Saturday, November 7, 2009

NBAA 09: Eclipse Aviation Sue former Officers, Directors and Employees

A lawsuit was filed on October 9, 2009 in New Mexico District Court on behalf of plaintiffs SM Aircraft Leasing and 136 other Eclipse 500 deposit holders against defendants Vern Raburn, plus other former Eclipse Aviation directors, officers and senior employees, seeking unspecified damages resulting from Eclipse's failure to deliver aircraft they ordered or return their deposits.

The suit, filed by attorney Gregory Chase of Albuquerque's Shapiro Bettinger Chase LLP, alleges that this resulted from the defendants being involved in "negligent representation, negligent failure to oversee and control, constructive fraud, breach of fiduciary duties, civil conspiracy and violations of the New Mexico Unfair Practices Act".

The $75-million D & O insurance policy is a main target of the lawsuit, according to one of the plaintiffs and one of the defendants. But, individual defendants also could be held liable for additional damages. It is likely that the plaintiffs will seek both compensation for actual loss of their cash deposits for new Eclipse 500 aircraft that were never delivered, as well as punitive damages against the defendants.

One plaintiff told Aviation Week that Chase will collect at least one-quarter of any settlement or court judgment. However, Hub International, the lead insurer for Eclipse Aviation before its insolvency, and other high net-worth defendants, are likely to fight the case in court, if a quick and reasonable settlement cannot be reached. If the case does go to trial, final resolution of the matter might not be achieved in less than five to seven years, according to one defendant.

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