Magellan Aerospace Middletown Files Chapter 11 With $20M Parent Financing

Magellan Aerospace, Middletown, Inc. filed for chapter 11 protection on July 22, 2026 in the U.S. Bankruptcy Court for the Southern District of Ohio, listing $26.3 million in 2025 revenue, an $8.5 million net loss, and no secured or public debt. Judge Beth A. Buchanan is presiding over the case, numbered 1:26-bk-11937. The Middletown, Ohio manufacturer builds jet-engine nacelles, exhaust components and heat-resistant space hardware for a customer base concentrated in three accounts that produce 80% of revenue. Its first-day declaration attributes the filing to the wind-down of legacy aircraft programs, environmental liabilities at two California properties, and a decision by its corporate parent to stop funding losses.

The debtor is a wholly owned, second-tier subsidiary of Magellan Aerospace Corporation, the Ontario-based public company traded as TSX: MAL.TO. Only the Middletown unit filed; its immediate U.S. parent, Magellan Aerospace USA, Inc., is providing debtor-in-possession financing rather than seeking protection itself.

Debtor	Magellan Aerospace, Middletown, Inc.
Court	U.S. Bankruptcy Court, Southern District of Ohio
Case Number	1:26-bk-11937
Petition Date	July 22, 2026
Judge	Hon. Beth A. Buchanan
Employees	109 (105 full-time)
2025 Revenue / Net Loss	$26.3 million / $8.5 million
2026 YTD Revenue / Net Loss (through 6/30)	$16.8 million / $2.8 million
Intercompany Debt to Parent	More than $80 million, unsecured
DIP Facility	Up to $20 million revolving from Magellan Aerospace USA, Inc. (parent); $2 million approved on an interim basis
Claims Agent	Stretto, Inc. (appointed effective as of the petition date)
Final DIP Hearing	August 18, 2026

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Legacy Program Wind-Downs and Customer Concentration

The declaration traces Magellan Middletown's revenue decline to the sequential retirement of Airbus and Boeing programs it long supplied: Airbus ended A340 production in 2011 and A318 production in 2013, then wound down the A380 in 2021; Boeing built its final 747 in 2021 and has said it will end 767 commercial production in 2027. A separate blow came in 2020, when a customer canceled a nacelle contract for the Pratt & Whitney PW1100G-JM engine used on the Airbus A320neo. With just three customers accounting for 80% of revenue and few other buyers in the specialized aerostructures market, the company had limited ability to replace the lost volume.

Torrance and San Diego Environmental Liabilities

Magellan Middletown's Torrance, California, environmental exposure dates to its acquisition of Longren Aircraft Co.'s operations there in the late 1950s. Magellan's 2025 annual information form had already identified the Torrance contribution and cost-recovery action, the Cleanup and Abatement Order, and the then-emerging San Diego investigation, while stating that the corporation could not predict its ultimate liability or available insurance recovery. A four-week trial concluded in March 2026 with a jury verdict finding the debtor jointly and severally liable for more than $5.2 million in past investigation and cleanup costs and liable for 25% of remediation costs at the site, which the declaration estimates could total $25 million to $64 million. The jury also issued an advisory verdict recommending the debtor contribute roughly $1.9 million to a co-defendant and third-party plaintiff, and the Torrance site remains subject to a Cleanup and Abatement Order from the state's Regional Water Quality Control Board. A second liability traces to the debtor's 2018 acquisition of Fleet Aerospace, Inc., successor to Langley Corp., whose former San Diego property is now the subject of a California Department of Toxic Substances Control order issued February 12, 2026, with feasibility and investigation costs estimated above $12 million. The debtor has spent more than $13 million on environmental remediation to date and projects another $10 million over the next six months. It has identified more than $100 million in potentially applicable environmental insurance coverage, though the declaration says some carriers are disputing that coverage.

Intercompany Debt and the DIP Roll-Up

The debtor carries no secured or public debt, but owes Magellan Aerospace USA, Inc. more than $80 million in unsecured intercompany loans, along with $1.8 million to trade suppliers, $450,000 to employees and $500,000 to its retiree medical plan. According to the DIP financing motion, Rock Creek Advisors solicited banks, credit funds and specialty lenders on the debtor's behalf before the filing; none besides Magellan USA was willing to extend financing. Magellan USA itself had already told the debtor it would no longer fund ongoing losses, a decision the declaration cites as a direct cause of the filing.

DIP terms and the roll-up. The DIP motion sought a revolving facility of up to $20 million in new money from Magellan USA, priced at SOFR plus 1.5% with no origination, commitment, standby, original-issue-discount, prepayment or exit fees — only reimbursement of lender counsel fees. The proposed final package also contemplates rolling up prepetition intercompany loans into the DIP facility at a three-to-one rate, a structure that could convert as much as $60 million of the unsecured intercompany debt into superpriority DIP claims, but the roll-up does not take effect unless and until the court enters a final order. On July 24, 2026, the court entered an interim order capping borrowing at $2 million pending a final hearing, while granting DIP liens and superpriority administrative claims. The interim order sets a final DIP hearing for August 18, 2026 at 10:00 a.m., where the court will also consider final approval of the roll-up and the interim employee, utility and cash-management orders.

First-Day Wage, Utility and Cash-Management Relief

The debtor's first-day wage motion said its last prepetition payroll was paid July 17, 2026, and sought authority to pay roughly $350,000 in prepetition wages and related compensation and about $100,000 in associated prepetition payroll taxes, plus continue withholding obligations that average approximately $55,000 per week. On the utilities side, the debtor sought to maintain service with existing providers by offering an adequate assurance deposit equal to about 50% of its average $65,000 monthly utility spend. The cash-management motion preserved the debtor's existing single account at City National Bank while deactivating the automatic sweep that had previously moved cash to Magellan USA. Separately, the debtor filed a petition and asked the court to redact employee home addresses from public filings, and Michael I. Goldberg, the company's sole independent director, was designated the case's Rule 1074-1 responsible person.

Claims Administration and the Path Toward a Plan or Sale

The debtor filed an application on the petition date to retain Stretto, Inc. as claims, noticing and solicitation agent, with duties to include maintaining the creditor list, processing proofs of claim, and administering the claims register. The court granted the application in an order entered July 24, 2026, appointing Stretto as claims and noticing agent effective as of the petition date. No official committee, trustee or examiner had been appointed. The court separately extended the debtor's deadline to file schedules and statements of financial affairs to 44 days after the petition date, a 30-day extension from the standard deadline.

Rock Creek Advisors intended to begin contacting potential buyers within a week of the filing, and the debtor expected to decide between a stand-alone plan of reorganization and a sale of substantially all assets within two to four weeks of the petition date. That decision, along with final approval of the DIP facility and its proposed roll-up, is expected to take shape around the August 18 hearing.

Key Timeline

• 2020 — Customer cancels an A320neo PW1100G-JM nacelle contract.
• February 12, 2026 — California DTSC issues a remediation order covering the former Langley/Fleet Aerospace property in San Diego.
• March 2026 — A four-week Torrance trial ends with a jury verdict against the debtor.
• July 17, 2026 — Last prepetition payroll date.
• July 22, 2026 — Debtor files its chapter 11 petition, first-day declaration, DIP motion and Stretto retention application; court enters an order scheduling an expedited first-day hearing.
• July 24, 2026 — Court enters interim orders approving employee wage payments, utility adequate assurance, cash management and up to $2 million of DIP borrowing, and appoints Stretto, Inc. as claims and noticing agent effective as of the petition date.
• August 18, 2026 — Scheduled final hearing on DIP financing, including the proposed roll-up, and on the interim first-day orders.

Frequently Asked Questions

Has a claims agent been appointed in the case? Yes. The court entered an order on July 24, 2026 appointing Stretto, Inc. as claims and noticing agent, effective as of the July 22 petition date.

Is Magellan Aerospace Corporation, the Canadian parent, also in bankruptcy? No. Only the U.S. operating subsidiary, Magellan Aerospace, Middletown, Inc., filed for chapter 11. Its corporate parents — Magellan Aerospace USA, Inc., Magellan Aerospace Limited, and the publicly traded Magellan Aerospace Corporation (TSX: MAL.TO) — are not debtors in the case.

Why is the DIP lender the debtor's own parent company? The debtor says Rock Creek Advisors approached banks, credit funds and specialty lenders before the filing and found no interest besides Magellan USA, which is also the debtor's largest creditor through more than $80 million in unsecured intercompany loans.

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