 2021.

The company established its first facility in San Antonio in 2007 and “rapidly” grew its business in aircraft completion contracts. In 2013, Gore Design Completions was acquired by a partnership led by MAZ Aviation, a predecessor of MAZAV Management, LLC, and SAAV Completions, LLC. Following the 2013 acquisition, GDC changed its name to GDC Technics to reflect its new technology-focused strategy. Along with a name change and “significant” investments, the business was expanded to further support customers throughout the world. This included moving the headquarters to Fort Worth, Texas, in 2015 and acquiring a full-service engineering firm with offices in Germany, the United Kingdom and Canada, which later became known as GDC Engineering.

In February 2019, SAAV relinquished its GDC ownership interests, which were subsequently acquired by Oriole Aviation LLC, which remains the debtor’s indirect ultimate parent. Oriole is in turn owned by GDC Investco LP, Mazav Management LLC, Nabil Barakat, and Oriole Capital Group, LLC. The company’s corporate organizational structure is shown below:

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The debtor has permits from the Federal Aviation Administration and the European Aviation Safety Agency, each of which permit GDC to certify certain aircraft projects.

Generally, GDC participates in major new aircraft engineering development processes, develops engineering solutions and certifications on existing aircraft and performs modification and completion work for “VIP/VVIP, Head-of-State,” commercial and military customers on a variety of aircraft ranging from upper business jets to both narrowbody and wide-body aircraft. The company says it leverages its extensive research and development activities to provide cutting-edge electronic systems for all types of aircraft and is dedicated to the Department of Defense and government aviation in providing mission-critical communication, engineering and integration services.

The debtor's largest unsecured creditors are listed below: