“They, like everyone else, had troubles during the COVID era and needed to reorganize or shutter its business,” Von Eitzen said. “They filed for Chapter 7, which is complete liquidation, but the value of this entity was being an ongoing operation.”
Since its founding in 1957 by Rudy Enstrom, the company has made and serviced thousands of helicopters designed for leisurely travel and training. Its manufacturing process and parts are specific to Enstrom and have little value without the company existing.
The bankruptcy proceeded in February without a stalking horse bidder, and an auction took place March 2. The winning bidder with a $10.5 million offer was MidTex Aviation LLC.
“Everyone’s preference would be that buyer come in and buy substantially all the assets because obviously that’s better for the city and the employees,” Von Eitzen said.
But MidTex had a problem. It couldn’t come up with the financing. Surack said MidTex owner Kevin Griffin lost his investor and approached Surack.
Surack, whose portfolio already includes three aviation companies, was interested in Enstrom but not partnering with Griffin, so he offered to take over the deal. Griffin gave up the purchase agreement earlier this month, and Surack became the new owner.
The process, however unusual, ended ideally, Von Eitzen said.
“That has not happened in my 17 years being a bankruptcy lawyer,” she said.
Saving businesses is nothing new for Surack, though he admits that reviving a manufacturer in the remote U.P. will be a unique challenge. Generally, there seems to be a curious attraction to saving small town manufacturing in Michigan’s upper half (like Stormy Kromer).
“It’s quite a ways up there, but they’ve been doing it since 1957, so it’s now multiple generations old,” Surack said. “I knew I could turn it back around — just a matter of applying principles and working on the details. I was very confident that I could save the business.”
The company reopened last week with 15 or so management employees, Surack said, and the next step is to bring back the rest. He’s hoping for 50 within the next few weeks.
Surack said it will likely take an investment of $7 million to $8 million in the first year, and maybe another $6 million the next year, to help lift Enstrom off the ground again.
“Walk before we run, but we have to start making parts,” Surack said.
After that, he said the goal is to build 24 helicopters next year. The company will continue targeting hobbyists, leisure travelers and foreign armies, who use the easy-to-operate helicopters for training.
“Filling them is not the problem, we just got to get them produced,” he said.
The company will be top priority, Surack said, and he expects to be in Menominee a few days a month. Surack said he owns a home in Petoskey but has no other business pursuits or ties to the state otherwise.
“We’re going to get back to ground zero where we’re making them again, and then we’re going to get to where we’re making them newer, better, nicer,” he said.