EVERY creditor, secured or not, has priority over equity.But the only secured debt is to him!
Owners are last in line in bankruptcy.
EVERY creditor, secured or not, has priority over equity.But the only secured debt is to him!
Has there been any statement from Van's about the status of outstanding backorders? I still have backordered items (including the seats) from my finishing kit. Backorders don't seem to be covered in their announcement.
To answer my own questions, I pulled and read the public filings Van's Aircraft made in the Oregon Bankruptcy Court. I'm attaching these documents because they are public record, they are the words of Van's Aircraft, and I believe everyone is entitled to full transparency. After reading these I'm feeling a bit more comfortable about the situation.
I don't know if I agree. Van's has historically been (relatively) low-budget, sure.
“The 51-year-old Oregon firm will immediately raise kit prices about 32 percent, and parts prices are likely to rise even more than that, company officials said.”
https://www.aopa.org/news-and-media/all-news/2023/december/05/vans-enters-chapter-11-bankruptcy
“The 51-year-old Oregon firm will immediately raise kit prices about 32 percent, and parts prices are likely to rise even more than that, company officials said.”
https://www.aopa.org/news-and-media/all-news/2023/december/05/vans-enters-chapter-11-bankruptcy
To answer your earlier question--no, under my recommendation, the SB kit company would not bail out the QB kit company if they didn't properly account for their costs. The QB company would have to raise prices, find an investor to bail them out, or file for bankruptcy. This wouldn't be screwing the QB customer, this would be making sure that the QB customer is responsible for paying the actual value of their kit instead of pushing that burden off onto someone else. Accordingly, the SB customer's costs would increase based only on factors directly related to the SB kit business.
Going forward, they need to fix their business practices and get more efficient.
Am I the only one that feels like this chapter 11 is just to legally break the contract with the previous customer orders?
bk1bennett; said:snip...
I want Van's to succeed, and I think, ultimately, they will emerge from Chapter 11 still operating. Going forward, they need to fix their business practices and get more efficient. The escrow for deposits is a good, necessary corrective action, and their are many more coming. Kit and part prices are going way up. A Van's aircraft is still a great deal overall, but it won't be the same deal it used to be, and that is a hard reality now.
Seems like some apologies are in order, to me.
I understand that Vans used my deposit money to fund operations… But I locked that price with Lycoming, not Vans. And I expect Vans to work with us to minimize the impact on the engines.
Well, I too hope that Vans succeeds through this rough sailing. But I'm afraid some customers are not going to be happy. They shouldn't be. But it's in all our interest to see Vans succeed.
People should be disappointed, for sure. They didn't get what they paid for, either with LCP parts, shipping dates, or pricing on future shipments.
On the other hand, Chapter 11 with a Van financed reorg is the best of a series of bad options. Most of the other options would have left current customers in much worse shape. Even if today's customers want to walk away, there is a secondary market for their wing/tail/fuse kits. They will recover some of their investment. That market would have been non-existent if Vans wasn't able to provide follow-on kits.
Am I the only one that feels like this chapter 11 is just to legally break the contract with the previous customer orders? ...
Reading the room, very few would volunteer to have their locked in price raised. So this seems to leave the only option to break the locked in price, and get back to shipping kits at a new price.
How could they have insured against it? Last I looked, there are no insurance plans that cover company insolvency as a loss. Additionally, you state that it's better for "you" without specifying who falls into the category of "you", but I assume you mean all builders. While this may be true for those builders who are wealthy and can absorb the price increases, it is most definitely not true for those who cannot. Those people will likely receive little to nothing back from the reorganization plan. That money will simply be gone. These are people who could not afford to continue with the build because Van's broke their contracts and decided to unilaterally raise prices and say take it or leave it.Really?
You're an unsecured creditor. You carried risk. You could have insured it, but didn't.
I don't say this to be antagonistic (although it might come across as such). I say it as a bit of a reality check, because what Vans is going through right now is so much better than it could be, and so much better for you than it could be too.
If Vans had run into this financial situation in my country, the regulator would have stepped in with a criminal prosecution for "trading while insolvent" by now, and our bankruptcy laws, which are designed around protecting creditors, would have forced the company to wind-up. Customers would lose everything, builders and owners would be left in the lurch, creditors would get cents in the dollar, and the company's Directors and Executive would receive court orders banning them from running any other companies for however many years it takes for the bankruptcy to be fully discharged. It'd be an absolute blood bath. Bankruptcy is a lot less forgivable in most of the world than it is in the USA.
So instead, Vans continues to trade, still accepting orders, still shipping parts, still supporting builders, with a large kit inventory ready to ship, planning to close-out the LCP issue in a year, and announcing that deposits haven't been lost, but will be applied at 100% value to whatever the new kit prices are.
In five years time, this will be a distant memory. Maybe someone will paint an RV-8 with winged dollar bill nose art to memorialize it.
(Besides, didn't Van already apologize in the video?)
I've been sitting on tenterhooks about the future of Vans for months. When I saw the Chapter 11 announcement, I relaxed. This is a great outcome. Looking forward to Vans having a long future.
- mark
Who was the check written to? Vans or Lycoming?
Not trying to be a smart*** here, really asking the question. I have not purchased an engine through Vans for either of my builds, so I don't know.
And now, if AOPA is to be believed, that secondary market just gained 32% value. I guess I'll need to increase my hull insurance, to match the new aircraft prices on the used market that we are about to see.
The check was written to Van's. It appears that Lycoming sells engines to Van's who resells them to customers with a markup. Lycoming will still want to be paid the same as before for the engines (plus the $600k they are owed). The markup is most certainly less than 25%, the amount of the deposit, so Van's will be out of pocket to Lycoming for some of the cost of the engine, even with the customer paying the 75% balance, unless Lycoming agrees to take a haircut. It appears they are negotiating that haircut as we speak and that's why they will get back to us on how this is going to work with regard to engines. But the pro forma budget shows $180k net cash flow out of the company "from honoring Lycoming Deposits", so it appears there is going to be some recovery of deposit here.
The hard part for me is trusting that Vans will make it thru this and coming in with a higher amount is not throwing good money after bad.
How much will a 32% increase in kit costs (and assuming some additional on avionics/engines) hurt demand? Enough that they don't make it and future deposits are lost?
Part pricing was always such a draw versus certified- wonder how much that will change. Trying not to let my mind run too much, but its hard not to.
Before people get terribly excited by the 32% number, that came from one reporter (Dave is a friend whom I respect BTW) who didn’t cite his source.
Kitplanes has been in contact with numerous sources in the know who basically say “we have no idea what the price increases might be”.
So be careful on what you let drive your anxiety.
Paul
So everyone talking about the price increase on their order but what about the lead times. If I receive an email in the following weeks/months about my “order, deposit, and contract options”, and am asked to make a decision by Jan 15th or X date, the delivery timeline must be communicated in that info. For example I know I’m in the second later boat since I have engine and avionics on order so I won’t be the Jan 15th round.
Whether I decide to pay more money or cancel contract could be heavily enticed with a quicker delivery window. I think some people wouldn’t mind the higher cost contract if there was a guaranteed quick delivery. Otherwise there’s not much “positive” incentive other than not wanting to be in line with the creditors at the end of bankruptcy and taking a loss of some amount. I mean I’m realistic and would be willing to work with vans but drastically shortening lead times could help them “sell” the higher costs to disgruntled builders… But shortening lead times in this situation is likely impossible.
So everyone talking about the price increase on their order but what about the lead times. If I receive an email in the following weeks/months about my “order, deposit, and contract options”, and am asked to make a decision by Jan 15th or X date, the delivery timeline must be communicated in that info.
I thought about that too. Also, the price of any unfinished kit (minus LCP issues) should have just jumped that same 32%, so if builders are looking to exit the market/hobby, there should be opportunities without needing to take a big haircut.
Wishful thinking but I disagree. My tail kit and wing kit are full of horrible laser cut parts. No builder would want these parts in an airplane. So unless Vans replaces all laser cut parts at its expense or at a steep discount, my kits are worthless.
Wishful thinking but I disagree. My tail kit and wing kit are full of horrible laser cut parts. No builder would want these parts in an airplane. So unless Vans replaces all laser cut parts at its expense or at a steep discount, my kits are worthless.
How does one read/see the details of the Vans Chapter 11 filing?
Is a link available?
Thanks
Those of you that think that most American owned businesses don’t use deposits for operating capital, I have some ocean front property in Arizona to sell you.
Deposits just become a liability on the balance sheet. It is as simple as that.
Post #12 of this thread.
How does one read/see the details of the Vans Chapter 11 filing?
Is a link available?
Thanks
I am the one that posted the docs earlier last night. I got them from PACER, which is the system the federal courts use for filing court docs and retrieving information on cases. You can check it out at https://pacer.uscourts.gov/. It costs money to pull documents but it's not that expensive.
There will be hundreds, possibly thousands, of documents filed over the course of this case and this will be the best place to get them and see information on deadlines, etc.
By the way, the court entered an order today requiring Van's to provide its most recent balance sheet, statement of operations, cash-flow statement, and Federal income tax return within 7 days. Once that's available we will have a better idea of what their situation is.
Those of you that think that most American owned businesses don’t use deposits for operating capital, I have some ocean front property in Arizona to sell you.
Deposits just become a liability on the balance sheet. It is as simple as that.