Nordam Could Emerge From Bankruptcy This Year

Gulfstream plans to step in the G500 nacelle production program.

Nordam could soon resolve the lawsuit with Pratt & Whitney over the nacelles it manufactures for the Gulfstream G500 and G600 and emerge from bankruptcy in the next few months.

It filed for bankruptcy protection on July 22, stemming from the burden resulting from the conflict over these nacelles.

In a motion filed on Sept. 4, Nordam outlines a Global Resolution that would resolve all issues to the PW800 program, improve Nordam’s liquidity and business operations, and “facilitate the debtors’ ultimate emergence from Chapter 11 by eliminating potentially the largest contingency in the Chapter 11 cases—namely, treatment of claims arising from or related to the LTPA,” which is the nacelle purchase agreement between Nordam and Pratt & Whitney Canada dated Oct. 18, 2010.

As part of this agreement, Gulfstream will buy “certain program assets” for the PW800 program and provide interim funding that would allow Nordam to resume production of the nacelles.

The agreement also calls for Nordam and Gulfstream to:

* Enter into a shared service agreement that transitions control of the PW800 nacelle program to Gulfstream and provide services and support that Gulfstream requires to restart the PW800 program at a Nordam facility.

* Nordam will sublease one of its facilities in Tulsa to Gulfstream to operate the program.

* Gulfstream will license and sublicense some of Nordam’s intellectual property for the program.

If a judge approves interim funding at a U.S. Bankruptcy Court hearing on Sept. 6, Nordam could resume the G500 nacelle programs by Sept. 10, according to Nordam. Gulfstream would not say when it expects to receive the first nacelles after manufacturing resumes.

The FAA granted type and production certification for the G500 on July 20. Gulfstream expects it to enter customer service in the fourth quarter.

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