A company that made a big splash with its car-plane-boat hybrid now appears to be drowning in debt.
Icon Aircraft filed for Chapter 11 bankruptcy protection on April 4, the company announced last week. It has accumulated $173.7 million in debt to dozens of different lenders. Now it seeks to sell the company, according to legal documents. Icon leaders will try to leverage a part of the bankruptcy code that may allow another company to purchase them — without the burden of existing liens.
In the meantime, Icon plans to continue making and selling its only vehicle: the Icon A5. That aircraft debuted in 2016.
Business as usual will continue, CEO Jerry Meyer promised, including service, training and support for the company’s customers.
“We believe this process will enable the business to address its current challenges and emerge with new ownership — stronger than ever — and continue building amazing planes with a focus on innovation, safety, and incredible flying experiences,” Meyer said in a press release.
In a GearJunkie review last year, Motors Editor Bryon Dorr spent some time driving and flying the Icon A5. Short version: It was a rad experience.
“The views and experiences you can get from this plane are truly spectacular,” Dorr wrote. “What blew my mind was that we then dropped the landing gear while floating in the water and then drove up a boat ramp and out of the water. How cool is that?!”
Icon Aircraft Bankruptcy: More Debt, More Problems
Icon’s debts are spread between many different lenders. For starters, it owes $68 million to 30 different creditors. Almost all of that debt ($65 million) is controlled by East West Bank of El Monte, Calif. There’s also about $3.3 million owed to various vendors and suppliers.
But, Icon also owes $105.4 million to three lenders who issued 21 notes over the last few years. Of these three, the biggest debt ($93 million) goes to an entity based in China named Pudong Science and Technology Investment (PSTI). The entity also owns about half of Icon’s equity, according to legal documents.
That overseas investment drew scrutiny from the U.S. government. In 2021, it resulted in an investigation by the Committee on Foreign Investment in the United States. While that case was resolved in February 2022, Icon had to spend more money dealing with it.
“The company was forced to enter into a cost-cutting mode, which left it unable to fully implement its financing and business plan or to otherwise avoid its dire situation,” an Icon affidavit said.
In 2021, a group of Icon stakeholders also filed a lawsuit against the company, Aviation International News reported. The stakeholders attempted to remove executive leaders over claims that the company was trying to transfer some of its technology to China. That case is ongoing.
At the moment, Icon Aircraft needs to produce and sell eight to 10 aircraft per month to break even, an Icon Aircraft affidavit said. But the company has only delivered 209 planes since the first A5 was sold in 2016, the Aircraft Owners and Pilots Association reported.
The price tag for an A5 starts at about $400,000.
“We understand that this situation creates a hardship for everyone involved,” CEO Jerry Meyer said. “However, without taking these steps, there is not a viable path forward for the business to do what we do best — build incredible airplanes and support our aircraft owners.”
