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What's happening in CHC?

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What's happening in CHC?

Old 7th May 2016, 15:46
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Old 7th May 2016, 18:07
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Excuse me for a really unknowledgeable question here, but I'd like to know:

If a company goes through Chapter 11, is it very common to restructure in a way that effectively disowns the loyal shareholders who dared to stick around? Like, converting to new stock leaving the old stock to vanish?

I sold my CHC long ago but still hold a bit of helicopter stock so given the current off-shore situation I might as well learn about this stuff.
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Old 8th May 2016, 07:09
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Originally Posted by Krautwald View Post
Excuse me for a really unknowledgeable question here, but I'd like to know:

If a company goes through Chapter 11, is it very common to restructure in a way that effectively disowns the loyal shareholders who dared to stick around? Like, converting to new stock leaving the old stock to vanish?

I sold my CHC long ago but still hold a bit of helicopter stock so given the current off-shore situation I might as well learn about this stuff.
I wouldn't want to attempt to answer that question until the various filings are made, but there has been quite a bit of information regarding this buried in various financial filings.

There is a stark and ominous caution regarding the stock in the last filing.

As only 20% of the stock was publicly traded and that value has all but vanished, I would suggest there may potentially be some major battling over equity. There is already an investor lawsuit filed regarding the IPO, and those issues are US SEC regulatory issues.

Only time will tell if there is merit or substance to any of these claims.
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Old 8th May 2016, 07:56
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?

Questions:

1. Has CHC been placed in Chap 11, or simply applied for it?

2. If only an application, what are the timelines to get there?

3. Can the application be deemed unrealistic by the court, and therefore converted to a Chap 7?

4. Is the class action law suit against CHC put in abeyance due to the presumed approval of Chap 11?

5. Airlines having gone through this have in many cases sought rather stiff wage and benefits concessions from their workforce, is that out of the question here?
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Old 8th May 2016, 10:13
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Companies with leasing agreements with CHC must be concerned that bills are never going to get paid.

How will they continue (in the UK) with companies leasing hangars, survival suits, lifejackets??

If I had a contract with CHC, I assume I'd be writing off the last 5 months of unpaid bills and considering that I might as well look for business elsewhere. I'd be very concerned whether the next invoice was going to get settled.
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Old 8th May 2016, 10:34
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Shareholders more important than revenue generating employees, what an awesome way of doing business. There's a lot to be said for hiring quality people and looking after them, they will in turn look after your business. Keeping non revenue generating staff to an absolute minimum is essential in difficult times. first sacrifice in cost saving should be senior management bonuses
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Old 8th May 2016, 11:24
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Special 25
in the UK
It's been said a few times in this thread that the protection afforded by Ch.11 is not applicable to the European companies. So my take is it's business as usual with regard to old and new bills in the UK.

It is simple isn't it?

Last edited by Apate; 8th May 2016 at 12:23.
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Old 8th May 2016, 11:48
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Probably not simple at all! It's not applicable to CHC Scotia - but there are plenty of European companies on the petition (CHC (Netherlands), Heli-One (UK) and on and on)

I know nothing about Ch 11 and so idle curiosity led me to have a look at the petition. I notice that the list of the top 30 unsecured claims has a UK company at No 2:

Name: McGrigors Pension Trustees Limited
Address: 141 Bothwell Street, Glasgow, G2 7EQ

Pensions

Liquidated

Unsecured Claim - $66,440,996


So does that mean that a pension pot is going to lose $66m? Somebody please educate me.

Makes the $5m-ish that they owe to Finmennica, AH and Sikorsky look like loose change.

I just hope that the incompetence of the bigwigs does not turn into financial pain for the worker bees. Oh sorry, I forgot - it's all the fault of the leasing companies.
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Old 8th May 2016, 12:22
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Ed, my guess would be that this is a pension deficit which CHC is legally liable to meet. Quite how Ch.11 would affect this liability, which is tied to UK legislation, I ain't gotta clue.

Presumably the deficit has been underwritten by the US company, hence its listing on the filing. However this wouldn't excuse CHC Scotia of it's liabilities, or would it?
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Old 8th May 2016, 12:47
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Originally Posted by Mitchaa View Post
Rotor Rooter, are you a pilot, engineer or someone that works in the legal departments of a leasing company?

CHC have confirmed that they are returning upto 100 airframes over the next couple of months due to their inability to drive down costs with their lessors. Chapter 11 allows them to do this with full protection so a fleet reduction to around 140 aircraft. They also said they will transfer $1bn of their long term debt into equity in their company. CHC have also confirmed that CHC Scotia / Ireland and Den Helder are companies within their own right and in the event of the main group entering Ch7 Bankruptcy they will survive.

You know better?
I am certainly no lawyer (or accountant, for that matter) and have no association with the leasing business. I have been trained, licenced and involved with just about everything you could possibly do in the global helicopter business and in every role from top to bottom. I can't imagine anything I've ever done as a career that could be more satisfying.

Chapter 11, Section 1110 of the bankruptcy law contains specific provisions dealing with aircraft leasing and financing. I am neither qualified or intending to interpret the law or the applicable case law that might determine the outcome in this particular instance. Chapter 11 is a relatively simple concept, but an extremely complicated, detailed and expensive process. It keeps an incredible number of highly qualified lawyers and accountants in work for their entire lives. Everyday somebody new is going broke!

Of course, without seeing the actual lease contracts, we have no idea what additional remedies or conditions may have been agreed to within the contract. What has been disclosed is that in the covenants, a default automatically triggers cross defaults consisting of accelerated payments, or other payment demands on all then other secured assets. Unleashing that Tsunami of cash demand will simply destroy the company, as none of it is immediately visible or on the books. In business you often have to assign just about everything you own to secure financing or credit - only a really tough deal if it all goes wrong.

I know nothing better, but I am confident that the law is neither simplistic nor a get out of jail free card.

A lot more will become apparent once the filings are completed. They are huge packages and make interesting reading. This filing wasn't written in the last week, everyone involved has been busy for a long time.

CHC have taken the only option open. They have a plan, they have excellent advisors and a strong leadership team and board support. They also have great employees who want the company to survive, and so long as they keep it all together and keep the support of the workforce, they may well succeed.

As you noted, it may be a very different organization at the end of the process.
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Old 8th May 2016, 13:48
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Ed

I just hope that the incompetence of the bigwigs does not turn into financial pain for the worker bees. Oh sorry, I forgot - it's all the fault of the leasing companies.
Whether its the bigwigs or the leasing companies, 13% cost of money on an aircraft lease is extortion in today's market.
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Old 8th May 2016, 15:05
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Extract from the Court document showing all the companies covered by this petition:

On the date hereof (5 May) , each of the affiliated entities listed below filed a voluntary
petition for relief under chapter 11 of title 11 of the United States Code in the United States
Bankruptcy Court for the Northern District of Texas. The Debtors have filed a motion requesting
that the chapter 11 cases of these entities be consolidated for procedural purposes only and
jointly administered pursuant to Rule 1015(b) of the Federal Rules of Bankruptcy Procedure.

CHC Group Ltd.
6922767 Holding SARL
Capital Aviation Services B.V.
CHC Cayman ABL Borrower Ltd.
CHC Cayman ABL Holdings Ltd.
CHC Cayman Investments I Ltd.
CHC Den Helder B.V.
CHC Global Operations (2008) ULC
CHC Global Operations Canada (2008) ULC
CHC Global Operations International ULC
CHC Helicopter (1) S. r.l.
CHC Helicopter (2) S. r.l.
CHC Helicopter (3) S. r.l.
CHC Helicopter (4) S. r.l.
CHC Helicopter (5) S. r.l.
CHC Helicopter Australia Pty Ltd
CHC Helicopter Holding S. r.l.
CHC Helicopter S.A.
CHC Helicopters (Barbados) Limited
CHC Helicopters (Barbados) SRL
CHC Holding (UK) Limited
CHC Holding NL B.V.
CHC Hoofddorp B.V.
CHC Leasing (Ireland) Limited
CHC Netherlands B.V.
CHC Norway Acquisition Co AS
Heli-One (Netherlands) B.V.
Heli-One (Norway) AS
Heli-One (U.S.) Inc.
Heli-One (UK) Limited
Heli-One Canada ULC
Heli-One Holdings (UK) Limited
Heli-One Leasing (Norway) AS
Heli-One Leasing ULC
Heli-One USA Inc.
Heliworld Leasing Limited
Integra Leasing AS
Lloyd Bass Strait Helicopters Pty. Ltd.
Lloyd Helicopter Services Limited
Lloyd Helicopter Services Pty. Ltd.
Lloyd Helicopters International Pty. Ltd.
Lloyd Helicopters Pty. Ltd.
Management Aviation Limited


As I understand it CHC Scotia is 49.9% owned by CHC and 50.1% owned by EEA helicopter operations BV. I believe this was a legal arrangement to allow it to hold European AOCs? Interesting that if you google the first name on the above list '6922767 Holding SARL', it directs you to a list of its subsiduaries including CHC Scotia and EEA helicopter operations BV. This suggests to me that the European companies ARE involved in this Chapter 11 filing.

Several posters have said that the filing is not applicable to the European companies. Did I read this wrong?

Last edited by Max Contingency; 8th May 2016 at 15:26.
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Old 8th May 2016, 19:21
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100% not affected just because management say so?
Just proven otherwise.
Mitchaa might be right in the fact that normal business (needs) to go on in all profit making subsidaries.
These subsidaries will most probably survive and continue to go on either in a new CHC or as a sold off entity.
To be included in the Chapter 11 might have the advantage that they can get rid of their idle lease airframes (if not leased for them by another, US-registered?, entity)
Furtheron Chapter 11 makes it possible to actually continu As Usual As Possible.
Pay the salaries and Sub-contractor bills (if the actual cash is still available).
That would not be possible in a Chapter 7 bankruptcy.

I wish all CHC employees strength and the best.
For the profitable subsidaries most of their jobs will probably there.
To say 100% unaffected....
But is the only thing management can say to affect that the only thing the employees can do now to help is indeed to battle on
AUAP

SLB
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Old 8th May 2016, 21:14
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CH 11 will be measured in years not months & that's only if they get the Green Light.
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Old 9th May 2016, 14:54
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180 days

Originally Posted by buzz66 View Post
CH 11 will be measured in years not months & that's only if they get the Green Light.
Ch 11 is normally 180 days
But perhaps it can be extended?

SLB
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Old 10th May 2016, 13:47
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SLB, the stated target by CHC to complete the process is 6 months. There is no official time limitation for reorganization, it takes as long as it takes, but everyone is keen for it to be completed due to the expense and hassle.

Some interesting reading in the filing. http://www.kccllc.net/chc/document/1...05000000000044

The near-term returns include approximately;
16 Sikorsky S-76
18 Airbus AS332
16 Sikorsky S-92
20 Airbus H225
1 Airbus EC155
19 AgustaWestland AW139

Anyone calculated the current value of each model with these numbers hitting the marketplace in an already saturated and over-supplied market?

And some reality;

The process of rejecting the Leases is extremely complicated, particularly when rejecting and returning approximately 90 helicopters in a very short period of time. One of the difficult aspects of this process is addressing the standard practice in the helicopter industry of “pooling” of helicopter parts, including engines, across an operator’s helicopter fleet as well as with third-party MROs and such MROs’ customers’ helicopter fleets.
20. Requiring CHC to return with each helicopter the Original Equipment would be monumentally burdensome, expensive and disruptive to CHC’s business, inasmuch as this process would require CHC to ground and remove all affected helicopters from revenue generating operations much earlier than would otherwise be necessary in order to remove the then affixed engines, transport each removed engine to the location of the helicopter subject to the applicable lease, and replace each removed engine with the engine identified in the applicable lease, assuming such engine is even currently in CHC’s possession as part of CHC’s engine pool. Thus, the operations and maintenance schedules for each affected helicopter would be disrupted, thereby adding to the complexity, burden, expense and loss of revenue. In addition, with respect to any Original Equipment installed on a helicopter that is no longer in CHC’s fleet or is now part of an MRO’s engine pool, it may not be possible for CHC to reacquire such Original Equipment to return to the applicable Lessor, since such engine may be installed and operating in the fleet of another operator and title to such engine would have been conveyed by an original equipment manufacturer (“OEM”) or MRO, as the case may be, to such operator.
The burden, expense and disruption to CHC’s business and fleet operations would be multiplied significantly given that 44 helicopters are being returned as part of this motion and an additional approximately 45 helicopters are expected to be returned in the very near term, with potentially additional helicopters to be surrendered and returned in the medium term as CHC continues to review its fleet needs.
It is worth reading the filing if you still think that the process is simple or that the return of the aircraft is easy or straightforward, look where they are located, and that in short order they will not be maintained or insured and they will be charged rent for continued storage. CHC in return is requesting relief from the original delivered engine configuration by Serial Number, perhaps not unreasonable, but subject to a response from the individual lessors. There are always two sides to every story.

Unbelievable amount of work to be undertaken there, just from the sheer numbers of aircraft and the varied locations around he globe. Took a huge amount of work to build and will take an immense amount to deconstruct.
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Old 10th May 2016, 15:02
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Strong recommendation to read the Chief Restructuring Officer's submission to the court.

http://www.kccllc.net/chc/document/1...05000000000014

Details all the financials in their gory details, article 27 onwards.

Next key date is 6 Jun, second day of hearings.

All court submission are here.
http://www.kccllc.net/chc/document/list/4290

Last edited by nowherespecial; 10th May 2016 at 15:04. Reason: Add second link
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Old 10th May 2016, 19:17
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Okay i am corrected on the Ch11 period.
Just thought so because this was the 3rd case of Ch 11I recently encountered were the 180 days were mentioned.

Concerning the state of the airframes which are being returned:
This problem also applies when a lease would end at normal term.
All major parts have been changed out and have different time till next overhaul.
I assume provisions for this have been made in all aircraft leases?
I am sure there are some experts who earn a good salary by detailed assesment of depriciation?
But yes it will be a paper mess to sort out.

SLB
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Old 11th May 2016, 03:17
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Mitchaa. The verbiage there is a direct quote from the filing. Not touching the aircraft being returned would be the normal course of action. CHC have petitioned the Court to permit the aircraft to be returned as is. This has not been approved by the Court at this time. Maybe the Lessors will have no issue with this if an adequate betterment/detriment process is applied?

slb. No one wants to ever get into this position, and desperately wants to get out of it as soon as possible. You need to set a target entering into any activity, I think that is a good, realistic and achievable time to hit. At least in the beginning.
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Old 12th May 2016, 13:16
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Trouble in (offshore) paradise

From 2 days ago.

Bristow Group: Strong Sell Due To Misleading Behavior, Looming Covenant Violation, And Likely Bankruptcy - Bristow Group Inc. (NYSE:BRS) | Seeking Alpha

Might as well post it on this thread as most of us are taking about the overall state of the industry.

A couple of glaring omissions by the author (not talking about fleet utilisation and clearly knowing nothing about valuing different types and sizes of helicopters) but overall paints an interesting view on the UK SAR contract which appears to be bleeding BRS dry of cash.

Perhaps CHC filing first has been a master stroke? Reminds me of this:
https://www.youtube.com/watch?v=ag14Ao_xO4c

CFO from Enron. Really?!

Over to the floor for discussion/ tearing apart.

Last edited by nowherespecial; 12th May 2016 at 13:16. Reason: added timeline
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