UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
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CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (date of earliest event reported): January 24, 1996
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Commission File No. 2-91762
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POLARIS AIRCRAFT INCOME FUND I
State of Organization: California
IRS Employer Identification No. 94-2938977
201 Mission Street, 27th Floor, San Francisco, California 94105
Telephone - (415) 284-7400
This document consists of 3 pages.
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Item 5. Other Events
Viscount Air Services, Inc. (Viscount) Default
As discussed in Polaris Aircraft Income Fund I's (the Partnership's) Quarterly
Report to the Securities and Exchange Commission on Form 10-Q for the quarterly
period ended September 30, 1995, the Partnership has been in discussions with
its lessee Viscount to restructure certain of Viscount's financial obligations
to the Partnership. While such discussions were underway, Viscount had
undertaken to pay in full, by the end of each month, beginning in June 1995, the
current month's obligations by making partial periodic payments during that
month. Viscount is presently in default on these financial obligations to the
Partnership. As discussed in previous filings, Viscount's failure to perform on
its financial obligations with the Partnership is expected to have an adverse
effect on the Partnership's financial position.
On December 13, 1995, the Partnership sent a notice of default to Viscount
demanding, within 10 days, full payment of all delinquent amounts due the
Partnership. On January 9, 1996, Viscount was notified that the Partnership had
elected to terminate the leases and the Partnership demanded return of the
Aircraft. On January 24, 1996, Viscount filed a petition for protection under
chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court in Tucson,
Arizona. Viscount presently has possession of the aircraft and engines. Legal
counsel has been retained and the general partner is evaluating the rights,
remedies and courses of action available to the Partnership with respect to
Viscount's default and bankruptcy filing.
The Partnership's three Boeing 737-200 commercial jet aircraft and two spare
engines were on lease to Viscount prior to the lease termination notifications.
Viscount had sub-leased one of the Partnership's aircraft to Nations Air
Express, Inc. (Nations Air) through February 1998. Payments from Nations Air are
paid directly to the Partnership. In addition to the two spare engines on lease
to Viscount, one spare engine was sold to Viscount in November 1995. The
Partnership agreed to accept payment of the sales price of approximately $0.5
million with interest in monthly installments through July 2000. The Partnership
recorded a note receivable for the sales price, which is secured by the engine.
The payments on the engine finance sale note receivable from Viscount are also
currently in default. All payments, whether due from Viscount directly or
indirectly from Nations Air, may be affected by Viscount's filing for protection
under chapter 11.
As of December 31, 1995, the Partnership recognized rent, loan and interest
receivables from Viscount aggregating approximately $1.8 million. In addition,
delinquent maintenance reserves due from Viscount aggregate approximately $0.3
million as of December 31, 1995 for a total of approximately $2.1 million in
outstanding obligations. As previously discussed, the engine finance sale note
receivable, the balance of which at December 31, 1995 was approximately $0.5
million, is secured by the engine. The balance of the line of credit advanced to
Viscount in 1994 of approximately $0.3 million at December 31, 1995 is
guaranteed by certain affiliates of the principal shareholder of Viscount. The
Partnership has recorded an allowance for credit losses for the remaining
unsecured receivable balances from Viscount of approximately $1.0 million in the
December 31, 1995 financial statements to be presented in the Partnership's 1995
Annual Report to the Securities and Exchange Commission on Form 10-K. The
Partnership has received no additional payments from Viscount subsequent to
December 31, 1995.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
POLARIS AIRCRAFT INCOME FUND I
(Registrant)
By: Polaris Investment
Management Corporation,
General Partner
February 7, 1996 By: /S/Marc A. Meiches
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Marc A. Meiches
Chief Financial Officer
(principal financial officer and
principal accounting officer of
Polaris Investment Management
Corporation, General Partner of
the Registrant)
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