Hawker Beechcraft $2.3 billion of dismissed claims partially reversed

By Kali Hays

New York, March 31 - A federal court partially reversed the dismissal of whistleblower claims filed against Hawker Beechcraft, Inc. by Donald Minge and David Kiehl, seeking $2.3 billion of damages for alleged violations to the False Claims Act, according to a Thursday filing with the U.S. District Court for the Southern District of New York.

The district court remanded the adversary proceeding back to the bankruptcy court.

The district court claims that "the bankruptcy court erred" in its August 2013 dismissal of the proceeding, in that it failed to dismiss damages and penalties owed directly to Minge and Kiehl, and is therefore sending it back to the bankruptcy court for further consideration "consistent with this opinion," according to the filing.

The initial recovery sought for the damages sustained by the government totaled $2.3 billion, with a civil penalty of $3.8 million for FCA violations, and payment of legal costs.

After the company filed Chapter 11 bankruptcy in May 2012, Minge and Kiehl filed the adversary proceeding to exclude their claims from any dischargeable debts allowed through the company's Chapter 11 case.

The company took steps to have the debt discharged and had creditors file complaints with the bankruptcy clerk in its pursuit of a dismissal of the adversary proceeding based on claims that Minge and Kiehl lacked standing to assert claims on behalf of the government, their complaints were "time-barred" under bankruptcy rule and that they had failed to plead intentional fraud by the company.

The bankruptcy court dismissed the adversary proceeding regarding claims of FCA violations in August 2013 but failed to specifically address the claims for legal reimbursement, giving the "realtors standing to assert their complaint," according to the filing.

Hawker Beechcraft is a Wichita, Kan.-based manufacturer of business, special mission, light attack and trainer aircraft. The company filed for bankruptcy on May 3, 2012 under Chapter 11 case number 12-11873 and emerged from bankruptcy on Feb. 15, 2013.

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