MESA, AZ — MD Helicopters Inc., a helicopter manufacturer based in Mesa, filed for Chapter 11 bankruptcy protection Wednesday and has entered into a purchase agreement with a consortium of its creditors.
The filing and acquisition deal comes after the company had a judgment of more than $108 million placed on it in 2021 after a federal jury found that MD defrauded the U.S. military.
According to documents filed with the United States Bankruptcy Court for the District of Delaware, MD Helicopters owes between $100 million and $500 million to at least 1,000 creditors. The largest claim against MD is for $108.7 million by the Fraud Section of Civil Division of the U.S. Department of Justice related to the court ruling.
In 2013, two former MD employees — Philip Marsteller and Robert Swisher — blew the whistle on the company for its alleged relationship with U.S. Army procurement officer Col. Norbert Vergez.
According to court documents, the whistleblowers showed that MD’s former CEO, co-owner and famed financier Lynn Tilton, groomed Vergez for employment at MD while he was still in the military — influencing him on potential company contracts. Vergez has since pleaded guilty to a criminal conflict of interest charges. Tilton was dismissed as a defendant in the case and left her role as CEO of MD in March 2020, the documents show.
Read more of this story from the Phoenix Business Journal.