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Chapter 11 Plan Filed

Highlights:
  • Existing equity gets wiped out (including the ESOP which is being terminated).
  • The Van Grunsvan loans totaling $7m will be converted to equity (i.e. Van will be the sole shareholder).
  • Customers who made "priority" claims for their customer deposits get paid $3350 on the effective date of the plan (i.e. when approved by the court).
  • The remainder of deposits are grouped as unsecured creditors class and will get an "impaired" $0.55 on the dollar paid over three years -- a total of $2.7m or 80% of net disposable income through 2027. It's different amounts allocated for payments over the three years, so the payments would be uneven: $860,000 on or before june 15, 2025, plus $570,000 on or before June 15, 2026, plus $1,320,000 on or before June 15, 2027. However, they can be prepaid by the company at any time, say, if its disposable income is more than projected at this time. The projections are relatively steady for $69m to $73m in revenue in the next three years.
  • The company is allocating 20% of net income annually "reinvested in business operations" to hire additional staff, purchase more manufacturing equipment, and upgrade software.
  • Anybody with a "small" unsecured claim under $1000 will be paid 100% within 60 days from the effective date. If your claim is greater than $1000, you can elect to reduce your claim to $1000 in order to be treated as a "small" unsecured claim.
  • The company can object to claims up to 60 days after the effective date.
  • All replacements for LCP are expected to be shipped by November 2024.
  • 82% of customers with deposits elected to sign new contracts.
 
Interesting Detail in the Liquidation Balance Sheet: the customer deposit account is excluded from being an Asset. So it’s not being used to satisfy creditors in case of Chapter 7.
This means that any new deposits are effectively treated as if they were held in escrow by a third party while they are in that account.
 
Chapter 11, when used properly, can be a good thing for all parties. Vans is a standup company and to me, their word is golden. A good company like Vans will use the chapter 11 process like a machinist using a tool and when it’s all said and done, a stronger company will emerge and mostly satisfied customers will result. Every company has its ups and downs. Some will fail from not making necessary changes to their business, others will learn from the past and grow. As a satisfied customer of Vans, I believe they will make it.
 
Well, happy to hear it’s 55% if that does in fact happen. Still sour that my dream of building a plane will forever be tainted by this fiasco. I can’t look at my project and think, why did so many others have their dream come through all happy and rosy but us Covid builders have been put through the wringer. No way to ever get that back. If nothing else, I’ve definitely learned a hard life lesson at a very young age. Any business dealings I make going forward, Van’s bankruptcy will always be at the forefront guarding me. I always said to myself “vans will never go bankrupt, they’re too big to fail”… boy was I wrong. Granted they didn’t “fail” but they did file bankruptcy. Well back to building…
 
I fly an RV14a. It has been flying for almost 4 years. I am very sorry for those unable to complete their planes during this period of financial instability.however, keep your eye on the ball. The plane is fantastic to fly and operate.With proper transition training even low hour pilots can comfortably and safely fly these planes.Keep on building. RVers are the most unique flying group out there.This too will pass. Tailwinds.
 
I am glad Vans Aircraft is quickly recovering from the Ch11 proceeding.
I want to add as a perspective of a new RV8 builder who is still in phase 1 testing, when you get to solo in your airplane that you built, all the years of toiling away alone, all the hardship will slip away, especially in a plane that surprises me of its wide range of performance. Every builder has a unique difficulty with his project, financial, technical, logistics, family, jobs, etc. Thera are at least 10,000 builders who had suffered through something similar with their projects before. Keep the eye on the ball and keep looking forward to the finishing line.
 
sc_pilot said:
Still sour that my dream of building a plane will forever be tainted by this fiasco. I can’t look at my project and think, why did so many others have their dream come through all happy and rosy but us Covid builders have been put through the wringer.
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I look at it a little differently. When I finish my airplane it will be an even more significant accomplishment than the builders who came before me and had it "easy". They had shorter lead times, no LCP's, fewer delays, less uncertainty, FAR lower costs, etc.

I'm really just kidding. Every builder has challenges. Building a -14 is a piece of cake compared to earlier models. New builders also have it easier with aftermarket accessories, the availability of custom interiors, custom built hose kits and panels, etc.

Building my airplane has pushed me right to the limit of what I'm capable of doing. The bankruptcy has been a very unfortunate thing for all that have been affected but compared to all the other challenges I'm facing, it's a minor annoyance. Yes, builders have suffered but think about the employees at Vans or the VanGrunsven family. I'd much rather be in my shoes. My livelihood and legacy aren't affected by the bankruptcy - only my patience and bank account.

Don't let the bankruptcy ruin your dream. When you fly your airplane for the first time, the bankruptcy will be the last thing on your mind.
 
sc_pilot said:
Well, happy to hear it’s 55% if that does in fact happen. Still sour that my dream of building a plane will forever be tainted by this fiasco. I can’t look at my project and think, why did so many others have their dream come through all happy and rosy but us Covid builders have been put through the wringer. No way to ever get that back. If nothing else, I’ve definitely learned a hard life lesson at a very young age. Any business dealings I make going forward, Van’s bankruptcy will always be at the forefront guarding me. I always said to myself “vans will never go bankrupt, they’re too big to fail”… boy was I wrong. Granted they didn’t “fail” but they did file bankruptcy. Well back to building…
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“Why did so many others have their dream come through all happy and rosy…?”

Really? I am truly sorry that this set of circumstances affected you, and so many others…but…that is life, and life isn’t fair.

While you may feel that it “taints” your dream, it also gives you valuable experience. If building is indeed your dream, you will find a way to make it happen…
 
bertschb said:
Building my airplane has pushed me right to the limit of what I'm capable of doing. The bankruptcy has been a very unfortunate thing for all that have been affected but compared to all the other challenges I'm facing, it's a minor annoyance. Yes, builders have suffered but think about the employees at Vans or the VanGrunsven family. I'd much rather be in my shoes. My livelihood and legacy aren't affected by the bankruptcy - only my patience and bank account.
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I agree, at this stage my cost has been the price increase. I've received all my kit backordered parts plus some that were on backorder from a web order. I have confirmed an LCP parts order and am on the fulfillment list. I have a FWF/Powerplant on order and its going to cost me more than I had originally planned. Bottom line though, I have not lost any money!

I haven't done the math but am sure its been done. Those with deposits in and unfulfilled orders that opted to exit will get $3350 (or their deposit whichever is less) plus 55% of any remainder over 3 years. Small debtors with claims under $1000 will be made whole within 60 days. I suspect the number of kitbuilders with outstanding allowed claims, claims greater than $3350 (class1) or greater than $1800 (class 6 with opt-in to reduce claim to $1000) is relatively small compared to where it all started. In other words, a better than average outcome of a bankruptcy proceeding.

So yes, its been a test of patience, time, and for some anxiety, but end of day, I will complete an airplane and fly it in the not so far off future because Vans appears to be navigating a successful reorganization. And that folks, is priceless to me.
 
sc_pilot said:
I’ve definitely learned a hard life lesson at a very young age....... I always said to myself “vans will never go bankrupt, they’re too big to fail”… boy was I wrong. Granted they didn’t “fail” but they did file bankruptcy.
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You must be young. What do Piper, American Airlines, Glasair,.... all have in common? Ans: They've all been through bankruptcy.
 
Has the plan been approved or did I miss something?

Answered my own question. The plan has not been approved yet. I suspect it will.
 
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Reading the plan with a nice Buffalo Trace so...

Note 3: Lycoming requires Van's pre-pay 50% of purchase price for the 12 engines on order at anyone time 90 days prior to scheduled manufacture with no refund once manufacturing starts. The engines are already presold to customers who have also paid a deposit, but having a liquidator follow through with paper work of delivery and collection of the balance customers owes for the engine and payment to Lycoming prior to shipment and confusion on engine options ordered will reduce proceeds by 20%.

I take this to mean that there are 12 engines on build order with Lycoming within any 90 day period (would include normal and TB). Am I reading this correctly?

Also noticed that there is a Lycoming/Vans Feb letter agreement on their terms, which I assume addresses this section.

OK, I'm an admitted accounting turnaround geek...
 
QuixoteAg said:
Reading the plan with a nice Buffalo Trace so...

Note 3: Lycoming requires Van's pre-pay 50% of purchase price for the 12 engines on order at anyone time 90 days prior to scheduled manufacture with no refund once manufacturing starts. The engines are already presold to customers who have also paid a deposit, but having a liquidator follow through with paper work of delivery and collection of the balance customers owes for the engine and payment to Lycoming prior to shipment and confusion on engine options ordered will reduce proceeds by 20%.

I take this to mean that there are 12 engines on build order with Lycoming within any 90 day period (would include normal and TB). Am I reading this correctly?

Also noticed that there is a Lycoming/Vans Feb letter agreement on their terms, which I assume addresses this section.

OK, I'm an admitted accounting turnaround geek...
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You know there are no buffalo in kentucky, we have them in Montana and in my freezer..... (do you have a geeky pocket protector and green shade visor?)
 
sc_pilot said:
Still sour that my dream of building a plane will forever be tainted by this fiasco.
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The whole situation is unfortunate, no doubt about it. But it's only as tainted as you allow it to be. And as life lessons go, this one is pretty cheap.

If you plan to keep building, move forward; stewing about the bankruptcy is a waste of valuable building time and energy.

ds
 
Still has too be voted on...
"Because Debtor constitutes a “small business debtor” under Section 101(51D) of theBankruptcy Code that has elected to be administered pursuant to Subchapter V of the BankruptcyCode, Debtor is not required to obtain approval of a disclosure statement prior to soliciting votes from Creditors and Interest Holders unless the Bankruptcy Court, for cause, orders otherwise.Debtor seeks your vote to accept the Plan. If you have questions about how your Claimor Interest is being treated under the Plan, Debtor recommends that you discuss the Plan with anattorney."
 
Definitely a good trajectory. For all few but very vocal internet oracles that were "certain there was no way Vans would survive" and were equally certain "we were all fools to continue", perhaps learn from this experience.
 
georgemohr said:
Definitely a good trajectory. For all few but very vocal internet oracles that were "certain there was no way Vans would survive" and were equally certain "we were all fools to continue", perhaps learn from this experience.
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They're not there yet...this is just the *proposed* plan, and even after being approved, they have to execute to the plan.
 
I’m not agreeing to it. I paid good money and to be told I’m only getting 55% of it back over three years. I will never send another cent their way. I’ll tell everyone that will listen of my experience. I’ll finish the aircraft but I’ll do it with second hand parts, own fabrication or aftermarket but they do not get any more of my coin. Am I pissed. You bet. No matter how long it takes they should pay us back 100% if they stay in business.
 
bobrv7taildragger said:
I’m not agreeing to it. I paid good money and to be told I’m only getting 55% of it back over three years. I will never send another cent their way. I’ll tell everyone that will listen of my experience. I’ll finish the aircraft but I’ll do it with second hand parts, own fabrication or aftermarket but they do not get any more of my coin. Am I pissed. You bet. No matter how long it takes they should pay us back 100% if they stay in business.
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My understanding is that simply not agreeing to the plan may not result in getting 100%. The court probably has a low bar for approving the plan (i.e. is it “feasible” and complies with the law). I’m not your attorney and suggest you consult with one if you want to object and argue that the plan should provide for 100% payment to unsecured creditors.
 
mikebee said:
My understanding is that simply not agreeing to the plan may not result in getting 100%. The court probably has a low bar for approving the plan (i.e. is it “feasible” and complies with the law). I’m not your attorney and suggest you consult with one if you want to object and argue that the plan should provide for 100% payment to unsecured creditors.
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I understand that and I’m not giving money to a lawyer either. Nothing I say will make any difference if 40000 people have to vote on proceedings. I’ll make back the losses on NOT giving this company another cent. I’ll build my own motor core up using superior parts (200 hp) and save money over the overly expensive 180 hp new lycoming I deposited on. I’ll make the difference back but I’ll always hate this company for taking my money. As I said…I’ll own an RV. People will ask me about it. I’ll be sure to tell them all about it. I’m sure I’ll be able to say great things about the aircraft but I will definitely pass on my thoughts about dealing with this company. Thankfully I have everything I need except a finishing kit, engine and FWF kit. I’ll be able to cover the engine and make up my own fwf kit arguably considerably cheaper than vans and the finishing kit now $14500 parts can mostly be got off third parties or I’ll scout for guys not finishing their aircraft for the legs and canopy. I’ll make my own canopy frame (again better than vans can! As in not having to be bent all over the place to make it fit) and my own fibreglass canopy skirts. There are aftermarket engine mounts available. They are taking my hard earned money so I’ll return the favour.
 
bobrv7taildragger said:
I’m not agreeing to it. I paid good money and to be told I’m only getting 55% of it back over three years. I will never send another cent their way. I’ll tell everyone that will listen of my experience. I’ll finish the aircraft but I’ll do it with second hand parts, own fabrication or aftermarket but they do not get any more of my coin. Am I pissed. You bet. No matter how long it takes they should pay us back 100% if they stay in business.
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While your feelings are understandable, it is apparent that you haven’t been through a bankruptcy before.
 
rocketman1988 said:
While your feelings are understandable, it is apparent that you haven’t been through a bankruptcy before.
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not The point. If they can survive they owe people money. Just because a court can say it’s ok to not give people back their money does not make it right. I know what losing my job is like and ended up working for pennies on the dollar with three kids to look after. Yet a business gets to take our hard earned coin and continue to operate! No matter how long it takes they should pay us back! On their recent write up I felt they were condescending on their treatment of those who “didn’t reorder” with them.

I have two claims with them….are both claims $3350 back each or just one lump of $3350 for priority….and what makes priority? Then 3 years to get 55% of the rest back….i wonder how they would like it if I bought something then just said…you know what….im only going to give you 55% of what I owe you…..
one should not belittle how I feel and no I have not been bankrupt before …..that was their doing….now they are taking our money to help them survive. Yes my feeling are understandable…
 
I’m pretty sure that not agreeing to the plan means asking for Vans to be liquidated via Chapter 7. The expected outcome of that is 4 cents on the dollar.

Bankruptcy sucks and this plan is the best Vans can do to make things right again. Who knows, maybe business will be really good and they pay back more than 55%.

At the end of the day this is still a lower “rate of loss” than the superior crankshaft AD. Replacing the crankshafts seems to cost around $10k and superior offered $750 to buy back the old crank. That comes out to 7.5 cents on the dollar. Compared to that Vans is doing pretty well.
 
Chapter 7 is like crashing into a smoking hole, while chapter 11 is like an off airport landing and needing to replace a wing. Both ugly, but I know which one I would rather be involved in.
 
bobrv7taildragger said:
not The point. If they can survive they owe people money. Just because a court can say it’s ok to not give people back their money does not make it right. I know what losing my job is like and ended up working for pennies on the dollar with three kids to look after. Yet a business gets to take our hard earned coin and continue to operate! No matter how long it takes they should pay us back! On their recent write up I felt they were condescending on their treatment of those who “didn’t reorder” with them.

I have two claims with them….are both claims $3350 back each or just one lump of $3350 for priority….and what makes priority? Then 3 years to get 55% of the rest back….i wonder how they would like it if I bought something then just said…you know what….im only going to give you 55% of what I owe you…..
one should not belittle how I feel and no I have not been bankrupt before …..that was their doing….now they are taking our money to help them survive. Yes my feeling are understandable…
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Not belittling your feelings at all. Unfortunately, this is how a bankruptcy works. It’s not fair, and it sucks but it is what it is. When my employer went through this, I lost FAR more, so I understand. What should happen and what will happen are very different. I guess my point is to not let your bitterness affect your life. Holding on to that bitterness will be apparent to others in your life and rob you of happy times…

…and TIME is the one thing you can never get back.

Just a view from someone who has been there, lost a bunch, and moved on.
 
rocketman1988 said:
I guess my point is to not let your bitterness affect your life.
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I agree. Vans bankruptcy will cost me about $25,000. Am I happy about that? Of course not. Do I hate the company because of it? Not at all. Leadership made some poor decisions and Covid and supply chain issues did the rest. Mistakes were made but there was no ill intent. The bankruptcy will allow Vans to survive and continue to support us for years to come. My $25,000 "contribution" will allow future builders to follow their dreams.

The bottom line is there is nothing we can do to change what happened. We can either move forward being bitter and choosing the long way around completing our airplanes. Or we can accept what has happened, be thankful we can still get kits, parts and support and look forward to the day of our first flight. I'm choosing the latter!
 
I think how one might feel about losing a sum of money is closely related to your financial situation. To many, 25K can represent years of saving and scrimping, to others, it's no big thing, a drop in the bucket so to speak. As a working class grunt all my life and raising 3 kids when I started the build and having to sell off all my other hobby stuff to build the airplane (20+ yrs ago), I know how I would feel if this happened to me.
 
sc_pilot said:
Well, happy to hear it’s 55% if that does in fact happen. Still sour that my dream of building a plane will forever be tainted by this fiasco. I can’t look at my project and think, why did so many others have their dream come through all happy and rosy but us Covid builders have been put through the wringer. No way to ever get that back. If nothing else, I’ve definitely learned a hard life lesson at a very young age. Any business dealings I make going forward, Van’s bankruptcy will always be at the forefront guarding me. I always said to myself “vans will never go bankrupt, they’re too big to fail”… boy was I wrong. Granted they didn’t “fail” but they did file bankruptcy. Well back to building…
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ANY company can fail if they exhibit bad business practices. In this case, Van's had several small items add up to one large item that got them into a pinch. Throw in COVID and some modern day business practices (that don't make your business better) and you've got a Bankruptcy salad.
I've spent hundreds of thousands of dollars at Van's over 30 years. I've never had so much trouble ordering or procuring parts in the past as I've had to deal with now. Two gals used to handle all the incoming calls and get you to the right people. Now we wade through a bunch of non-sense to get something done. I say get rid of the automated BS and get some folks on the phone ready to take your order and your C/C right now. Funny how hard they make it to spend your money?
We have it at our work to, so don't think this is a total Van's thing. "Modern day" business practices are not all that great.
I say to our board, if I could run a parallel company alongside yours and make more money doing things the old fashion way, why are you doing what we are doing now? They get real silent.....

I hope Van's puts some old fashion touches back in the system and gets to selling anything that makes them money and supports all their customers.

But you better have your parts lists and numbers ready to go!
 
So there is only 18% of people that did not re sign yet they have to steal 45% of our hard earned money. This whole wonderment and joy of building my own aircraft has been soured and sullied to the point it will always have a dark cloud over it. Never will I be able to be as excited as I once was and when ever I see vans in the future “recovered” and prospering I’ll always think of what they owe me. It’s just legalised theft. I’ll be sure to protest in any way possible until they make it right. If they survive and prosper they should pay back creditors just like I’d have to do if I owed a business money. I don’t care it’s bankruptcy….if they survive …..taking our money is not right
 
bobrv7taildragger said:
So there is only 18% of people that did not re sign yet they have to steal 45% of our hard earned money. This whole wonderment and joy of building my own aircraft has been soured and sullied to the point it will always have a dark cloud over it. Never will I be able to be as excited as I once was and when ever I see vans in the future “recovered” and prospering I’ll always think of what they owe me. It’s just legalised theft. I’ll be sure to protest in any way possible until they make it right. If they survive and prosper they should pay back creditors just like I’d have to do if I owed a business money. I don’t care it’s bankruptcy….if they survive …..taking our money is not right
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All I can say is I hope nothing really bad actually happens to you. If it does (as it has to me), you'll understand this bankruptcy is nothing. None of us can change what happened but we can change how we respond to it. Being able to build your own airplane is a gift that very few people will ever get to experience. Cherish that gift and be thankful that Mr VanGrunsven started Vans aircraft, kept it running for 50 years and saved the company from closing it's doors for good.
 
bobrv7taildragger said:
So there is only 18% of people that did not re sign yet they have to steal 45% of our hard earned money. This whole wonderment and joy of building my own aircraft has been soured and sullied to the point it will always have a dark cloud over it. Never will I be able to be as excited as I once was and when ever I see vans in the future “recovered” and prospering I’ll always think of what they owe me. It’s just legalised theft. I’ll be sure to protest in any way possible until they make it right. If they survive and prosper they should pay back creditors just like I’d have to do if I owed a business money. I don’t care it’s bankruptcy….if they survive …..taking our money is not right
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You can always declare personal bankruptcy if your personal situation warrants and similar things happen with the amounts you owe others. I’m grateful that there is a chance at recovery and that I’ll have a chance to see this through. Adversity isn’t fun and challenges aren’t easy. But these things also help define us in how we choose to respond. It’s a choice that we get to make. Best of luck and I hope you finish and love the result.
 
bobrv7taildragger said:
So there is only 18% of people that did not re sign yet they have to steal 45% of our hard earned money.
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They aren’t taking 45% of those who did not re-sign. Many people with small claims are getting everything. You are also getting $3350 dollars immediately (priority claim on page 15) and 55% of the rest. This means your actual loss will be less than 45%. E.g. for a $10k claim you should get around 75% back.

By rejecting the new contract you chose to take the loss. You could have accepted and built a plane at the same price it’ll cost someone that decides to build one today.
The only thing that people who accepted “lost” was the price lock.
 
bertschb said:
All I can say is I hope nothing really bad actually happens to you. If it does (as it has to me), you'll understand this bankruptcy is nothing. None of us can change what happened but we can change how we respond to it. Being able to build your own airplane is a gift that very few people will ever get to experience. Cherish that gift and be thankful that Mr VanGrunsven started Vans aircraft, kept it running for 50 years and saved the company from closing it's doors for good.
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+1.

This bankruptcy is nothing. My comments are based on experience losing far, far more than deposits on an experimental aircraft. I make those comments having watched friends and acquaintances let the losses consume them and their loved ones with bitterness and anger...for several, it was too much. I will just leave it at that.
 
All great comments but why if they survive can’t they pay out 100%? Why do we have to take a hit. If you guys are not worried about the coin feel free to give me some of your own money. No. Didn’t think so. As I said…this will always be a stain on what was supposed to be a once in a life time project. Let’s not marginalise the argument by constantly mentioning those with worse problems like I have never seen or been involved in…. This is about why we should have to take a loss when the company survives and ultimately prospers. How much is too much of a loss (again financially not medically) and please don’t comment when you don’t have a deposit taken.
 
bobrv7taildragger said:
All great comments but why if they survive can’t they pay out 100%? Why do we have to take a hit. If you guys are not worried about the coin feel free to give me some of your own money. No. Didn’t think so. As I said…this will always be a stain on what was supposed to be a once in a life time project. Let’s not marginalise the argument by constantly mentioning those with worse problems like I have never seen or been involved in…. This is about why we should have to take a loss when the company survives and ultimately prospers. How much is too much of a loss (again financially not medically) and please don’t comment when you don’t have a deposit taken.
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Because that is how the bankruptcy process works; it’s not right and it’s not fair…

I have heard those same sentiments before and do you know how many people were made whole after the bankruptcy, by the now profitable company?

Zero

I’m curious, IF you finish the project, when you come back from boring holes in the sky, are you going to be thinking how lucky you are and how much fun and satisfaction you had, or are you going to be thinking about how much money you lost and how unfairly you were treated?
 
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