Air T Inc. (AIRT) presents a materially deteriorated recovery posture as of December 31, 2025, driven by the December 18, 2025 acquisition of Rex Airlines (Australia) through a DOCA structure. The MFFAIS-reported CLV of negative $143 million and OLV of negative $35 million confirm deeply negative equity recovery across all liquidation scenarios, consistent with what the balance sheet arithmetic produces under haircut methodology. Total reported assets of $381.8 million face severe haircuts against $375.9 million in stated liabilities plus $8.0 million redeemable NCI (mezzanine, face-value treatment required), leaving virtually no equity buffer before haircuts are applied. Key asset-side impairments under liquidation: inventory of $65.4 million haircuts to roughly $39 million at 60%; PP&E net of $136.4 million (largely Rex aircraft and associated assets) haircuts to $68-95 million at 50-70%; goodwill of $11.9 million and intangibles net of $13.9 million receive zero recovery. Equity method investments of $33.6 million (CJVII aircraft joint venture) are carried at cost-basis equity accounting and would require distressed asset sales in a liquidation, realistically recovering 50-70 cents on the dollar at best. The Rex acquisition added approximately A$107.8 million ($~67 million USD equivalent) in assumed Commonwealth of Australia facility debt—specifically a 30-year zero-interest Perpetual Facility Agreement (fair valued at $22.5 million on acquisition but carried at face in liquidation analysis) and a new A$60 million facility at 12% per annum—plus a $40 million 11.5% Senior Secured Note (ATA 25.1 Investor Note) issued to finance the transaction. Consolidated gross debt per XBRL stands at $196.9 million face value ($194.2 million net of issuance costs). Operating cash flow was negative $25 million for the nine months ended December 31, 2025, a $44 million swing from the prior year, driven by inventory buildup. The company also carries $16.2 million in operating lease liabilities (ASC 842) that do not extinguish in liquidation. The deferred bargain purchase gain of $95.8 million reported in working capital is a non-cash accounting artifact with zero liquidation recovery value and should be excluded from any asset recovery calculus. Commercial Aircraft/Engines segment revenue fell 42% year-over-year in Q3 due to aging Contrail component inventory, compressing the segment's tangible asset coverage. The Contrail RNCI ($2.6 million) and Shanwick RNCI ($5.4 million) total $8.0 million, sitting between liabilities and equity—these must be settled at face in a wind-up before equity receives anything. G&A expenses have run at 24% of revenue for the nine-month period, elevated by $3.0 million in deal-sourcing costs and $0.4 million in post-acquisition integration costs directly tied to Rex, indicating no near-term G&A deleveraging. Filing discusses preliminary purchase accounting for Rex in MD&A but does not separately XBRL-tag the Rex goodwill, bargain purchase gain, or Commonwealth facility debt components; these appear only in narrative disclosure.
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