Dynamic Aerostructures: Defense Supplier to B-2, F-22, SpaceX Sold in 50 Days

Dynamic Aerostructures' chapter 11 filing in February 2025 affected the aerospace and defense supply chain. The Valencia, California-based company—operating as FMI Aerostructures—ranked among the largest independent aerospace manufacturing sites in North America, producing mission-critical structural components for platforms including the B-2 Spirit stealth bomber, F-22 Raptor, and spacecraft for SpaceX and Blue Origin.

Investment banker Configure Partners had contacted 73 potential buyers beginning nine months before the filing, ultimately identifying aerospace-focused private equity firm Avem Partners as the stalking horse bidder. Avem closed the acquisition on April 15, 2025—under 50 days from petition.

Company Background

Four decades of aerospace manufacturing. Forrest Machining, Inc. was founded in 1978 in Valencia, California, serving the aerospace and defense industry.

The Valencia facility grew to encompass approximately 226,000-230,000 square feet across two Southern California locations with over 130 active spindles. Full-service capabilities included complex machining up to 6-axis and parts up to 160 feet—enabling production of large structural components for aircraft fuselages, wings, and spacecraft structures. This scale positioned FMI as one of the largest independent aerospace and defense manufacturing businesses in North America.

FMI developed expertise in fracture-critical, durability-critical, maintenance-critical, and flight-critical components—designations reflecting the safety implications of each part category. In aerospace manufacturing, these classifications determine inspection requirements, material traceability, and quality control protocols. A fracture-critical component, for instance, is one whose failure would result in loss of the aircraft structure.

Defense Prime Customer Relationships.

FMI Aerostructures supplied mission-critical parts to the nation's largest defense contractors across multiple platforms:

The B-2 Spirit program was among the defense platforms supplied. F-35 deliveries were already averaging over seven months of delays according to Government Accountability Office reports.

The company supplied structural components for SpaceX and Blue Origin launch vehicles.

Endeavour Capital Acquisition (2021).

On August 10, 2021, Endeavour Capital acquired FMI Aerostructures. Endeavour, a Portland, Oregon-based private equity firm founded in 1991, targets companies with enterprise values between $25-$250 million and EBITDA of $5-$50 million—typically profitable businesses positioned for operational improvement and growth.

At acquisition, FMI employed over 240 workers.

Following the acquisition, Dynamic Aerostructures LLC was formed as the parent holding company, with Dynamic Aerostructures Intermediate LLC as an intermediate holding entity and Forrest Machining LLC as the operating subsidiary.

Within several years of the acquisition, quality control issues emerged that, according to management, predated the private equity ownership but surfaced during post-acquisition operational reviews.

Path to Financial Distress

Quality Control Crisis.

CEO Eric Ellis attributed the bankruptcy to "persistent manufacturing practice inconsistencies" that led to legacy quality control issues discovered after Endeavour's 2021 acquisition. The problems predated the private equity ownership but surfaced during post-acquisition integration and operational reviews.

Dynamic Aerostructures self-reported quality concerns to its customers. The disclosure damaged business relationships and customer confidence.

The company invested significant time and resources into rectifying the quality issues, diverting capital from operations and growth initiatives.

Financial Deterioration.

Beyond quality issues, the company faced rising inventory costs due to inflation—a common challenge across the aerospace supply chain where specialty metals, advanced composites, and rare-earth elements remained in global short supply.

Some customer contracts proved unprofitable, locking the company into below-cost production that drained working capital.

At petition, the company owed lenders nearly $55 million total, with approximately $41.5-42.6 million in secured debt. The company reported assets in the $10-50 million range against liabilities of $50-100 million.

Industry Context: Aerospace Supply Chain Under Stress.

Dynamic Aerostructures' distress occurred against a backdrop of stress across the aerospace supply chain. Aerospace and defense supply chain disruptions increased 35% year-over-year from 2023 to 2024, rising from 9,188 incidents to 12,356. Labor disruptions surged 33%, reaching 1,182 incidents as manufacturers struggled to staff production lines.

The restructuring wave extended beyond Dynamic Aerostructures. Business sales linked to bankruptcies, mergers, and acquisitions caused 828 supply chain disruptions in 2024. Aerospace supplier bankruptcies surged 146% year-over-year, with corporate restructurings rising 110%. Dynamic Aerostructures' filing occurred during this period.

Tier 2/3 suppliers—companies like FMI that supply parts to larger manufacturers who then sell to OEMs—faced liquidity pressure. Many tier-3 and tier-4 suppliers continued to face tight liquidity positions into 2025. Late payments from larger OEMs further exacerbated financial instability. Financing concerns grew, with 49% of suppliers citing lack of financial resources as a challenge—up from 41% in 2024.

Personnel shortages also affected suppliers. At 65%, personnel shortages remained the most commonly cited challenge among aerospace suppliers in 2025.

Prepetition Marketing Process

Configure Partners Engagement.

Dynamic Aerostructures' management and advisors pursued a prepetition marketing process to identify a stalking horse bidder. Configure Partners, an Atlanta-based credit-oriented boutique investment bank spun out of Guggenheim, was retained to conduct the sale process. The firm specializes in debt placement, credit resolution, special situations, and M&A advisory.

The prepetition marketing process began in May 2024—approximately nine months before the bankruptcy filing.

Configure Partners' marketing effort:

The 45 parties executing NDAs represented a conversion rate of approximately 62%. Of those conducting diligence, nine submitted proposals, representing a 20% proposal rate from NDA signers.

Stalking Horse Identification.

FMI Holdco LLC, an entity formed by Avem Partners, emerged from the marketing process with a $16 million stalking horse bid for substantially all assets. Avem Partners, a Manhattan Beach, California-based private equity firm founded in 2017, specializes in aerospace and industrial company investments across North America.

Avem's portfolio included nine companies as of late 2025, with prior aerospace experience including the 2023 acquisition of Astech Engineered Products.

Chapter 11 Filing and First Days

Petition and Initial Relief.

On February 26, 2025, Dynamic Aerostructures LLC and two affiliated debtors filed voluntary chapter 11 petitions in the U.S. Bankruptcy Court for the District of Delaware. The filing encompassed the entire corporate structure:

CEO Eric N. Ellis filed the First Day Declaration in support of first day motions, outlining the company's history, causes of distress, and need for immediate relief. Interim first day orders were entered on February 27, 2025—one day after filing—covering operational matters, all approved on an interim basis:

• Joint Administration
• Claims Agent Appointment
• Utilities Protection
• Tax Authority Payments
• Customer Programs Continuation
• Insurance Maintenance
• Wages and Benefits
• Cash Management System
• Critical Vendor Payments

DIP Financing.

The debtors filed a DIP Motion seeking a $12.5 million loan from CRG Financial LLC, a specialty finance firm with over 15 years of experience in distressed debt and claims, having participated in more than 600 bankruptcies. CRG Financial provides bridge financing to debtors in bankruptcy cases.

The Interim DIP Order authorized the debtors to obtain postpetition senior secured financing and use cash collateral with adequate protection for prepetition lenders.

Creditor Dynamics and Settlements

Defense Prime Customer Participation.

Lockheed Martin Corporation retained Verrill Dana LLP counsel and formally appeared in the proceedings on March 4, 2025.

The settlement with Northrop Grumman Systems Corporation was approved on March 21, 2025. Northrop Grumman—customer for B-2 Spirit and E-2D Advanced Hawkeye components—had disputes with the debtors. CEO Eric Ellis filed a declaration supporting the settlement motion.

While settlement terms were not publicly disclosed in detail, the settlement resolved disputes with a major customer.

TRM Equity retained DLA Piper LLP counsel and appeared on March 24, 2025.

Limited Creditor Objections.

Several creditors filed limited objections to first day relief:

Rexford Industrial's cure amount objection related to the debtors' Valencia facility. The Cure Amounts Order on March 25, 2025 addressed these issues.

Final first day orders were entered by March 20, 2025—less than a month after filing.

Sale Process and Closing

Expedited Bidding Procedures.

From petition on February 26 to the Bidding Procedures Order on March 25, 2025 took 27 days.

The chapter 11 petitions and the Sale Motion were filed on the same date. With nine months of prepetition marketing complete and a stalking horse bid in hand, the in-court process provided an overbid opportunity.

Avem Partners Acquisition Closing.

On April 15, 2025, Avem Partners closed the acquisition of substantially all assets of Dynamic Aerostructures and affiliates, emerging as the winning bidder in the section 363 sale process. The closing came 48 days after the bankruptcy filing.

The acquisition included significant participation from Avem principals and aerospace industry executives, with True West Capital Partners providing capital support.

The firm described a strategic focus on aerospace and defense companies with strong fundamentals.

Case Administration and Dismissal

Professional Retentions.

The debtors retained a team of restructuring professionals:

James Carroll of Carroll Services LLC was retained as Chief Restructuring Officer in June 2025—after the sale closed—to manage post-sale wind-down and case administration.

Fee Applications and Case Closure.

Following the April 2025 sale closing, the case entered a wind-down phase and fee applications followed:

On September 3, 2025, the court entered the Dismissal Order, concluding all three chapter 11 cases approximately six months from petition date. The dismissal order confirmed:

• Consummation of the sale
• Transfer of books and records to the Purchaser (Avem Partners)
• Satisfaction of DIP financing obligations
• Resolution of administrative matters

The final claims register was filed September 12, 2025.

Key Timeline

Frequently Asked Questions

What is Dynamic Aerostructures?

Dynamic Aerostructures, operating as FMI Aerostructures, was one of the largest independent aerospace and defense manufacturing sites in North America. Founded in 1978, the company supplied mission-critical structural components for platforms including the B-2 Spirit stealth bomber, F-22 Raptor, F-35 Lightning, and spacecraft for SpaceX and Blue Origin. The 226,000 square-foot Valencia, California facility employed over 180 workers.

What caused the bankruptcy?

CEO Eric Ellis attributed the filing to legacy quality control issues discovered after Endeavour Capital's 2021 acquisition—problems that predated the private equity ownership but surfaced during post-acquisition operational reviews. The company self-reported concerns to customers. Additional factors included rising inventory costs from inflation in specialty metals and composites, plus money-losing customer contracts that locked the company into below-cost production.

Who acquired the company and for how much?

Avem Partners, a Manhattan Beach, California-based private equity firm specializing in aerospace investments, acquired substantially all assets through a $16 million stalking horse bid. The sale closed on April 15, 2025—48 days from the petition date. True West Capital Partners provided capital support, and the acquisition included significant participation from Avem principals and aerospace industry executives. Avem's portfolio includes nine aerospace and industrial companies, with prior experience from its 2023 acquisition of Astech Engineered Products.

What was the prepetition marketing process?

Configure Partners, the investment banker, conducted a prepetition marketing process beginning in May 2024—approximately nine months before the bankruptcy filing. The firm contacted 73 potential strategic and financial parties, of which 45 executed non-disclosure agreements to conduct due diligence. Nine parties ultimately submitted proposals. The process identified Avem Partners as the stalking horse bidder.

What defense programs relied on FMI's components?

FMI supplied structural parts for multiple critical defense platforms: the B-2 Spirit stealth bomber, F-22 Raptor, F-35 Lightning, F-15 Eagle, C-130 Hercules, and E-2D Advanced Hawkeye. Commercial aviation programs through Boeing and Spirit AeroSystems also relied on FMI manufacturing. Space customers included SpaceX and Blue Origin launch vehicle programs.

How was DIP financing structured?

CRG Financial, a specialty finance firm with over 15 years of experience in bankruptcy lending, provided a $12.5 million DIP facility. The interim order was approved February 28, 2025—two days after filing—with the final order entered March 21, 2025.

What was the Northrop Grumman settlement about?

The settlement with Northrop Grumman Systems Corporation was approved March 21, 2025, resolving disputes with this major aerospace prime contractor. Northrop Grumman was a customer for B-2 Spirit and E-2D Advanced Hawkeye components. While specific terms were not publicly disclosed, the settlement resolved disputes with a major customer.

How long did the bankruptcy case last?

The cases were filed February 26, 2025 and dismissed September 3, 2025—approximately six months total. The sale closed April 15, 2025, 48 days after filing. A Chief Restructuring Officer was retained in June 2025.

Who were the key professionals in the case?

Ropes & Gray LLP served as lead counsel, with Chipman Brown Cicero & Cole as Delaware co-counsel. Berkeley Research Group served as financial advisor, while Configure Partners conducted the prepetition marketing process and served as investment banker. Kurtzman Carson Consultants (now rebranded as Verita Global) served as claims and noticing agent. James Carroll of Carroll Services LLC was retained as Chief Restructuring Officer.

What is the broader context of aerospace supplier distress?

Dynamic Aerostructures' bankruptcy occurred amid stress across the aerospace supply chain. Aerospace and defense supply chain disruptions increased 35% year-over-year in 2024, with bankruptcies surging 146% and corporate restructurings up 110%. Tier 2/3 suppliers faced tight liquidity, late payments from larger OEMs, and financing challenges, with 49% citing lack of financial resources as a problem—up from 41% the prior year. Personnel shortages affected 65% of aerospace suppliers.

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For additional coverage of aerospace and defense industry restructurings, visit the ElevenFlo bankruptcy blog.