In April 2012 it defaulted on interest payments and was in breach of banking covenants; this caused widespread speculation that it would enter bankruptcy.

[5] By October 18, 2012, the negotiations for the sale had failed and the company decided to cease jet production and exited bankruptcy on its own on February 19, 2013, under a new name, Beechcraft Corporation.

[16] In October 2006, Raytheon Aircraft Company commenced a US$16.3-million 112,000-square-foot (10,400 m2) facility expansion for Hawker 4000 completion work in Little Rock, Arkansas.

The expansion included a new 54,000-square-foot (5,000 m2) hangar bay, as well as extensions to existing buildings to provide additional woodshop, upholstery, sheet metal and storage space.

Schuster said:[24] The government's stimulus package has failed to sufficiently loosen credit markets, which are absolutely vital to the success of HBC and our industry...The media and some politicians have cast general aviation as a wasteful extravagance instead of a critical business tool and the source of millions of American jobs...This is an extremely painful step for the HBC family and community, but one that is absolutely necessary.

[26] On August 31, 2009, the company indicated that it was slowing development of the Beechcraft Premier II, moving its first delivery date into late 2012 or early 2013 due to the poor market for business aircraft.

The union warned its members in the letter, "The picture we are getting is of a Hawker Beechcraft Wichita that will shrink almost immediately by 75 percent or more within two years, without a guarantee of even the last few jobs staying".

[33] On October 16, 2010, union machinists at Hawker Beechcraft voted against a new seven-year contract that would have included a 10% pay cut and higher worker health insurance contributions aimed at keeping the company from moving its operations out of Kansas.

[34][35] In December 2010 the company signed an agreement with the Kansas state government to retain facilities in Wichita until at least 2020 and a minimum of 4000 employees in exchange for a US$40M incentive package.

[36] In early 2010, the company, in partnership with FlightSafety International, opened the 44,000 sq ft (4,100 m2) Maintenance Learning Center, for technician training.

"[39] The company also announced that it was looking for relief from payments on a US$182 million revolving line of credit, due to the general poor economic conditions and low sales of light jets.

[40] In January 2012, the company's Beechcraft AT-6 lost out to Embraer's Tucano in a competition to supply 20 light attack jets to Afghanistan.

[1] In March 2012, the general media began carrying stories that the company would have to soon enter bankruptcy, even though the new CEO Miller had indicated he would work hard to avoid that.

[38] The following day Reuters reported rumours that the company was negotiating a prearranged bankruptcy "within the next several weeks" to include debtor-in-possession (DIP) financing of less than $500M.

There is substantial doubt that we will be able to obtain additional equity or debt financing on favorable terms, or at all, in order to have sufficient liquidity to meet our cash requirements for the next twelve months."

The SEC filing also stated that the company might sell off assets and equity, renegotiate its debt and may have to enter Chapter 11 bankruptcy to resolve its problems.

The sale agreement did not include the subsidiary Hawker Beechcraft Defense Co., builder of the T-6 trainer and AT-6 light attack aircraft.

The bid for the company was the most attractive we received during the strategic review process and the going-forward plan offered the most continuity for our business, allowing us to preserve jobs, product lines and our ability to maintain our commitments to our customers."

[5][50][51] Aviation analysts reacted to the announced deal with skepticism, indicating that the purchase price seemed high for a company with an old product line and little recent investment in research and development.

[53] On July 16, 2012, the International Association of Machinists and Aerospace workers (IAM), which represents some 3,500 of the company's 18,000 employees, filed in bankruptcy court an objection to the proposed deal with Superior, warning that the sale had "broad implications for the U.S. economy and national security," and contending that Superior's proposal excludes the assumption of Hawker's three pension plans, which the Pension Benefit Guaranty Corporation estimated to be underfunded by about $751 million at that time.

"[8] Specific problems included national security concerns as "the company's defense operations were integrated with its civilian businesses that proved difficult to untangle",[6] and legal complications, as "advisers in the US had trouble negotiating with Chinese representatives unfamiliar with US finance and bankruptcy law.

"[6] In response to the failed negotiations, Hawker Beechcraft planned to emerge from bankruptcy protection by filing an amended Joint Plan of Reorganization (POR) with the US Bankruptcy Court for the Southern District of New York,[8] and re-emerge as a stand-alone company[56] renamed Beechcraft Corporation and focused on growing the company's most profitable products.

[9] A letter from company Chairman, Bill Boisture and Executive Vice-President Shawn Vick stated that their aim is to carry out the reorganization "in a strong operational and financial position."

At the same time the company affirmed that future work would concentrate "on turboprop, piston, special mission and trainer/attack aircraft, as well as our parts, maintenance, repairs and refurbishment businesses.

The jet line was discontinued, but the new company continued to support the aircraft already produced with parts and with engineering and airworthiness documentation.