Vans Aircraft files for Chapter 11 bankruptcy protection

[KRviator]

Wow. I knew they were in strife, but bloody hell.

On the plus side, most companies do make it out of Chapter 11, and I don't have the slightest doubt that Vans will as well, simply because there are not many comparable products to the RV lineup. Of course a big part of their appeal was they were relatively affordable, but that's certainly going to change going forwards, especially with the exchange rate being what it is now, too...

Sucks if you were waiting on a kit in the near future, I have a feeling the pineapple you're about to receive won't be lubed...
 

Quote

VAN’S AIRCRAFT ANNOUNCES CHAPTER 11 REORGANIZATION

On December 4, 2023, Van’s Aircraft filed for protection under Chapter 11 of the federal bankruptcy code, a key step in the reorganization of our company. During this period of reorganization, we will continue to source, produce, and provide parts, service, and support to our customers. We will also be crating and shipping kit orders.

 

Over the past few years, the company has faced a handful of complex issues, including unprecedented supply chain challenges throughout COVID, faulty primer that led to corrosion problems on quick build kits, and problems with laser-cut parts that were manufactured in response to high demand. As a result of this combination of issues, the company experienced serious cash-flow problems from which it could not recover through the normal course of business.

 

During that time, Van’s built up a significant and high-value parts inventory. As we manufacture the additional parts needed to balance this inventory, we will leverage it to fulfill orders for kits and parts over the next 12 to 18 months.

 

The purpose of the Chapter 11 filing is to allow Van’s to continue to provide ongoing support for its customers, suppliers, and employees for many years to come. We understand that this situation creates a hardship for everyone involved. However, without these changes we do not see a viable path forward that would allow Van’s Aircraft to remain in business and support its customers.

 

We invite you to watch this video message from Van’s founder, Dick VanGrunsven, explaining the Chapter 11 filing.

Source

 

 

 

Edited December 5, 2023 by KRviator

[LoonyBob]

Not good news, really.

[Litespeed]

It was obvious from the previous shutdown.

 

The Vans attitude to customers, staff and partners was plain to see.

 

The pineapples are loaded and signed by lawyers. Lubrication is only available if all rights are signed over.

 

Chapter 11, a way to screw everyone, hide your money and keep the company.

 

[onetrack]

The writing was on the wall many months ago. This is just formalisation of the mess to prevent the corporate wolves from destroying what's left of the company.

 

Unfortunately, bankrupt aircraft manufacturers are a dime a dozen, and this is how it always will be.

[rgmwa]

I feel sorry for Dick van Grunsven having to prop up his company when he should be comfortably retired, but it seems to me that they're in a good position to trade out successfully. There are obvious reasons why their cashflow took a hit, but they have a very good product line and loyal customers and suppliers, most of whom would continue to support them despite the inevitable price rises. It will be interesting to see what the new management structure will look like. I always thought that having Rian Johnson as both CEO and chief engineer was too big a job for one person.  He would have been spread very thin looking after both the technical and managerial side of the business.

[Thruster88]

As a Van's aircraft owner I see this as a positive.  

[KRviator]

7 minutes ago, Thruster88 said:

As a Van's aircraft owner I see this as a positive.  

Agreed. As an owner, however. As a builder or prospective builder, I think they're going to have to pay a significant premium going forwards.

I see on VAF that Van himself has stumped up several million dollars to provide interim funding for Vans to continue, so if a private individual, even The Man himself, is prepared to do that, I can't see RV's going the way of the dodo. Still, it must be heart-breaking for him to see Vans in the position it is now, when his name is on the building.

[Thruster88]

The way I see it if management had been managing the kit prices for those in the queue now would have been somewhat higher. The cost is what it is, you have to pay to play.

[Litespeed]

I agree the real cost is the cost.

 

The problem is they allowed a situation where everyone from workers, legacy suppliers and customers pay the cost.

 

The employees didn't get the luxury of chapter 11.

 

Jobs, loyalty and quality parts became the casualty. 

For management to fork out, is the least they should do.

 

 

 

[kgwilson]

Once the writing is on the wall companies often take ever more desperate measures to keep afloat and sometimes these measure come back to bite them. For example getting parts laser cut was a very bad decision but I presume because it was fast and relatively cheap they did it but suffered the consequences.

[facthunter]

Is this running on 2  places at the one time?  Nev

[Thruster88]

9 hours ago, kgwilson said:

Once the writing is on the wall companies often take ever more desperate measures to keep afloat and sometimes these measure come back to bite them. For example getting parts laser cut was a very bad decision but I presume because it was fast and relatively cheap they did it but suffered the consequences.

I dont think that is the case here. Van's outsourced to meet increased demand. With the benefit of hind sight they should have just increased the kit price to make the company profitable or more so which may have subdued demand to the point where the out sourcing was not necessary. They are not selling lowest cost widgets, it is a niche product with strong demand. Most successful kit manufacturer and I think it will remain so. Van's total performance, it is a real thing. 

[BurnieM]

While current kit builders will pay whatever they have to, I don't see many new kits being sold in the next 2-3 years.

This willl create further problems.

[KRviator]

15 minutes ago, BurnieM said:

While current kit builders will pay whatever they have to, I don't see many new kits being sold in the next 2-3 years.

This willl create further problems.

The trust lost is going to be the biggest issue, I think - not the new kit prices. I paid, from memory, about $45,000USD for my RV-9A QB kit. That's the new price for a standard kit, so you could still build a -9 in Oz for under $120K AUD. It'll just take a second hand engine, basic avionics, and the seats from a Suzuki Swift (don't laugh - they're an awesome fit!)

[Litespeed]

Trust is everything in this game.

 

Can I trust the kit is complete?

Can I trust the parts are to specifications?

Can I trust the parts are protected from corrode and crack formation?

Can I trust the employees are motivated for quality and paid appropriately?

Can I trust the price?

Can I trust replacement parts to cover the dodgy ones, esp. given they consider non structural parts, which by admission are below par and will not be replaced unless at customer expense?

 

If I was a current customer, I would be angry as hell.

As a new customer, I would not trust a thing they say, would be very worried about quality, and even doubt I would get a complete kit, at expected quality.

Price wise I would see it like gambling on a limp horse.

 

They may be a great company historically, but that is only previously.

 

They screwed their original suppliers, staff and customers.

Nothing they are currently doing provides any great confidence bar much larger prices and a lesson in how not to manage a aircraft company.

 

I accept many will forgive but I am very wary.

 

I like the Vans aircraft but would not trust the company,

maybe in five years when products are prooved again.

 

 

[Garfly]

 

 

 

[onetrack]

The interviewer is being pretty gentle, and asks about a "best case scenario" - but he needs to be asking the hard questions, such as a "worst case scenario". 

 

One thing is for sure, any Vans aircraft owner is going to be paying a LOT more for a kit and parts, and there's going to be a huge delay in supplying both, as new production will have to be financed - and I didn't see any mention of where that financing might come from.

 

If Van's Aircraft is re-constituted as a new corporate entity (almost 100% likely), then any production by the new entity is likely to be hobbled by demands for COD payment by suppliers for materials/components supplied, or hobbled by a lack of funds because neither the owners of Vans nor any financier has supplied enough funding for production to continue at the previous pace.

 

And it is very likely that the "new Vans" will have a substantially lower number of employees, to keep costs down - so this will mean lower production levels, and higher costs per unit produced, by the new entity.

[kgwilson]

I'd say that the current employees will be getting the jitters and probably looking around for other jobs which will exacerbate problems.

 

Worst case scenario is the rescue package fails and the secured creditors take whatever cents in the dollar they can get and those who have paid for kits are at the end of the queue & not get much back at all as they are unsecured creditors. So what do you do if you have already paid for a kit? Pay up a whole lot more and wait, but for how long. If everything goes belly up you should get 100% of your new payment (after the chapter 11 declaration) but lose a large chunk of your original deposit. Apply now for a refund knowing you won't get it till the court deliberates. Either way you are caught between a rock & a hard place.

[KRviator]

14 hours ago, Litespeed said:

Trust is everything in this game.

 

Can I trust the kit is complete?

Can I trust the parts are to specifications?

Can I trust the parts are protected from corrode and crack formation?

Can I trust the employees are motivated for quality and paid appropriately?

Can I trust the price?

Can I trust replacement parts to cover the dodgy ones, esp. given they consider non structural parts, which by admission are below par and will not be replaced unless at customer expense?

 

 

And that trust is precisely why Vans has done so well, for so long. I didn't even sit in an RV before I plonked down my hard-earned for a complete RV-9 QB kit 10 years ago - such was the level of trust I had in both their cabin dimensions, payload, performance figures through to kit quality and build manual. And my RV performs almost exactly as Van said it would. 

How long it takes to get that level of trust back in the company is the is the big unknown. For my money, the suppliers will negotiate something that gets them a goodly percentage of their $$ back even if it means a bit of a loss, just to keep Vans in business, because that means more engines, props and avionics they'll sell. But the builders - what they'll decide to do, both those as creditors and those looking at building, will have a lot of soul-searching to do before we see Vans return to the juggernaut it once was.

[Litespeed]

Talk about a sweetheart interview.

 

Makes it all sound rosey and as if the kits will proceed at a little extra cost.

 

I expect kit owners are going to get bugger all back in the dollar if they want a refund.

 

I expect staff will have a very shitty Christmas, as will customers.

5000 plus creditors, I do not see a happy ending.

 

Bar screwing everyone bar it's biggest suppliers and a complete phoneix operation, it's a one legged duck full of buckshot.

[Litespeed]

On 07/12/2023 at 9:03 AM, kgwilson said:

Once the writing is on the wall companies often take ever more desperate measures to keep afloat and sometimes these measure come back to bite them. For example getting parts laser cut was a very bad decision but I presume because it was fast and relatively cheap they did it but suffered the consequences.

Your right KG, no responsible kit maker would ever use such laser cut parts, it is a absolute no no for safety and quality. I have previously noted exactly why. It is absolute worst practice.

 

As soon as such a decision was made they loaded the gun and pointed it at customers. It should be turned back on the owners, then they can pull the trigger.

I am sorry, but too me that's unforgivable.

 

 

It's like a miniature Boeing, once great now a laughing stock for those that know. 

 

I don't want to see them fail but I doubt they will ever be the same.

[turboplanner]

US Chapter 11 allows breathing space for a Company to find a way forward from a difficult time.

It's not the Australian Receivership wind up, but a bit like our putting the Company under Administration with a Scheme of Arrangement.

 

Here are a couple of Chapter 11 examples.
 

General Motors went for Chapter 11 in 2009

It was rejuvenated and a new GM bought out the old GM.

Most members of the public would be reading this for the first time.

Chapter 11 allows an organization to find its way back to profitability.

 

 

Sometimes financial problems are solved by evolution.

Cyrus McCormick invented the Reaper in 1831; before that farmers and their employees had to walk through fields cutting the wheat, oat and barley stalks by hand.

For those on the land, he was the person who invented those triangular blades rivetted to a strip which slid between guards – the blades which seemed to find every rock in the paddock.

 

Not all seasons were good and although by 1902 Cyrus was exporting his reapers in the thousands all over the world the industry was in disaster mode. He solved it by merging with his competitors, Deering Harvester Co and three others, forming the International Harvester Company.

 

Industrial Designer Raymond Loewy, designed the Coke bottle and the Studebaker car with the flat boot. (it stood out so much that people said you couldn’t tell which way it was pointing when it was coming towards you.)

 

He also design the IH logo which went on, like the coke bottle to be worth millions.

 

In 1981 following a crippling strike in 1979, International Harvester was possibly the first company to transition to build vehicles using robotics. When a recession hit, IHC also discovered you can’t lay off robots; you had to keep paying the loans and went for Chapter 11.

 

They renamed the Company “Navistar” and opted to come out of Chapter 11 with just the core products of trucks and school buses. They retained the Truck name “International”.

 

They sold the IH logo, Construction Equipment (bulldozers etc), Tractors and Implements to Case, which rebranded itself Case IH and changed its colours from yellow to red.

 

This allowed people in the three different industries to keep on buying the products they wanted.

 

Today if you’re watching a movie and there’s a city scene, you’ll most likely be looking at an International truck or school bus.

A few days ago I passed a hugged CASEIH/Steiger Row Track tractor big enough to need a four axle Low Loader trailer pulled by a heavy truck.

 

Chapter 11 allowed that long term product evolution to continue for the past 42 years.

 

As for the Van’s Chapter 11:

I took part in the International Harvester Chapter 11 process.

Freed from the crippling debt, given time for the recession to end, we were able to heavily discount product to reduce a huge excess stock, spend a lot of time looking at core strengths and core products, and off-load non-performing areas. We had the money to step up advertising and the business went on, particularly where the customers came to us and asked us what was going on. We were free to tell them exactly what was happening in terms of sales service and parts.

 

So I’d add a caution to some of the comments above, and recommend anyone who is concerned, just contact Van’s and ask for regular updates. Then you’ll know what’s happening as against reading information which may or may not be correct or may or may not be out of date.

Remember, while they are under Chapter 11, they have the time to address some of the issues raised here.

 

I’m not saying they’ll come out of it; I’m not saying they won’t; I’m not saying their prices will go up; I’m not saying their prices will go down, I’m not saying their quality will change; I’m not saying their quality won’t, and they don’t have to advise every self-appointed expert on what their plans are; they still have competition.

[kgwilson]

GM only survived because the US Government stepped in and decided it was too big to fail and pumped something like US$1 billion in as a rescue package.

[FlyBoy1960]

29 minutes ago, kgwilson said:

GM only survived because the US Government stepped in and decided it was too big to fail and pumped something like US$1 billion in as a rescue package.

and I remember the publicity at the time, the people from General Motors were summoned to somewhere on the north-east coast of the US and they all turned up in private jets either owned by, or rented by, General Motors to get their executives to a meeting asking for money.

I would have sent them packing and told them to try again another day when they turned up on commercial airlines and got from the airport in an Uber  and not some stretch limo!

Edited December 16, 2023 by FlyBoy1960

[kgwilson]

I was wrong about the US$1billion bailout. The bailout was $US85 BILLION shared between GM and Chrysler & then the US Treasury became the biggest shareholder of GM. GM sold a lot of its subsidiaries (Opel, Vauxhall etc) closed others like Holden & Chrysler & it's Fiat partner went on to eventually be swallowed by Stellantis now based in Amsterdam..

 

Neither company should have survived. They had become fat and lazy and were producing the same old stuff while Japanese car makers were producing vehicles that actually sold and they made a profit. GM though has morphed back in to what it was using its size & (too big to fail mantra) to try and bully the government in to letting them continue to produce stuff that the planet cannot sustain.

 

VANS on the other hand is a miniature by comparison and their products are good. They just failed to keep up with changing market conditions and rising costs and continued to make bad decisions till eventually filing for Chapter 11 bankruptcy. If VANS does survive it will be a very different organisation to what it is now.

Edited December 16, 2023 by kgwilson