What's happening in CHC?

[industry insider]

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.

[Max Contingency]

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.à r.l.
CHC Helicopter (2) S.à r.l.
CHC Helicopter (3) S.à r.l.
CHC Helicopter (4) S.à r.l.
CHC Helicopter (5) S.à r.l.
CHC Helicopter Australia Pty Ltd
CHC Helicopter Holding S.à 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?

[Self loading bear]

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

[buzz66]

CH 11 will be measured in years not months & that's only if they get the Green Light.

[Self loading bear]

180 days

Originally Posted by buzz66

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

[rotor-rooter]

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.

[nowherespecial]

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

[Self loading bear]

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

[rotor-rooter]

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.

[nowherespecial]

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.

[rotor-rooter]

Very interesting link there, nowherespecial. I really can't comment on the specifics, without further research. Whilst the fundamentals that have driven these businesses into this situation are very different, and to be quite clear, they're at very different stages of the cycle, the risks are almost identical.

This is precisely the type of situation I noted earlier, where Operators may be forced into Chapter 11 bankruptcy, simply to escape from leasing covenants and cross defaults. With the scale of the number of surplus leased aircraft across all operators, the potential for this is very real: every operator may be at risk of being bankrupted solely by their lease and other financial/credit commitments. The next stage is that the Lessors are going to suffer huge exposure from this and may end up in the exact same situation, Chapter 11 protection.

With the 225 issue still unresolved and the continuing depressed state of the O&G business, if a recovery doesn't start moving by Q4, there is a real potential for a meltdown in the entire offshore helicopter business and associated leasing, manufacturing and MRO sectors.

[Fareastdriver]

I can remember the days when an engineer came out with a drill and a riveting gun; removed a plate bleating about some bank or suchlike and replaced it with a plate that said 'Owned and Operated by Bristow Helicopters'.

After the Old Man went the accountants screwed the company into the ground.

[Apache Pappy]

How long do you think it will take for CHC to start negotiating pilot and mechanic wages down? They are already being paid in an under valued Canadian Currency.

[rotor-rooter]

As this process moves into the real Company restructuring phase, sadly it gets really tough for the employees as the management of a downsized operating structure leads to the inevitable reduction in headcount. Payroll and benefits are a huge portion of the operating cost, and can be predicted in a precise and simple calculation. Equally easy, is to calculate the immediate savings that can be achieved by by reducing headcount and paying required severance packages.

Unfortunately, this process is a simple and required part of the restructuring goal;

https://www.kccllc.net/chc/document/...13000000000012

13. Accordingly, by this Motion, the Debtors are requesting authority to
continue the Severance Policy, including the payment of the Statutory Severance and Benefit Payments and CBA Severance Payments. As part of the restructuring process, the Debtors expect to pay, in the aggregate, up to approximately $9,000,000 for Statutory Severance and Benefit Payments and CBA Severance Payments to approximately 210 employees, the majority of which are covered under collective bargaining agreements in Australia and Canada, and none of whom are “insiders” as such term is defined in section 101(31) of the Bankruptcy Code.3

The amount of severance an employee receives will ultimately be determined on a case-by-case basis pursuant to the applicable law in the employment jurisdiction, the collective bargaining agreement, if any, and will also depend on the employee’s position with the Company and the nature of the respective employee’s severance payment.

The cash demands for the legal side of the bankruptcy are a huge but essential part of such a complex undertaking - they are all detailed in the Court filings if you are so inclined to review them.

This is the sad and ugly side of this situation. Loyal and hardworking employees losing their livelihoods through an outcome that they had no part in creating or influencing.

https://www.kccllc.net/chc/document/list/4290

[lowfat]

average of about 430000 dollars US redundancy pay

Better than bristows recent offer of 10000 pounds GB.....

Just saying

($43000)

[Outwest]

430000 dollars US

!!!!!

Holy cow!!! I guess I got short changed a whole bunch ;-)

[lowfat]

relax ladies its a typo 43000....

[Holy Moly]

Sure it's not 4,300 USD?

[Outwest]

Well I can tell you no one at Global got $43,000 USD in severance pay.

[RyRy]

Even $43,000 CDN would have been nice!