For those of you who haven't been paying attention, the US Trustee (i.e. the Department of Justice) recently filed an objection to Van's proposed plan insofar as (1) it holds back 20% of projected income for reinvestment of the business; (2) only provides for payment of 55% of general unsecured creditor claim amounts over three years instead of actual disposable income and more percentage over five years; and (3) does not provide default and remedies after confirmation:
In today's court filings, Vans argues that it should not have to extend/increase payments to unsecured creditors over five years because its existing plan technically meets the requirements. 83 people returned acceptances of the plan (and 11 returned rejections), so Vans is able to argue that the general unsecured creditors "overwhelmingly voted to approve the Plan as a three-year plan." Vans argues that if the plan is not confirmed with a three-year term, then essentially the entire company will cease operations and be liquidated -- i.e. Mr. Van Grunsven's loans to the company will be called, the case will convert to Chapter 7, all of the company assets will be liquidated, over 100 employees will be fired, all of the pending orders will be cancelled, etc etc.:
Although not raised in any of the filed documents by the UST or Vans, I'm going to add that the Plan does not account -- or provide any funding -- for potential future claims arising from LCP, for example, if someone dies in an accident resulting from defects in parts that Vans published were "acceptable." The Plan said that a $5,000,000 reserve was created pre-petition for LCP replacement parts pre-petition, but does not indicate that any such reserve exists for the Plan itself. It is unclear whether there is potential insurance coverage for any such claims. Likewise, in the 4/12/24 Vans youtube video Mr. Hamstreet indicated that Vans plans to reject claims exceeding deposit amounts (i.e. for additional costs and damages to builders resulting from LCP including but not limited to those who received QB kits that had LCPs who wanted a replacement QB kit instead of just replacement parts).
The Plan provides that Vans can object to those claims up to 60 days after the Plan is confirmed (i.e. July 31 if confirmed on May 15 as currently set for hearing). The 5/11/24 Vans youtube video last week says that they hope to substantially complete all LCP replacements "by July" (even though Mr. Hamstreet's declaration says "by November" which is even different from his video which says "October). They're also now staffing people to make phone calls asking to make final orders for LCP replacements. In sum, this isn't like the Takata bankruptcy where there was a fund created to pay out for the damages caused by the defective products. Here, Vans will object to all of the claimed costs/damages resulting from LCP and complete their LCP replacement parts program, and then argue in the future that any injuries will not be the company's responsibility by characterizing any LCP-related claims as "pre-petition" that have already been handled by the Plan.
P.S. I thought it was interesting from the amended schedules that Joby Aviation purchased and leased two SLSA RV-12is planes for their training program.
In today's court filings, Vans argues that it should not have to extend/increase payments to unsecured creditors over five years because its existing plan technically meets the requirements. 83 people returned acceptances of the plan (and 11 returned rejections), so Vans is able to argue that the general unsecured creditors "overwhelmingly voted to approve the Plan as a three-year plan." Vans argues that if the plan is not confirmed with a three-year term, then essentially the entire company will cease operations and be liquidated -- i.e. Mr. Van Grunsven's loans to the company will be called, the case will convert to Chapter 7, all of the company assets will be liquidated, over 100 employees will be fired, all of the pending orders will be cancelled, etc etc.:
Although not raised in any of the filed documents by the UST or Vans, I'm going to add that the Plan does not account -- or provide any funding -- for potential future claims arising from LCP, for example, if someone dies in an accident resulting from defects in parts that Vans published were "acceptable." The Plan said that a $5,000,000 reserve was created pre-petition for LCP replacement parts pre-petition, but does not indicate that any such reserve exists for the Plan itself. It is unclear whether there is potential insurance coverage for any such claims. Likewise, in the 4/12/24 Vans youtube video Mr. Hamstreet indicated that Vans plans to reject claims exceeding deposit amounts (i.e. for additional costs and damages to builders resulting from LCP including but not limited to those who received QB kits that had LCPs who wanted a replacement QB kit instead of just replacement parts).
The Plan provides that Vans can object to those claims up to 60 days after the Plan is confirmed (i.e. July 31 if confirmed on May 15 as currently set for hearing). The 5/11/24 Vans youtube video last week says that they hope to substantially complete all LCP replacements "by July" (even though Mr. Hamstreet's declaration says "by November" which is even different from his video which says "October). They're also now staffing people to make phone calls asking to make final orders for LCP replacements. In sum, this isn't like the Takata bankruptcy where there was a fund created to pay out for the damages caused by the defective products. Here, Vans will object to all of the claimed costs/damages resulting from LCP and complete their LCP replacement parts program, and then argue in the future that any injuries will not be the company's responsibility by characterizing any LCP-related claims as "pre-petition" that have already been handled by the Plan.
P.S. I thought it was interesting from the amended schedules that Joby Aviation purchased and leased two SLSA RV-12is planes for their training program.
