Hawker Beechcraft Inc.’s effort to exit bankruptcy was disrupted after a judge refused to approve part of the aircraft manufacturer’s restructuring plan.
U.S. Bankruptcy Judge Stuart Bernstein in Manhattan said at a court hearing today that he would approve the plan while rejecting terms for a Hawker unit that he said conflicted with bankruptcy laws.
“The company is reviewing the relevant part of the plan and will decide how best to address the judge’s concerns,” Justin Dini, a Hawker spokesman, said in an e-mail.
The proposed plan would swap debt for equity and hand ownership of Hawker to creditors. The Wichita, Kansas-based company filed for bankruptcy in May, citing lower demand for private jets after the recession and reductions in U.S. defense spending.
Hawker sought court approval for the plan after a $1.79 billion sale to Superior Aviation Beijing Co. collapsed in October.
Bernstein’s objection stemmed from the bankruptcy plan’s treatment of equity in the subsidiary, Hawker Beechcraft Corp. The unit is an “operating entity,” Ross Kwasteniet, a Hawker attorney, said at the hearing.
The case is In re Hawker Beechcraft Inc., 12-11873, U.S. Bankruptcy Court, Southern District of New York (Manhattan).