One of P.E.I.'s largest aerospace companies is now under creditor protection by an order of the provincial Supreme Court.
Testori Americas and Wiebel Aerospace have been in business for more than 20 years. According to court documents, the owners say the two affiliated companies would have faced bankruptcy without creditor protection.
The main production facilities for the companies are in Slemon Park, just outside of Summerside. They also have a branch plant in Bloomfield. They manufacture interior components for railroad and commuter cars, and airplanes throughout the world.
In 2011 the companies were sold to a California company called TMC Avion. Shortly afterwards, there was a falling out between the old and new owners, and a series of lawsuits began.
Now Testori and Wiebel are on the brink of insolvency. The firm PricewaterhouseCoopers is the court-appointed monitor during the creditor protection period.
The P.E.I. government was once a major creditor, holding more than $13 million in loans. The government sold that debt last year to a Delaware company called Westside Funding for $5 million.
The Progressive Conservative Opposition leader Steven Myers told CBC News Thursday that's when the real downfall of the Testori group began, because by selling off the debt the province handed control of the companies to Westside.
"Had they stayed on they might have at least been able to assure the safety of the future of this company," said Myers.
In court documents a director for Testori and Wiebel, Daniel Michaels, says the companies have 110 full time, permanent employees with annual sales of $14 million, but the companies are insolvent. They still owe Westside $13.7 million in debt and securities, and the companies are also involved in about $2.9 million in outstanding litigation.
Michaels said without creditor protection Testori and Wiebel would have to shut down through receivership or bankruptcy, and he believes "serious prejudice and damage would result to the secured and unsecured creditors, [to the] employees of Testori and Wiebel and the local economy."
The court affidavit says a new chief executive officer has a new operational restructuring plan, and he has also arranged for $2.5 in new financing.
Myers is doubtful about the companies' survival.
An official at PricewaterhouseCoopers says the company will be in court again Wednesday. They are now trying to compile a list of creditors, and hope to have a long-term restructuring plan in place by the end of February or early March.