AvCraft files for bankruptcy

AvCraft Technical Services, the aircraft maintenance company that left hangars near Myrtle Beach International Airport this month after it couldn’t pay Horry County more than $91,000 in overdue rent, filed for bankruptcy this week.

Company officials had tried to organize a last-minute sale of the business to keep AvCraft operating, but a deal couldn’t be reached.

"Unfortunately, we were unable to get some sort of rescue plan," said AvCraft President Mike Hill. "We weren’t able to make that happen, so we were forced to file for Chapter 7 bankruptcy."

As part of a settlement agreement with Horry officials, AvCraft vacated the three hangars it had rented from the county this month, said county attorney Arrigo Carotti.

The company, however, has not paid its overdue rent and late fees.

AvCraft’s bankruptcy concludes a chapter in Horry County economic development marked by unfulfilled promises.

Although the firm averaged between 50 and 60 employees during most of its time in the area, AvCraft’s hiring projections were much higher.

The company never quite got off the ground.

AvCraft moved to the beach from Tyler, Texas, in 2003 when the Myrtle Beach Air Force Base Redevelopment Authority agreed to reimburse the company up to $750,000 for upgrades at several hangars at the airport. The county also approved cutting its hangar rent from $5 per square foot to $2 per square foot, and S.C. officials chipped in tax credits and job creation credits worth up to $281,600 annually if AvCraft hired 80 workers within its first year.

At the time, AvCraft announced plans to create 280 jobs within five years.

But after one year, AvCraft had failed to meet its projections. The company hired 65 workers instead of the 80 required under the incentives agreement. In response, the county canceled the initial deadline and gave AvCraft another six months to reach the goal. When that new deadline rolled around, AvCraft’s employee count had dropped to 53, and the company’s German production plant had filed for bankruptcy protection.

The company didn't receive the full $750,000 local reimbursement and wound up losing the state incentives because it didn't create the number of jobs it had promised.

In 2009, AvCraft announced another job expansion. This one called for 50 new jobs, but again the promise didn't pan out and the company returned to Horry County Council the following year asking for a reduction in its hangar rent as it was on the verge of going out of business. In 2010, KNH Aviation Services Inc., a group of investors led by Hill, bought all of the company’s assets.

Three years ago, the firm announced it would hire 150 workers in exchange for $200,000 in state and local grants. The announcement was the first from the retooled Myrtle Beach Regional Economic Development Corp. (EDC), which had received a boost of more than $1 million in county funding to spur its job creation efforts.

When it became obvious AvCraft couldn’t meet its hiring goals, Hill told county leaders about his plight. AvCraft never used any of the grant money made available to the company.

In the months leading up to the bankruptcy filing, Hill tried desperately to find a buyer for AvCraft.

He told county leaders that three companies had expressed interest in purchasing the firm, but two of them found the county’s lease rates too high.

County officials indicated they wanted to be paid $2.85 per square foot, a rate Hill argued was too steep.

On Wednesday, a day after AvCraft filed for bankruptcy, Hill said he will continue following the legal proceedings.

"Hopefully successfully," he said, "and with fairness to all the creditors out there."

A meeting of creditors has been scheduled for April 23 in Charleston, according to bankruptcy court records.

As for his post-AvCraft days, Hill said he’s evaluating his options.

"I have a lot of business contacts and associates," he said. “[There are] some discussions about opening up a facility or maybe some type of work outside of the Myrtle Beach area or Horry County."

This story was originally published March 25, 2015 at 2:00 PM with the headline "AvCraft files for bankruptcy."