Small jet maker Eclipse files for bankruptcy

NEW YORK (Reuters) - Eclipse Aviation Corp, which pioneered the market for very light jets, filed for bankruptcy protection on Tuesday as it ran out of financing to stay afloat.

The Albuquerque, New Mexico-based company, founded in 1998 by former Microsoft Corp (MSFT.O) employee Vern Raburn, cut back production of its Eclipse 500 jet earlier this year as costs outstripped sales.

The twin turbofan jet, seating up to six and able to fly at 425 mph, was designed to open the lower end of the business jet market to a new class of buyers.

The mass market for small jets never reached Eclipse's ambitions and one of its largest customers, the air taxi service DayJet, folded earlier this year.

After a five-year boom, the economic slowdown and financial crisis has stopped the business jet market in its tracks.

Manufacturers such as Canada's Bombardier Inc (BBDb.TO), Textron Inc's (TXT.N) Cessna unit and France's Dassault Aviation SA (AVMD.PA) all reported a sequential dip in the value of jets delivered in the latest quarter.

Eclipse filed for Chapter 11 protection in the U.S. Bankruptcy Court in Delaware, where it is incorporated. Its largest shareholder, ETIRC Aviation, has agreed to purchase Eclipse's assets, but may be outbid in a later bankruptcy auction.

Several of Eclipse's customers have sued the company for a refund of deposits they paid on jets that have not been delivered.

(Reporting by Bill Rigby, editing by Leslie Gevirtz)