In an unprecedented action, the Federal Trade Commission announced yesterday that it will attempt to rescue financially a company on the verge of bankruptcy, in order to recover some $6.3 million owed by the company to consumers.
In what he called "an innovative solution," FTC Chairman Michael Pertschuk said the company, Bede Air-craft Inc., of Kansas, has agree to allow a trustee to take over its operations and search for an estimated $6 million in capital needed to help save the failing firm, which is moving to Washington.
Pertschuk said that his staff, after consulting with industry sources, determined that Bede which sells do-it-yourself, home-built airplane kits, had "a sound product, but lousy management."
Since the firm was heading for bankuptcy and still owed some 10,000 consumers a total of about $6.3 million, Pertschuk said it was decided to try and save the company.
"This demonstrates the commission's sensitivity to the real world," Pertschuk said in announcing the arrangement yesterday. "We wanted to see if a means could be found to save the consumers' investment."
Bede Aircraft developed, manufactures and markets an aircraft know as the "BD-5," which is sold both assembled and in a home-built "do-it-your-self" kit.
According to FTC Denver attorney Kenneth Bennington, who led the investigation into the company, the firm shipped about 10,000 of the kits to consumers at a price of $3,000, which he called "unrealistically low."
Most of the kits were missing at least a few of the key parts, which were to be shipped later. All were shipped without the engine, a Japanese product that has only now been approved for U.S. sale by the U.S. government.