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Lynn Tilton has stepped down as the CEO of MD Helicopters Inc. (MDHI) as of March 23.
An MDHI spokesperson confirmed the surprise development on March 26, telling Vertical that the company is otherwise “status quo” as it continues to fully execute all of its government and commercial contracts.
“Though she has withdrawn from active management of MDHI and other Patriarch Partners portfolio companies, Lynn remains the largest single shareholder and a major creditor of MDHI,” the spokesperson said.
“Going forward, the company is being run and managed by the existing senior leadership team, who will continue to deliver strong and decisive leadership with a cohesive and strategic focus on ensuring excellence across all business operations.”
According to the Wall Street Journal, Tilton “walked away” from her roles at MDHI and other companies after being ordered by a bankruptcy judge to sell them to pay off Zohar funds. These collateralized loan obligation vehicles were established to make loans to failing companies, and now owe investors $1.7 billion.
Through her private equity firm Patriarch Partners, Tilton has specialized in acquiring and restructuring companies in distress. She also founded and managed the Zohar funds until 2016.
Tilton has been leading MDHI since Patriarch Partners acquired the troubled helicopter manufacturer in 2005. The so-called “Diva of Distressed” promised to apply her expertise in rescuing failing companies to turn MDHI around, which she did with mixed success.
Under her leadership, MDHI continued commercial helicopter production in addition to securing several important military contracts, including sizable MD 530F orders for the Afghan Air Force. Living Legends of Aviation named Tilton “Aviation Entrepreneur of the Year” in 2011 for her work in leading the company to profitability and rebuilding its “shattered” supply chain.
However, the company’s production numbers have generally lagged those of its competitors, and highly touted new helicopter programs such as the MD 6XX have been shelved. MDHI has also struggled to support its commercial customers, as reflected by the company’s relatively poor showing in Vertical‘s annual Helicopter Manufacturers Survey in recent years.
Throughout, Tilton has been publicly bullish on the company’s prospects. At this year’s HAI Heli-Expo in Anaheim, California, Tilton promised that 2020 would be “a big year and a big expensive year” for MDHI as it pursued development of the MD 969 combat attack helicopter and glass cockpit upgrades for its single-engine product line.