By Aisha Al-Muslim

Air Force One supplier GDC Technics LLC has filed for bankruptcy and warned that it would lay off more than 200 employees after Boeing Co. canceled its contracts.

GDC, a Boeing subcontractor working on government executive fleets, filed for chapter 11 protection Monday in the U.S. Bankruptcy Court in San Antonio. The Fort Worth, Texas-based aerospace company valued both its assets and liabilities in the $10 million to $50 million range, according to court papers.

The decision to file for bankruptcy comes after Boeing and GDC sued each other earlier this month over their business dealings in building two new Air Force One aircraft, which would be used to transport the U.S. president.

Chicago-based Boeing filed a lawsuit against GDC on April 7 in Texas state court alleging GDC was roughly a year behind schedule in completing interior work on the two presidential planes. The delays caused by missed deadlines allegedly resulted in millions of dollars in damages to Boeing and jeopardized work that is of critical importance to the U.S. Air Force and the president, the lawsuit said.

Boeing, responsible for designing and manufacturing the military aircraft, hired GDC as a subcontractor to design and build the interiors of the planes. Boeing also hired GDC as a subcontractor on existing Air Force One aircraft to help refurbish the interiors.

A Boeing spokeswoman said Tuesday that the company canceled the contracts with GDC earlier this month "due to their insolvency and failure to meet contractual obligations." Boeing declined to comment on the bankruptcy filing.

GDC countersued Boeing on April 16, seeking at least $20 million. It alleged Boeing's mismanagement caused the delays in completing the aircraft and that Boeing failed to pay what GDC was owed for its work. It also alleged Boeing has damaged GDC's reputation with the Air Force, its vendors and suppliers, and the aviation industry.

"GDC's financial stress resulted from Boeing holding up in excess of $20 million in payments that should be paid to GDC from Boeing for changes directed by Boeing and performance under the subcontracts," GDC said in the lawsuit.

GDC, which is owned by aviation investment firm Oriole Capital Group, plans to continue operating while restructuring its finances, said Oriole Managing Partner Hossein Mousavi.

"GDC Technics looks forward to emerging from this process with a bright future and will diligently work through the legal process to keep its well-earned reputation," he said in a statement Tuesday.

Boeing is working to mitigate any impact to the work on the aircraft, as well as to GDC's suppliers, a Boeing spokeswoman said Tuesday. Boeing plans to either shift the work assigned to GDC to new suppliers or perform it in-house, she said.

In 2018, Boeing received a $3.9 billion contract from the U.S. Air Force to convert two new 747-8 aircraft into presidential jets that would replace the existing Air Force One models. The planes were to be delivered by December 2024.

The modification to the two 747-8 aircraft includes electrical power upgrades, a mission communication system, a medical facility, interior improvements and autonomous ground operations capabilities. The work is being performed at a Boeing facility in San Antonio, the company spokeswoman said.

As a result of losing the Boeing contracts, GDC said it anticipated permanently cutting 223 jobs in San Antonio and Fort Worth by May 9. The San Antonio facility is where the Air Force One work was done.

"It is anticipated that most operations at the Fort Worth facility will cease and that the San Antonio facility will close due to the sudden and unexpected termination of a client contract," Brad Foreman, chief executive of the company, wrote in a letter to the Texas Workforce Commission dated April 9.

GDC has hired law firm Wick Phillips Gould & Martin LLP. Judge Craig A. Gargotta has been assigned the case, number 21-50484.

Write to Aisha Al-Muslim at aisha.al-muslim@wsj.com

(END) Dow Jones Newswires

04-27-21 1819ET