Just days after Eclipse Aviation achieved two key milestones–EASA and Avio NG 1.5 certification–the pioneering VLJ manufacturer this morning filed for Chapter 11 protection in U.S. Bankruptcy Court in Delaware. At the same time, Eclipse Aviation entered into an agreement to sell “substantially all of its assets” to an affiliate of Etirc Aviation of Luxembourg. Eclipse also filed a debtor-in-possession motion with the court, to allow a group of existing share- and noteholders to fund “normal business operations” with up to $20 million until the company is sold in a public auction in January.

The sale to Etirc Aviation, while agreed upon, is not guaranteed and depends on the outcome of the public auction. The debtor-in-possession financing is an asset-preserving move that helps keep the company operating and the current 954 workers employed during the bankruptcy. If Etirc Aviation isn’t the successful bidder for the assets, the debtor-in-possession funds would have to be repaid by the winning bidder.

The bankruptcy filing includes a list of creditors holding the largest unsecured claims, totaling $702.6 million and including wing-maker Fuji Heavy Industries ($31.8 million), empennage-maker Hampson Aerospace ($31.3 million), engine manufacturer Pratt & Whitney Canada ($30.1 million), UT Finance ($13.5 million), Albany Engineered Composites ($6.9 million), DayJet ($6.2 million), TW Metals ($5.9 million), Chelton Flight Systems ($4.9 million), instrument panel maker Innovative Solutions & Support ($4.3 million) and landing-gear maker Mecaer ($4.3 million). The largest unsecured creditors are King Road Investments with $92.3 million and HBK Master Fund with $84.9 million. The list of hundreds of equity security holders also includes many of the same names as well as industry notables such as DayJet founders Ed and Nancy Iacobucci, FlightSafety International founder Al Ueltschi, Eclipse board members (including Kent Kresa, former CEO of Northrop Grumman) and Etirc Aviation with the largest holding at 64.6 percent. One security holder’s name seems to invoke the dreams that propelled Eclipse from the fertile mind of founder Vern Raburn and also the attempts by the current leadership to extract a viable company from what is left of Eclipse Aviation: Fly Eclipse Fly.

A primary reason for the bankruptcy, according to an Eclipse filing, is that the company “continued to lose larger than expected sums of money on each aircraft manufactured and has not reached cash flow positive in its operations.” In its bankruptcy filing, Eclipse estimated total liabilities at more than $1 billion.

In other Eclipse news, the company announced today that Peg Billson, president and general manager of the manufacturing division, has left “to pursue other career opportunities.” Roel Pieper, Eclipse CEO and also chairman and CEO of Etirc, said, “We thank Peg for her contributions to Eclipse and wish her the best as she takes on new challenges.”