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To be honest, this felt kind of inevitable. I never fully understood the appeal of a $400k toy that only the ultra-rich would consider. It's a small market because it's owner operated and generally those types of people have more passion/desire for a proper, mission capable airplane. So you need people with $400k throw away money and the willingness to learn how to fly it.

Wonder what happens to all the depositors?

Same topic in Babble Talk with more comments. But this is probably the most appropriate place to post.
https://www.beechtalk.com/forums/viewtopic.php?f=5&t=228348

it never had any real use except for play. to be a successful product it needed to be bigger etc.

here is one that looks very similar that is flying in new Zeeland and is supposed to be certifiable under MOSAIC rules

https://www.vickersaircraft.com/

It is big enough to carry two real people and stuff.

Very nice! It looks to be what the Icon wanted to be. The remaining question, as always, is price.

Didn't Icon originally want to sell the A5 for something closer to 100AMU? That is a lot closer to what the target demographic can afford and would want to pay.

Once they emerge from BK, I am considering taking few weeks off to run down to Tampa and get my SLSA rating. Hopefully the new owners will keep the flight school. I am wondering if they will sell to a foreign company.

Can we also kill this notion of “democratizing aviation”. May they both RIP.

A "foreign company" already controls ICON. A "foreign company" has been the primary investor in and lender to ICON. A "foreign company" will likely own 100% of ICON when the dust settles.

I posted the same thing in the Babble Talk - ICON thread:

It looks like the final step in a complete Chinese state take-over of ICON. Don't forget it was 2 years ago when ex-Boeing CEO Phil Condit, and former ICON CEO (and Founder) Kirk Hawkins, filed a lawsuit to prevent the Chinese state-owned (effective) majority company shareholder, Pudong Science and Technology Investment Inc. (PDSTI), from transferring technology to China. PDSTI owns 47% of ICON, is far and away the largest shareholder and "effectively" controls the ICON Board. The FBI got involved.

Subsequently the minority shareholders asked the Committee on Foreign Investment in the U.S. (CFIUS) to review PDSTI’s investment in ICON. CFIUS conducted a comprehensive review and investigation of PDSTI’s investment in ICON and informed the parties that it was clearing the investment without the need for mitigation. Although the minority shareholders lost they continued to proceed with a lawsuit against PDSTI. https://www.paulweiss.com/practices/litigation/litigation/news/icon-aircraft-shareholders-resoundingly-defeat-motion-to-dismiss-in-stolen-ip-derivative-action?id=45792

ICON wound up in this mess because Founder and then CEO Hawkins invited the Chinese in 2015 to invest in ICON. ICON Aircraft completed four rounds of equity financing from 2006 - 2013 (A round in June 2006 and its B round in July 2008 - both unknown $. A $25 million C round was closed in June 2011 and a $60 million D round was announced in June 2013. Due to management missteps ICON wound up needing more and more money. The Chinese invested in ICON in 2015 and again in 2017, at a time when ICON was in a difficult financial situation and in need of capital. PDSTI wound up owning 47% of the company at that time. The amount invested is unknown but given the size of prior investments it was probably at least $100 million for roughly half the company).

The news says that ICON continued to bleed losses and cash and since March 2020, issued another $170.4 million in unsecured notes, 54.6 percent of which came from Pudong Science and Technology Investment (Cayman) Co. Ltd., (PDSTI).

- $12.5 million loaned by PDSTI in March 2020, followed by another $23.9 million in January 2021. Lenders, primarily PDSTI, provided an additional $19 million during the course of 2022, and just under $50 million in 2023, all but $5 million of which was loaned by PDSTI.

Of the $170 million in Debt:

- $65 million—owed to East West Bank of El Monte, California. ICON owes a much larger sum—$105.4 million—to three lenders who issued 21 unsecured notes in recent years. Of that total, $93 million, came from the China Equity (PDSTI)

The Chinese are ICON's largest shareholder and largest Creditor. The Chinese control the Board.

Another $3.3 million is owed to Vendors.

All this on a company with $12 million in revenue.

Those that can access the Delaware case filings note that ICON hopes this will be a quick "Debtor in Possession" restructuring. The ICON press release says that they have " secured debtor in possession financing "

I suspect it is the Chinese that are providing the financing during bankruptcy. They hold most of the cards - Equity and Debt. They are in the drivers seat. The Chinese probably have already a pre-packaged restructuring plan with them owning 100%. The American shareholders and Founders will likely get hosed. Unlikely that anyone will offer enough to the Bankruptcy Court for ICON to muscle out the Chinese.

https://www.aopa.org/news-and-media/all-news/2024/april/04/icon-aircraft-files-for-bankruptcy-seeking-buyer

This would make a great college level study on how NOT to run a aviation company, it’s so horrible it’s almost like “impractical jokers business edition”

“So now that trying to sell it as a jet ski and crashing it with our senior leadership and killing a few high profile celebrities in our plane hasn’t helped sell aircraft, where should we get money from?”


“Wait wait…..tell him to ask…china lol”

Do they have any sales? All of this restructuring is pointless if they can't make and sell the planes profitably. They can as well just liquidate.

The executives will get a bonus to stay with the company, the employees will likely get screwed, the vendors will definitely get screwed, and the executives will get a golden parachute a few months down the road when they leave “to pursue other interests”. Those are the main points. Having a viable company that makes a viable product is not among them.

It's amazing investors never appeared to ask about why the money would be needed, or did any assessment on the total market potential for this product. It's an overpriced jet ski.

It reminds me of the Mooney owners in the late 90s. They had this bloated org chart of non-production employees to support a miniscule output each year, of a product that wasn't being improved upon in any meaningful way.

All the flashy promotions and booths at OSH, All the AOA hype, Magazine reviews and Ads, The controversial sales agreement, LSA petition for gross weight increase. High profile fatal accidents, Overseas investors, now bankruptcy. Woof. What a bunch of hype for the last 11 years or so. Hopefully now it will finally go away.

But would it ever have worked at all? With this, Eclipse, Mooney, Adam, Vans, all the foreign, domestic LSA startups, and others. I am amazed anyone outside company founders invest in aviation companies. In all this what newer since 1980 airplane companies have worked out without foreign investment?

170M for a LSA development. How in the world did they expect to sell enough product to even come close to a return. A study of where the money went and the saga should be documented for review by anyone starting a business.

The Vickers design listed in a previous post does not appear to have enough wing area compared to other similar size successful seaplanes. It's not how fast or range. It is what lake you can use, weight you can carry, ease of docking, simple to maintain.

Hard to beat a Supercub unless you need folding wings.

It is worse than you characterize. The $170 million that you highlight is only debt to cover the cash losses since March 2020 (about $40 million CASH LOSS per year). There was probably $90-100 million invested 2006-2013 in four (4) equity funding rounds. The Chinese (PTSDI) invested probably another $100 million 2015-2017 to buy 47% of the ICON.

All in invested funds are probably $350-400 million invested for a business that hemorrhages about $40 million cash loss each year.

Whoever buys this company from bankruptcy will need to pay $65 million—owed to East West Bank of El Monte, California. probably immediately. - I bet the loan is secured. The other lenders of $105 million will want something. The equity investors will get nothing.

Then the buyer will need to cover the daily cash loss to run the business (if it continues). History shows that cash losses are about $40 million per year on sales of about $12 million per year. You do the math. If they triple the approx. $400K price per plane they still wont break even. This is Dead Man Walking....

I think the entire Chapter 11....continue business..."The company intends to keep operations running as smoothly as possible throughout the restructuring process to minimize disruption. In a statement, Jerry Meyer, CEO of ICON Aircraft" is COMPLETE CRAP. I think this will be Chapter 7 liquidation.

In fact the Law360 website headline was

"A Delaware bankruptcy judge gave interim approval Friday to light-sport aircraft manufacturer Icon Aircraft to make use of $4 million of its desired $9 million bankruptcy funding as the company's Chapter...

Light-sport aircraft manufacturer ICON Aircraft filed for Chapter 11 protection in Delaware bankruptcy court with more than $170 million in debt and plans for an asset sale and liquidation."

Does anyone have a subscription to this? https://www.law360.com/bankruptcy-authority/articles/1822356

Anyone with a deposit is hosed.

I only find it hard to believe it took this long.

How many times will history repeat with the VTOL air taxis and flying car concepts?