Air Force One Supplier GDC Technics Files for Bankruptcy
April 27 2021 - 6:34PM
Dow Jones News
By Aisha Al-Muslim
Air Force One supplier GDC Technics LLC has filed for bankruptcy
and warned that it would lay off more than 200 employees after
Boeing Co. canceled its contracts.
GDC, a Boeing subcontractor working on government executive
fleets, filed for chapter 11 protection Monday in the U.S.
Bankruptcy Court in San Antonio. The Fort Worth, Texas-based
aerospace company valued both its assets and liabilities in the $10
million to $50 million range, according to court papers.
The decision to file for bankruptcy comes after Boeing and GDC
sued each other earlier this month over their business dealings in
building two new Air Force One aircraft, which would be used to
transport the U.S. president.
Chicago-based Boeing filed a lawsuit against GDC on April 7 in
Texas state court alleging GDC was roughly a year behind schedule
in completing interior work on the two presidential planes. The
delays caused by missed deadlines allegedly resulted in millions of
dollars in damages to Boeing and jeopardized work that is of
critical importance to the U.S. Air Force and the president, the
lawsuit said.
Boeing, responsible for designing and manufacturing the military
aircraft, hired GDC as a subcontractor to design and build the
interiors of the planes. Boeing also hired GDC as a subcontractor
on existing Air Force One aircraft to help refurbish the
interiors.
A Boeing spokeswoman said Tuesday that the company canceled the
contracts with GDC earlier this month "due to their insolvency and
failure to meet contractual obligations." Boeing declined to
comment on the bankruptcy filing.
GDC countersued Boeing on April 16, seeking at least $20
million. It alleged Boeing's mismanagement caused the delays in
completing the aircraft and that Boeing failed to pay what GDC was
owed for its work. It also alleged Boeing has damaged GDC's
reputation with the Air Force, its vendors and suppliers, and the
aviation industry.
"GDC's financial stress resulted from Boeing holding up in
excess of $20 million in payments that should be paid to GDC from
Boeing for changes directed by Boeing and performance under the
subcontracts," GDC said in the lawsuit.
GDC, which is owned by aviation investment firm Oriole Capital
Group, plans to continue operating while restructuring its
finances, said Oriole Managing Partner Hossein Mousavi.
"GDC Technics looks forward to emerging from this process with a
bright future and will diligently work through the legal process to
keep its well-earned reputation," he said in a statement
Tuesday.
Boeing is working to mitigate any impact to the work on the
aircraft, as well as to GDC's suppliers, a Boeing spokeswoman said
Tuesday. Boeing plans to either shift the work assigned to GDC to
new suppliers or perform it in-house, she said.
In 2018, Boeing received a $3.9 billion contract from the U.S.
Air Force to convert two new 747-8 aircraft into presidential jets
that would replace the existing Air Force One models. The planes
were to be delivered by December 2024.
The modification to the two 747-8 aircraft includes electrical
power upgrades, a mission communication system, a medical facility,
interior improvements and autonomous ground operations
capabilities. The work is being performed at a Boeing facility in
San Antonio, the company spokeswoman said.
As a result of losing the Boeing contracts, GDC said it
anticipated permanently cutting 223 jobs in San Antonio and Fort
Worth by May 9. The San Antonio facility is where the Air Force One
work was done.
"It is anticipated that most operations at the Fort Worth
facility will cease and that the San Antonio facility will close
due to the sudden and unexpected termination of a client contract,"
Brad Foreman, chief executive of the company, wrote in a letter to
the Texas Workforce Commission dated April 9.
GDC has hired law firm Wick Phillips Gould & Martin LLP.
Judge Craig A. Gargotta has been assigned the case, number
21-50484.
Write to Aisha Al-Muslim at aisha.al-muslim@wsj.com
(END) Dow Jones Newswires
April 27, 2021 18:19 ET (22:19 GMT)
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