Yes, that is exactly your choice. And what Van's stated in their bankruptcy filing.
And it's important to understand that it means getting pretty much nothing, and that nothing may take a long time to be determined and paid.
Minor unsecured creditors who are not individually important to the future of the business almost always get pennies on the dollar if the don't accept the compromise deal and hold out for what they're owed.
If you have say 10k down, you'll get a few hundred at best.
Far better to take the terms and take delivery, then sell it on. Freshly-delivered kits, as long as they are complete, are likely to have significant resale value.
but it's not written in stone that your parts will be delivered. nobody can predict today if Vans still exists within next year. you paid already let's say 10K, then Chapter11 happens and you are asked to add 5K or so for the same amount of parts. rejecting the new price means you lost probably 90% of 10K, accepting the new price means that you ventured 15K.
all the folks who made deposits/final payments already etc. were struck by the whole mess completely unaware. no one has a glass sphere. but now shooting additional money into an officially bankrupt system? a company that has to apply to a court when they want to put their coffee machine on ebay?
please don't flame me, i would love to see them survive. but please nobody should hope to make a business case out of it.
The business will be rebuilt within a few years, the trust will take a lot longer to return.
I hope this doesn't get deleted. It is not bashing, it is not whining, it is not bad-mouthing, it's not social screaming and it's not wanting the world to burn. It's the simple, unemotional, stating of facts without taking a position.
If this plan is approved by the court and things proceed as Van's intend, the customers who are creditors are the ones who eventually pick up the entire tab for getting the company back on it's feet. Van does not lose ownership or control, his prior loans and DIP funding are safe unless the business fails completely and is liquidated. The larger unsecured creditors may have to take a haircut, or they may not.
The enforced price rises for those who have deposits down will, at the bare minimum, equate to those deposits being lost and having to be repaid in order to stay in the game. It is perhaps no coincidence that ~1,500 customer creditors multiplied by some reasonable guesstimate of average individual exposure ($4k) = $6 million.
When it comes to the question of future trust, the question of why customers have picked up the final tab rather than the company and its owners may need answering.
iMHO Vans needs to take accountability for what has happened to rebuild trust that has been completely shattered. Covid made us do it because all of you wanted more airplanes. The primer wasn't our fault, it was those workers in the PI. The LCP issue was the fault of that outside supplier we hired. I see it as a complete failure of management to supervise these outside vendors and provide any semblance of quality control before it was too late, yet I see no mea culpa message coming out. At OSH '23 they surely knew the financial straights they were in yet gladly took money for kit orders. I have a trust problem with that.
The business will be rebuilt within a few years, the trust will take a lot longer to return.
Regarding "trust" ... Vans didn't sell to the Chinese ... so there's that ... this could have gone in a very different, very bad direction fast ... A lot of us know these folks and they genuinely care about customers.
Historically, airplane companies, even kit companies like vans, have refused to transfer line positions. That's to keep people from using them as commodities and speculate for profit while the manufacturer tries to figure out how many items they've actually got customers for.
When it comes to the question of future trust, the question of why customers have picked up the final tab rather than the company and its owners may need answering.
Isn't it always the way?
If Vans had the money and didn't have to hike prices for customers with deposits down, they would hike prices for new customers, with an even bigger mark up to cover the losses they just incurred by not forcing new contracts on those with deposits.
In the end, the customer always pays.
Isn't it always the way?
If Vans had the money and didn't have to hike prices for customers with deposits down, they would hike prices for new customers, with an even bigger mark up to cover the losses they just incurred by not forcing new contracts on those with deposits.
In the end, the customer always pays.
I am not sure if I see the logic in this, plus if Chinese can buy it and make it better company without breaking their promise to the existing customer, that would that be caring more for the customers.Regarding "trust" ... Vans didn't sell to the Chinese ... so there's that ... this could have gone in a very different, very bad direction fast ... A lot of us know these folks and they genuinely care about customers.
But usually in Chapter 11, the company owner loses a significant amount of their ownership (and often overall control) in the course of obtaining DIP financing. Thus the creditors at least feel they are not the sole losers.
In this instance that isn't happening.
I don't think that's really fair. Owners, including Van, will almost certainly see their existing shares wiped out. This is an employee-owned company, so every employee's stake will be worthless. Poof!If this plan is approved by the court and things proceed as Van's intend, the customers who are creditors are the ones who eventually pick up the entire tab for getting the company back on it's feet.
I don't think that's really fair. Owners, including Van, will almost certainly see their existing shares wiped out. This is an employee-owned company, so every employee's stake will be worthless. Poof!
Yes, Van will likely end up owning part of the reorganized company, but that's because he's financing the reorganization to the tune of $6 million and this loan will probably be converted to equity. He's not getting ownership for free... he's investing $6 million for it.
And all creditors will probably take a haircut. Lycoming, Hartzell, Stein, etc.
So no, customers who are creditors will NOT be picking up the entire tab. Most of the tab is being picked up by Van himself... he's paying $6M to retain partial ownership in the company, rather than lose it all.
CubCrafters does it. But there is no room for markups. They simply take your order and offer it to the next in line. If they accept you get a refund and next one takes over you order. It's not a right to refund. If they find no buyer then you still have to pay for it.
Sorry for venting..
But this process is just leaving me very frustrated.
Vans is using the CH11 blanket to cover their own mistakes. Vans is asking to unilaterally cancel all existing orders without providing refund. And, they'll allow us to resubmit a new order using our existing deposit. The terms of the new order will be at their discretion, which is *not* specified in the court request. So at some future date, they get to dictate the $$ they want us to pony up, without court approval. I've read the court filings. Tomorrow is their court hearing. Vans is requesting an immediate court approval for the contract cancellation. Vans knows that filing a claim to get deposits back is a years long effort and no guarantee we get anything.
PS: I mention Vans, because they are the filers. I know a turnaround expert is involved and they'll be more ruthless in executing to Vans benefit because it helps them as well.
"I know a turnaround expert is involved and they'll be more ruthless in executing to Vans benefit because it helps them as well."
Who knows how their fee is structured? I would not assume they are necessarily a bad actor. Remember the process is overseen by a judge
They are consultant and do real work and have expertise. They deserve payment like everyone else.
" Vans is asking to unilaterally cancel all existing orders without providing refund. And, they'll allow us to resubmit a new order using our existing deposit."
Yep all this sucks.
I am glad to see it is CH 11 not CH7. Then Van's closes their door forever. The property is sold off. Then equipment and materials go to auction. Most likely no more kits unless there is buyer for the IP.
Often unsecured creditors get nothing in CH7. I think there are more options for customers. Continue to build at a higher price or partial refund. The partial refund is unknown and could be zero. I think it is likely to better than CH 7. No experience here.
Fair enough. I don't know how the turnaround exec is compensated. Could be performance based. Could be straight hourly.
Vans had many other options to solving this. Asking for bigger deposit would clearly have helped. May not solve the kit cost issue right away.
Yes, the court has final say. I'm waiting to hear what transpires at the hearing tomorrow. Vans presents their papers as the 'only solution' to their plight. I suspect the courts will accept that position.
plus if Chinese can buy it and make it better company without breaking their promise to the existing customer, that would that be caring more for the customers.
Usually in Chapter 11 the party providing DIP funding takes a big ownership stake in exchange for providing that funding (often so much that the original owner loses control) but here the DIP funder and the owner are one and the same (Van) so there is no net transfer of ownership.
Correct me if I'm wrong - but I believe at this point all we have from Van is an OFFER of DIP funding - probably one among many - the Court has to select/approve which one is accepted.
I am not sure if I see the logic in this, plus if Chinese can buy it and make it better company without breaking their promise to the existing customer, that would that be caring more for the customers.
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Correct me if I'm wrong - but I believe at this point all we have from Van is an OFFER of DIP funding - probably one among many - the Court has to select/approve which one is accepted.
Look at Cirrus, Chinese owned since 2011 went from marginal financials (At one time they were contemplating a bankruptcy filing, owed back rent of well over a year) to securing a Collier trophy 6 years later. Seem to be doing very well and carrying on the tradition the founders started.
Plus we don’t know how much of the company Van himself owns. The “owners” may well be taking a bath on the back of this.