SFX Founder Robert Sillerman hasn’t made his $44,000 a month payment on his helicopter this year and the aircraft’s previous owner is asking a judge to help terminate the lease.
The aircraft’s owner ECN Aviation has filed a motion for relief from an automatic stay that has prevented companies from collecting payment from Sillerman since he filled for bankruptcy at the end of 2017. Despite no longer making the monthly payments on the aircraft, Sillerman has continued to use the helicopter to commute between Manhattan and the Hamptons, according to records as part of his bankruptcy.
Sillerman, through his company Aircraft Acquisition Corp. (AAC), purchased a 2011 AW109SP Grand New Helicopter from ECN through a financing agreement in July of 2014. After Sillerman was forced into Chapter 7 bankruptcy in December, his company (ACC) discontinued payment for the helicopter. In the motion for relief, ECN Aviation states that Sillerman ceased payments of nearly $44,000 per month for the luxury helicopter in January.
Last year, lawyers for React Presents’ Lucas King and Jeffrey Callahan asked a federal bankruptcy judge to push Sillerman into Chapter 7 bankruptcy over an unpaid $7.4 promissory note after the pair won a judgment against Sillerman. Two months later, Sillerman requested a judge convert his Chapter 7 bankruptcy into a voluntary Chapter 11 bankruptcy, which would allow him to continue to partially control his financial affairs while the bankruptcy winds its way through court.
The aviation company is now asking the court to allow them to terminate the lease agreement with Sillerman so that ECN can “exercise its contractual rights under the Aircraft Agreements to terminate the Lease” and “foreclose its liens against the Aircraft by a foreclosure sale.”
“The requested relief will not interfere with the bankruptcy case,” ECN’s attorney Leo T. Crowley writes.”Mr. Sillerman’s continued use of the Aircraft is a luxury and is not necessary for his duties as a debtor in possession or for his reorganization efforts.”
ECN Aviation argues that holding on to the helicopter will not help with the repayment of creditors, but it actually making the situation worse. Sillerman has been racking up late payment fees for the past 10 months, making the amount owed on the aircraft close to, if not more than, what the helicopter is actually worth.
“The Aircraft alone is unlikely to be worth more than $3,500,000, and is likely to be worth considerably less after ongoing failures by (AAC) and Mr. Sillerman to comply with their maintenance obligations,” the motion reads.
In addition to being unable to pay his monthly bill, Sillerman has also allegedly failed to keep up with the engine warranty maintenance contract which could further depreciate the value and safety of the helicopter. The motion argues that ECN Aviation should be able to terminate its agreement with ACC, which Sillerman solely owns, since creditors will not be able to squeeze additional money from it in a foreclosure sale.
Throughout 2018, Sillerman has continued to utilize the helicopter with the motion reading “A review of publicly available flight records indicates that the Aircraft is based in or around Caldwell, New Jersey, and primarily flies between Manhattan and Long Island. Mr. Sillerman has a primary residence in Manhattan and has another residence and other real property in Southampton.”
The motion suggests that this year Sillerman has also loaned out the helicopter when he isn’t using it for revenue and transferred $110,000 to his company ACC since the forced bankruptcy.
The motion reads “When not in use by Mr. Sillerman pursuant to the Lease, the Aircraft may be used by Zip Aviation, LLC (“Zip”), a third party helicopter tour and charter operator, pursuant to a lease with (ACC), and the monthly operating reports filed by Mr. Sillerman show gross revenues for (ACC) from Zip in the aggregate amount of $75,000 since the order for relief in this bankruptcy case.”
In a bankruptcy filing, Sillerman discloses ACC’s fair market value of assets at $4,003,000 with two helicopters worth $4 million and a little over $3,000 in cash. The company, however, has $4,054,000 in outstanding loans, bringing Sillerman’s equity in ACC to a loss of roughly $50,000.