NORDAM Reaches Deal To End Bankruptcy Early, Restart Production
TULSA, Oklahoma - NORDAM filed a motion in federal court on Tuesday asking a judge to approve a deal that would end its bankruptcy proceedings much earlier than anticipated and allow it to restart a key production line.
In the motion, filed in Delaware Bankruptcy Court, the company says the request is a comprehensive solution to all issues related to the PW800 Program. The program involves building engine nacelles for Gulfstream's G500 and G600 business jets.
NORDAM had blamed the program for the expenses that forced it to file for chapter 11 bankruptcy in July.
In its bankruptcy petition, NORDAM had said it had entered into a long-term partnership agreement in October of 2010 with Pratt & Whitney Canada to design and build engine nacelles for Pratt & Whitney Canada's PW800 Program.
NORDAM said it agreed to pay for "upfront engineering and design costs and other preproduction expenses on the understanding it would recoup that investment, plus significant profit." But the company said unanticipated design changes made after the agreement was signed led to much higher costs for NORDAM.
NORDAM says it invested more than $200 million in the PW800 program over the years.
When it couldn't reach a new deal with Pratt & Whitney Canada, it filed for bankruptcy and laid off dozens of workers.
In the motion filed on September 4, 2018, NORDAM says it will sell some assets involved in the nacelle program to Gulfstream and that Gulfstream will provide money to restart production of the nacelles immediately.
In addition to Gulfstream buying parts of the PW800 program, the two companies will also license parts of the program to other companies.
Mike Neal, president and CEO of the Tulsa Regional Chamber, released the following statement about the deal:
“We at the Tulsa Regional Chamber welcome today’s news about NORDAM. The company has long been – and will continue to be – an anchor of our aerospace industry, which is a critical sector of the Tulsa region’s economy. Today’s news means NORDAM will recapture jobs as the company restarts production of its G500 and G600 nacelles program. We are confident the family company will continue to grow its global business from Tulsa, and we will continue to support the NORDAM leadership team and employees.”
The next hearing in the case is set for September 26, 2018, but if no objections are filed the court could accept the motion without any further notice or hearing.
NORDAM was founded in 1969 when Ray Siegfried, Sr. bought Northeastern Oklahoma Research, Development, and Manufacturing Company, which the petition says was a struggling company. Siegfried appointed his son, Ray Siegfried, II as vice president and general manager and the younger Siegfried transformed NORDAM into a global aerospace manufacturing and repair company, the petition says.