Van’s Aircraft filed for protection under Chapter 11 of the federal bankruptcy code Dec. 4, 2023.
Company officials call the move “a key step in the reorganization of our company.”
In late October, the company alerted customers that it was suspending “business as usual” while it dealt with a number of issues.
“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,” company officials said when announcing the bankruptcy. “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.”
“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,” officials continued. “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.”
“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,” officials noted.
Company officials have devised plans for customers, noting the plans are dependent on the approval of the bankruptcy court.
If you are a Van’s customer you can see those plans at VansAircraft.com.
The company noted a few points about its reorganization under Chapter 11:
- The day a company files Chapter 11, which is referred to as the petition date, the company places itself under the jurisdiction of the bankruptcy court.
- Van’s will file its proposed plan of reorganization within the next 90 days explaining how the company will operate in the future, and how its financial obligations that existed at the time of filing will be dealt with.
- Van’s will continue to operate, under court supervision in the normal course of business, building and selling airplane kits.
- Van’s will be increasing prices of kits and parts.
- All post-petition financing requires court approval.
- Payments of debts, other financial obligations, and any litigations are frozen, as of the petition date.
- The formal plan of reorganization will be circulated to Van’s unsecured creditors for a vote.
- After the vote, the court is asked to approve the plan. Once the plan is approved, Van’s will emerge from bankruptcy.
- After emerging from bankruptcy, Van’s will pay down its debt to pre-petition creditors according to the approved plan.
Biggest reason for their troubles.
How can they come up with an accurate price for a product you can’t deliver for 2 years?
That and the obvious problem of co mingling deposits for engines with their general funds
What made me sad when listening to this video is that there is a lot of “business” and “Lawyer” talk and very little about the technical aspect what prompted this accelerated demise which is what I think whoever is considering receiving a kit at an increased price or placing an order for a new one should be worried about.
As a Design Engineer working for a major technology corporation, I see the same trend. Lots of talk about “business” and little about the “engineering”. And the result is not pretty.
I am sure the RV design will be around for a long time in the future, just would not be surprised if a Chinese or Middle East investment group is the new owner not long from now.
Not everybody has a crystal ball about their business and the future. A business operator keeps wishing and hoping things will improve with the next sunrise. Sometimes they do, sometimes they don’t. Many small- to medium-sized businesses didn’t survive the Covid period. At least Van’s is open and operating.
I believe I read where they plan to pay their unsecured creditors — e.g., paint, nuts & bolts suppliers, etc. Usually these get screwed in the bankruptcy process.
I’ve been on the sidelines of a few bankruptcies and to those in Rio Linda: bankruptcy is a jarring and nasty process. Once the court takes over your business, you can’t make coffee or pee without permission. And many of your trade creditors can be forced to refund payments you made to them recently to have cash for secured creditors. It’s a Matchiavellian process that can leave you humble and spirit broken.
Best thing for customers and Vans alike it to help them survive by continuing to do business with them for parts and orders in process. The alternative is business closure, insolvancy, with the court cleaning out the bank account and customers and trade creditors getting NOTHING out of it. Yep! You lose your underwear, sox and shoes under that turn of events.
So I say in everyone’s interest: Continue to support Vans and help them work their way back to the surface and bankrupcy discharge one fine day.
Regards/J
Vans management has really done a disservice to their customers and to the GA community
I can understand that inflation has impacted their plans and financials, but from what I read in another article they’ve had an increase of 250% in orders over the last year. Inflation, supply chain issues, etc aren’t a new issue… it’s been over a year and a half
So why would Vans continue to accept/process these extra orders at the same price, when they knew inflation was impacting their costs?
And now they need to raise prices on already-existing orders by 32%, or the customer has to accept a reduced deposit refund via bankruptcy?