Aveos to begin liquidation of assets; CCAA restructuring not possible

By Caroline Salls

Pittsburgh, March 21 - Aveos Fleet Performance Inc. said it plans to begin asset liquidation after an "11th-hour offer" submitted by its principal customer did not appropriately meet the company's challenges.

According to a company news release, a restructuring under Aveos' Companies' Creditors Arrangement Act case is not possible.

The company said it has ceased its operations and terminated the employment of about 1,300 employees across Canada.

"For some time we have attempted to work for a consensual agreement with Aveos' principal customer," chairman of the board Eugene I. Davis said in the release. "At this point, we have exhausted all measures.

"Their draft proposal received late yesterday evening did nothing to address the many issues previously discussed with them, and was unacceptable to us and our secured lenders.

"The company had no viable option but to cease operations."

As previously reported, Air Canada said Tuesday that its offer of $15 million in emergency financing was rejected by Aveos.

If accepted, Air Canada said the $15 million debtor-in-possession financing could have helped stabilize Aveos for the benefit of its employees and stakeholders and supported an orderly restructuring.

According to Air Canada's March 20 release, this stabilization would have permitted Aveos to reopen some of its facilities and recall some of its employees, which would have allowed Air Canada to provide additional maintenance work to Aveos.

Air Canada said it believes that Aveos has failed to act in the interests of its employees, customers and other stakeholders by abruptly abandoning its business while other viable options to closure were available.

Aveos said it was forced to file for CCAA protection, in part, because of uncertain work volume across its business lines from its principal customer.

Since the beginning of the year, the company said its principal customer reduced, deferred and cancelled maintenance work, which resulted in roughly $16 million in lost revenue in less than two months.

Aveos Fleet Performance Inc. is a Montreal-based full-service maintenance, repair and overhaul provider to the aviation industry.

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