Court documents from a mid-February hearing in New Zealand's High Court have revealed the financial position of Pacific Aerospace Limited (PAL) and concerns that the Civil Aviation Authority would revoke the companies certifications.
The hearing was to consider the application of parts supplier International Aviation Support to have a liquidator appointed to PAL over unpaid debts totalling $NZ1.38 million, and an outstanding tax bill of $NZ770,839.
PAL CEO Mark Crouch filed an affidavit stating that the company was unable to pay its debts.
Associate Judge Peter Andrew noted concerns that it would be difficult to find a buyer for the company if the CAA took action to revoke PAL's manufacturing certifications.
"The company’s assets are in jeopardy," Andrew said in his judgement. "The main asset of PAL is the intellectual property to design and manufacture aircraft. The ability to use that asset is wholly reliant on the certification referred to above from the CAA.
"I have noted that Mr Crouch has already informed the CAA that PAL is in non-compliance of the CAA Rules governing the grant of the certification from the CAA to manufacture aircraft. Because the CAA has now been advised of PAL’s insolvency it is simply a matter of time before the CAA revokes the certification given to PAL.
"The plaintiff hopes that with the appointment of an interim liquidator, that the CAA may consider delaying the revocation of the certification for PAL to enable a sales process to proceed with the interim liquidator."
PAL's certifications include the Fletcher, Cresco and P750XL, which are believed to make up 80% of the aerial agriculture aircraft in NZ. All would need to be grounded in the CAA revoked the certifications.
The CAA suspended PAL's certificates, but have allowed aircraft to keep operating unless a serious fleet-wide airworthiness issue was identified.
The court appointed local company Khov Jones as administrators.
At the time it went into liquidation, PAL was owned in equal shares by PAL and BIAC International, a Hong-Kong firm. BIAC had appointed four directors of which only one lived in NZ.
Crouch told the court that directors and shareholders had shown no interest in either injecting more capital into the company or liquidating. He said he beiieved control of the PAL needed to be taken away from "inactive" directors and shareholders.