Aerospace parts distributor Incora — formerly known as Wesco Aircraft — announced June 1 that it has filed for Chapter 11 bankruptcy protection upon citing reduced demand for aircraft maintenance and ongoing litigation over the company’s efforts to restructure its debt.

Fort Worth, Texas-based Incora said the company has entered into an agreement that will provide it with more than $300 million in debtor-in-posession (DIP) financing, which Incora said will be used to fund operations throughout the process and position the company’s capital structure for long-term growth. That agreement is subject to approval by the U.S. Bankruptcy Court for the Southern District of Texas. 

Fort Worth, Texas-based Incora is No. 20 on MDM’s 2023 Top Fastener Distributors List.

Formed through the March 2020 merger of Wesco Aircraft and Pattonair, Fort Worth, Texas-based Incora is a supplier of supply chain management services catering primarily to the aerospace and defense industries, along with industrial manufacturing, marine, pharmaceutical and more. That merger was completed just before the COVID-19 pandemic wiped out air travel in most of the world.

Even as air travel resumed, factors of supply chain disruption, high inflation and slower-than-expected industry rebound — particularly from China — led to Incora seeing its net profit fall from $204 million in 2019 to $65 million in 2021, according to court filings reviewed by Reuters.

The company looked to avoid bankruptcy via out-of-court restructuring in 2022 that supplied Incora with $224 million in cash flow and extended most of its debt due dates, but as Reuters noted, it wasn’t enough to completely stabilize finances. It led to litigation from junior lenders.

Reuters report noted that Incora enters this bankruptcy filing with $3.14 billion in debt and that Chief Executive Officer David Coleal stated that the company looks to right-size that debt while meeting customer demand.

Citing court documents, Reuters noted that Incora will use some of the $300 DIP financing to pay critical suppliers, which charge about $87 million per month to provide the company with the aircraft parts, chemicals, supplies and services that it distributes.

“We expect that this decisive action will right-size our capital structure and allow us to confidently build and grow into the future,” Coleal said in a June 1 news release. “This path will enable Incora to continue operating its business from a place of strength, positioned to empower its customers to meet their critical business needs.”

On June 1, Bloomberg Law reported that Incora was awarded access to $110 million of DIP financing from Pacific Investment Management Co. and Silver Point Capital on an interim basis, with a U.S. Bankruptcy judge overruling objections from some Incora noteholders.

The company’s website states Incora has more than 60 locations nationwide, 7,000 suppliers, 8,400 customers and over 644,000 active SKUs in its inventory.

Incora opened its Fort Worth global corporate headquarters in May 2021. Its roots date back to Wesco Aircraft’s 1953 founding. Wesco Aircraft and Pattonair merged after Pattonair parent company Platinum Equity bought Wesco and merged the two companies.