Epic Aircraft - History

History

When the company was founded in 2004 it located in Bend, Oregon due to public incentives that were offered, including state loans and grants of US$1.3M. In return for the grants and loans Epic promised to create 4,000 jobs.

In September 2007, Indian billionaire Dr. Vijay Mallya intended to join Epic as a strategic partner. In April 2009 Rick Schrameck, CEO of Epic Aircraft, indicated that the investment deal with Vijay Mallya was on hold and it was never completed.

On 5 June 2009 Epic was named as defendant in a lawsuit filed with the United States district court by Blue Sky AvGroup, an Epic customer that had an aircraft under construction at the build center. The lawsuit alleged that Epic failed to meet its contractual obligations in completing an aircraft for Blue Sky. Blue Sky requested that a receiver be appointed for Epic, a move Epic opposed in court documents filed on July 2, 2009.

Epic was also named as plaintiff in July 2009 in a lawsuit against engine maker Williams International, claiming that the engine maker defaulted on a contract to supply engines for the Epic Victory program.

In January 2009 the company laid off 20 workers. General Manager Dave Hice indicated the company had hired based on projected expansion that had not occurred: "It's a very difficult decision. It's a large investment, training people in anticipation for increased sales, but that didn't happen. Sales haven't fallen off, but the increase hasn't happened."

In late June 2009 the company dramatically scaled back its operations and laid off all but 15 of its employees. The lay-offs primarily affected the aircraft build center, where customers worked on their own kits, in its Bend, Oregon plant and were attributed to "economic issues". The company indicated it was working to rectify the situation and that customers still had access to their aircraft under construction.

On August 8, 2009, the company's landlord ER1 LLC posted a notice indicating that they had "taken possession of the premises" claiming "a possessory lien on the personal property" due to Epic being in default on its lease.

By early September 2009 several additional lawsuits had been filed against Epic. These included "serious allegations about the conduct of company principals". In a sworn statement Chief Financial Officer David Clark said that Epic owed its customer builders an estimated US$15 million for parts and that the company had no money to pay those debts. Also in his sworn statement Clark alleged many financial irregularities and that company financial reports and practices "did not comply with generally accepted accounting practices". Other sworn statements by Clark and General Manager David Hice alleged that the company was a "chaotic financial environment over which CEO Rick Schrameck ruled exclusively". Hice further alleged many financial irregularities, including that the company missed its payroll in July 2004 and was only able to pay its staff using customer aircraft deposits from sales at AirVenture that same month. Hice also alleged that "On June 16th, 2009 I was terminated after Rick Schrameck physically attacked me."

By mid September 2009 CEO Rick Schrameck was removed by the board of directors from any "managerial or supervisory capacity" with Epic parent company Aircraft Investor Resources and the company voluntarily entered Chapter 11 bankruptcy, seeking to reorganize, find investors and continue kitplane production on a reduced scale. As a result of the bankruptcy filing customers with aircraft under construction at the company facility were permitted to remove their aircraft and parts.

In late November 2009 a bankruptcy hearing date was set for December 7 with four different unnamed companies, including one established aircraft manufacturer, expressing interest in purchasing Epic from Chapter 11 bankruptcy. That event did not result in a sale of the assets and the company moved to Chapter 7 liquidation. In March 2010 filed court documents showed that Harlow Aerostructures offered to buy the company's assets for US$2M effective March 30, 2010. The company was valued at US$20,295,000 at that time.

In the 26 March 2010 Chapter 7 auction, the state-owned China Aviation Industry General Aircraft Co. Ltd. was the highest bidder with a US$4.3 million offer, beating out a bid by the LT Builders Group, a group of seven aircraft owners with incomplete aircraft in the plant. The LT Builders Group offer was actually US$2.2M higher than the Chinese bid, but included US$4M in credit, whereas the Chinese bid was all cash. Due to the foreign buyer, the auction was held in two-parts, with Harlow Aerostructures as a reserve bidder that would acquire the assets if the US federal government does not approve the sale to the Chinese company. In a letter to the trustee the Chinese representatives indicate that their plan is to relocate "all assets...back to China to develop, manufacture and service general aviation and enhance the value of the aircraft models". Company lawyer Yan Yang stated however that the company may change its mind: "They want to enhance the value of the brand in this country. They're open to suggestions and working with people interested in the same goal." The hearing judge admonished the LT Builders Group for their bid describing it as "pathetic, useless, incompetent, unacceptable, garbage and fiction" but gave the group another chance to improve their position and reserved his decision on the final winner of the auction until 2 April 2010.

On 2 April 2010 the judge issued a judgement ordering China Aviation Industry General Aircraft Co. Ltd. to form a partnership with the LT Builders Group allowing the latter to run the Bend plant. The deal was completed by 11 April 2010, with the LT Builders Group agreeing to run the plant and market to North America, while the Chinese company would market to the rest of the world. The new company intended to reopen the Bend plant for builder-assist construction as well as pursue type certification of the Epic LT.

At AirVenture on 31 July 2010 CEO Doug King announced that the company was ready to take orders for the Epic LT, Escape and Victory kit at that time and that 11 aircraft were in plant, being completed by their owners.

Engineering LLC, a Russian company, purchased Epic in March 2012 and announced plans to type certify the Epic LT, something the original owners had started but never completed. As part of this plan the company entered into negotiations with Cessna in December 2012 to buy the former Columbia Aircraft plant that Cessna owns in Bend. The company indicated that it expects to hire 40-80 new employees in 2013 as part of the certification effort and to expand kit production.