Cincinnati-based CTL Aerospace Inc. has filed for Chapter 11 bankruptcy in Delaware, weighed down by at least $15 million in debt and a turbulent year marked by material sourcing failures and lender pressure.

In a first-day declaration Monday, President and COO Scott Crislip said the 77-year-old aircraft parts manufacturer intends to restructure its debt or sell itself as a going concern. Despite solid demand from aerospace and defense clients, CTL’s finances unraveled after raw material defects led to losses.

“Garbage In, Garbage Out”

Crislip said faulty materials supplied by two vendors in 2024 caused major manufacturing delays, scrapped products, and a $2.1 million net loss.

“In essence, the adage of ‘garbage in, garbage out’ hurt the company’s bottom line and created chaos at an unprecedented level,” Crislip wrote. Although CTL resolved the quality issues, the damage had already soured relations with Wells Fargo, its secured lender.

Wells Fargo Tightens the Screws

CTL’s bankruptcy petition listed $10 million to $50 million in both assets and liabilities, with Wells Fargo owed $15.1 million across a term loan and revolving facility.

By August, CTL had failed to secure a new lender, investor, or buyer, triggering a loan default. In September, Wells Fargo began sweeping CTL’s accounts, seizing even a $2 million customer advance payment meant for operations.

To keep afloat, CTL had relied on advance payments from clients, but the bank’s cash sweeps stripped the firm of liquidity to cover payroll and raw material costs.

Workforce Caught in the Turmoil

Advisers warned CTL to prepare 40% workforce cuts starting Sept. 10. Crislip resisted, arguing layoffs would trigger WARN Act liability, drive skilled staff away, and reduce the company’s value for any potential buyer.

Although 14 employees were let go pre-bankruptcy, CTL said further cuts aren’t planned. The company currently employs 290 people in the Cincinnati area, producing aerospace engine and body parts to OEM specifications.

Betting on Chapter 11 Survival

Crislip said Chapter 11 is intended to preserve value, stabilize operations, and safeguard jobs, while positioning CTL for restructuring or a sale. With steady aerospace demand and long-standing client ties, CTL is banking on industry momentum to pull it through.

“The bankruptcy case has been filed to preserve value and operations, ensure supply to customers, and save the jobs of its workforce,” Crislip said.

Legal Counsel

CTL has retained Coolidge Wall Co. L.P.A., with attorneys Patricia J. Friesinger and Briana C. Breault steering the case. Bankruptcy counsel declined immediate comment Tuesday.