CAPE CANAVERAL, Fla. -- Faced with over $600 million in debt liabilities and a bleak market outlook for its still-unfinished reusable rocket, Kistler Aerospace Corp. filed to reorganize July 15 under Chapter 11 of the U.S. Bankruptcy Code.
Based in Kirkland, Wash., the private company is developing the K-1 reusable launch vehicle with intentions to launch commercial and government payloads into low Earth orbit, initially from the Woomera Spaceport in Australia, and later the Nevada Test Site.
Papers were filed in the U.S. Bankruptcy Court for the Western District of Washington in Seattle, a move that will "facilitate Kistlers restructuring, which is designed to restore the company to long-term financial health while operating in the normal course of business," the company said in a statement.
"The bankruptcy filing will permit Kistler to focus on the steps it must take to further its operational goals, while it has the opportunity to re-evaluate its current debt, capital and cost structures, and assess other strategic options," the statement said. Kistler has arranged $4.6 million in financing from a group of lenders led by Bay Harbour Management L.C. of New York. The loan will allow the company to continue to operate during the reorganization.
The K-1 vehicle is a two-stage, liquid-fueled rocket that is designed to be fully reusable. Numerous components for the vehicle have been built and tested, but the schedule for a demonstration flight has been a big question mark for the past several years.
Among Kistlers creditors are several Saudi Arabian investors and some of the aerospace companies that had worked on the K-1 rocket and components, according to the bankruptcy filing. Aerojet, for example, which was to supply Russian-designed engines for the K-1, claims it is owed over $99 million, the documents show.
Other aerospace firms with claims against Kistler, according to the filing, include Lockheed Martin Corp.; Northrop Grumman Corp.; and Honeywell. Kistlers filing said the claims against the company total $604.3 million. The filing listed the companys assets at just less than $6.3 million.
Kistler officials were unavailable for comment, but in a statement, company Chairman Robert Wang and Chief Executive Officer George Mueller said they "firmly believe that the Chapter 11 process will provide Kistler with greater flexibility to meet changing market demands and will ensure completion of the first K-1 vehicle.
"During the restructuring period, Kistler will focus on preparing the K-1 contractor team and hardware for re-start, and will work with NASA to prepare for demonstrating the ability of the K-1 vehicle to deliver and recover cargo from the international space station," the statement said.
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