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A potentially wealthy whistleblower, awarded $3 million this month in a worker harassment suit against his former employer, turned into just another unsecured creditor when Hamilton Aviation Inc. filed for bankruptcy protection. The $3 million jury award was “the final blow” that pushed Tucson, Ariz.-based Hamilton Aviation into Chapter 11 reorganization after the debtor had recently tapped turnaround specialist Old Mission Assessment Co. of Travers City, Mich., to help it restructure out-of-court, said Hamilton Chief Operating Officer John Sawyer. A nine-member jury in Pima County Superior Court in Tucson awarded $170,000 in compensatory damages to William Allen Boydstun and then came back with an additional $2.8 million in punitive damages against Hamilton that nudged the aircraft maintenance company into Chapter 11. “A guy basically got transferred to another department and wasn’t happy about it and then called the FAA (Federal Aviation Administration) to report on his supervisor in what was an absolutely frivolous lawsuit,” Sawyer asserted. “The whole company would have fallen apart from this huge award if we hadn’t already had a sale planned with a new company before the lawsuit was ever filed.” Family-owned Hamilton now plans to sell its equipment assets to 1-month-old Hamilton Aerospace Technologies Inc. of Tucson for $1.5 million under a stalking-horse agreement that’s subject to a court-supervised auction, Sawyer said. Sawyer and several senior managers will join Hamilton Aerospace with plans of eventually bringing all 150 of the debtor’s existing workers over to the buyer, he said. The debtor, which had revenue of $30 million last year, will list assets at about $1.5 million and $1.7 million in debt when it files its first post-petition documents next week with U.S. Bankruptcy Court Judge Eileen Hollowell in Tucson. The company made the filing May 9. Virtually all the creditors in the case are unsecured trade claimants, Sawyer said. Hamilton Aviation has never had a secured credit facility in its 54-year existence and isn’t seeking debtor-in-possession funding for the ongoing operation. “I just don’t know what my client’s going to get out of this now that Hamilton has filed for bankruptcy,” said Adam Watters, Boydstun’s counsel at Watters & Watters in Tucson. “Now it looks like he’ll just have to wait in line like all the other unsecured creditors to get paid.” Boydstun, 45, was in his second stint at Hamilton Aviation in May 1999 when he was first suspended, then fired after telling Hamilton owners that his immediate supervisor falsified paperwork on a critical rudder that could fall off in midair and cause a plane to crash if not corrected, Watters said. Boydstun was rehired but demoted from his old, $19 per hour technician’s job to a $15 per hour job and then wrote the FAA outlining the potential dangers of the falsified documents and improper calibration on the rudders, Watters said. “Our client reported to the FAA and then his fellow employees refused to work with him, told him they would all lose their jobs if there were any more complaints filed, and then someone glued his toolbox shut so that he had to drill it open. That was the final straw,” Watters said. “Our client’s supervisor, Steve Howells, had his license suspended by the FAA in the interim but was allowed to work as a technician at his old, $25 an hour salary when he was doing a $17 an hour job. [Meanwhile,] Mr. Boydstun had been forced to work at a lower salary.” Sawyer countered that Boydstun’s complaint to the FAA didn’t involve a safety issue and that Watters distorted the facts by convincing “some out-of-work jurors that Boydstun was being harassed when his unit was merely being phased out. The facts are the facts, but a lawyer can twist those facts, and the company is being punished for the acts of an individual, Steve Howells, who is deceased and never had a chance to defend himself in court.” The debtor ran into financial problems when debt began to pile up after poor advice from its research-and-development department turned a projected $1 million freighter conversion project for Boeing 727s into a crippling $15 million to $16 million investment, Sawyer said. “We expensed the project rather than capitalize it because we only expected it to cost $1 million and were then hit with so much debt when we were forced to pump lots more money into it,” he said. Omni Financial in Boulder, Colo., is advising Hamilton while Russell Krone, Jeffrey Greenberg and David Sobel are lead debtor counsel at Leonard Felker Altfeld Greenberg & Battaile in Tucson. �Copyright 2002, The Deal, LLC. All Rights Reserved.

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