The bankruptcy consultant helping Van’s Aircraft says he’s confident the company will emerge from Chapter 11 and resume profitability. Clyde Hamstreet, of Hamstreet and Associates, said in a video update hosted by Van’s that almost 85% of customers with deposits on kits and parts stuck with the company after its bombshell announcement late last year that it was seeking Chapter 11 protection. “That’s [very much] appreciated and makes a big difference to the success of the company,” he said. “We’ve got a backlog of business now that we know … can be profitable and will allow us to repay our pre-petition obligations so I’m pleased with it.”
Hamstreet said the reorganization plan has been filed with the court and is now under review. It’s expected to be approved in mid-May. Hamstreet said the strong support of customers and vendors, along with the millions of dollars in cash that founder Dick VanGrunsven and his family loaned the company to keep it afloat, all helped ensure a “good outcome” for creditors and a positive future for Van’s. “There’s a lot of things coming together … and it really gets pretty exciting knowing what’s coming and what the opportunity is.”
Classic case of a small family business outgrowing its processes and systems. They have a great product that is in big demand. Easily solvable absent some outside shock like spiking fuel prices.
“Easily solvable absent some outside shock like spiking fuel prices.”
Has anyone had any “outside shocks” say, in the last 5 years or so?
I think rather that the people who took over management when Van sold the company, made some foolish and perhaps greedy decisions in preference to the focus on quality. In some respects it looks not unlike Boeings travails. An example is the choice to laser cut parts. Some no trained aircraft engineer would consider acceptable practice and there are anecdotal reports to suggest that at least some of Vans employees knew this. There are other examples.
I am surprised and pleased for VANS as I want them to thrive and survive – however I do hope they look after the people who didn’t accept the price hike and give them ALL their money back. I managed to get a full reimbursement from my CC provider, but I know that not everyone paid with this method and to be out at 55-60 cents on the dollar is simply unfair.
There is no such thing as fair.
Chapter 11 bankruptcy is designed to reorganize the company’s debt so that it can remain in business. This is done by reducing the debt burden and finding new financing. The alternative is to use Chapter 7 of the Bankruptcy Code to close the company down, which would mean that Vans would cease to exist. Availability of parts for existing Vans aircraft, and, the opportunity to obtain an excellent Vans airplane even if you are not a millionaire would disappear along with the jobs of all Vans employees and the economic contribution made by Vans in its community. Nobody gets “all their money back” in bankruptcy except for the government with regard to taxes. The people who put down deposits would get far less in a liquidation sale of the company’s assets than they will get in the Chapter 11 payment to creditors. I am delighted that Vans, a kit plane pioneer with great aircraft, can survive and prosper in the future.
If my math is correct, and it never is, losing 45% of your deposit is roughly equal to the price hike for those of us staying in the game. Which seems fair.
Better than getting 0 cents on the dollar.