In United States ex rel. Minge v. Hawker Beechcraft, 2014 U.S. Dist. LEXIS 42425 (S.D.N.Y. March 27, 2014), the U.S. District Court for the Southern District of New York revived a $2 billion suit brought against a Chapter 11 corporate debtor by two qui tam relators under the False Claims Act (FCA).1 This decision is important because it may afford plaintiffs in FCA actions additional leverage against corporate debtors, regardless of the merits of their asserted FCA claims, and could, depending on the dollars at stake, impact the ability of a corporate debtor with potential FCA liability to successfully reorganize.

Hawker Beechcraft Case

In 2007, two former employees (plaintiffs) of TECT Aerospace, a subcontractor of Hawker Beechcraft Corporation (HBC), filed a qui tam action under the FCA against TECT and HBC in the U.S. District Court for the District of Kansas (the Kansas action). The plaintiffs alleged that the defendants knowingly made misrepresentations in their certifications to the government regarding components incorporated into aircraft sold to the government. The complaint sought more than $2 billion in damages sustained by the government, plus attorney fees and costs.