Incora files bankruptcy, cites Covid-19 aftermath, noteholder lawsuits

By Sarah Lizee

Olympia, Wash., June 1 – Wesco Aircraft Holdings, Inc., which does business as Incora, and 43 affiliates filed Chapter 11 bankruptcy on Thursday in the U.S. Bankruptcy Court for the Southern District of Texas to improve its capital structure and position the business for long-term growth, according to a press release.

Raymond Carney, the company’s chief financial officer, said in court documents that Covid-19 occurred just as Incora was formed through the consolidation of Wesco, an aerospace hardware and service provider, and Pattonair, a provider of C-class parts for civilian aircraft engines.

In March 2022, the company entered a recapitalization transaction that was sponsored by most of its secured noteholders and supported by strong majorities across the capital structure.

Though Incora’s financial performance improved following the transaction, the company was set back by the significant disruption in the global supply chain, critical labor shortages, and the extended closure of the Chinese markets following Covid-19.

Carney said that while the company was addressing these operational challenges, some unsecured noteholders filed suit in the Supreme Court of the State of New York against Incora and some of its noteholders to unwind the 2022 transaction.

This action was followed by a similar action naming only Incora’s noteholders and affiliates, also in the New York Supreme Court.

“These cases have caused yet another drain on Incora’s financial resources (including on account of Incora’s indemnification of the parties that participated in the 2022 transaction) and distraction for its management team and key employees at a time when focus on operations and reorganization could not be more critical,” Carney said in court documents.

The CFO said Incora has managed to keep its business sound and continues to be a reliable source of inventory for its customers, but it can’t generate enough cash to meet its existing obligations, including interest payments on its notes that became due on May 15.

To fund and preserve its operations during the Chapter 11 process, Incora has lined up a $300 million debtor-in-possession note facility to provide the company with the necessary liquidity to operate as usual as it works to improve its balance sheet.

The financing is being provided by the company’s 2026 first-lien noteholders. Wilmington Savings Fund, FSB is the DIP agent.

The company has filed customary motions with the bankruptcy court intended to allow Incora to maintain normal operations and fulfill its go-forward commitments to customers, vendors and employees.

In its petition, the company listed 25,000 to 50,000 creditors, $1 billion to $10 billion in assets and $1 billion to $10 billion in liabilities.

Its largest unsecured creditors are BOKF, NA, based in Denver, with a $337.28 million 9% notes due 2026 claim, a $176.77 million 8˝% notes due 2024 claim and a $104.13 million 13 1/8% notes due 2027 claim, PPG Industries, based in Pittsburgh, with an $11.12 million trade payable claim, and Gulfstream Aerospace, based in Savannah, Ga., with an $8.72 million customer programs claim.

Incora is advised by Milbank LLP as restructuring counsel, PJT Partners as financial adviser and Alvarez & Marsal as restructuring adviser.

Based in Forth Worth, Incora is a provider of comprehensive supply chain management services to the global aerospace and other industries. The Chapter 11 case number is 23-90611

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