Vans Files For Chapter 11 Bankruptcy

MarkH

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MarkH

It looks as of they are committed to continuing to shop kit's and parts long term.
 

It looks as of they are committed to continuing to shop kit's and parts long term.
Well either the customers are going to get screwed out of a bunch of money or they will go completely under and get bought out which will also screw their customers out of a bunch of money. Unless something is in stock and shipping today I’m not sure why anyone would place future orders with them. It’s not going to be a fun trip through bankruptcy and not nearly as rosy as the press release makes it sound.
 
Well either the customers are going to get screwed out of a bunch of money or they will go completely under and get bought out which will also screw their customers out of a bunch of money. Unless something is in stock and shipping today I’m not sure why anyone would place future orders with them. It’s not going to be a fun trip through bankruptcy and not nearly as rosy as the press release makes it sound.
Which trips through bankruptcy are "fun"?
 
Exiting Chapter 11 is not common, but also not unheard of. It gives the company an opportunity to keep creditors at bay for a while and negotiate an orderly compromise to allow the operation to continue with an eye towards exiting. Some of the creditors may become equity holders in order to be made partially or fully whole.

I survived my employer’s Chapter 11 and we came out strong at the other end. Creditors got about 97 cents on the dollar at exit, mostly in company shares, and then made money selling those shares a few months later. The pre-bankruptcy public shareholders (“unsecured creditors”) did get hosed however.

I would say going through the process was actually fun. That was once we figured that my position was safe and I had options. I learned a lot! It’s a rare experience to go through bankruptcy and emerge at the other end stronger. Crazy legal concept though.
 
Reported on other forum is that current customers that have not received various kits will be offered to pay higher price. Seems Van has been serious subsidizing the company for a few years.
 
I would not even call it somewhat comparable. They are very different aircraft.
Well , both are pretty much the only somewhat affordable 4 seaters ( albeit TSI is more like 3+) , one cruises at 140 kts, the other around 180 with higher gross and more room and so on … different planes for sure but these 2 are pretty much the only options in that category …
 
Reported on other forum is that current customers that have not received various kits will be offered to pay higher price. Seems Van has been serious subsidizing the company for a few years.
The business is very viable. Vans got hit with two huge issues that led to this. If just one had not occurred they would have been fine. Issue one was their quick build kits were improperly primed by a sub contractor and a large number had to be tossed and many delivered kits replaced. Issue two was kit demand soared so much they outsourced a large number of parts to a company using a laser cutting process. For reasons yet known these parts are developing micro cracks around rivet holes. Engineers seem to feel it’s not a issue but Vans has committed to replacing the parts at a massive expense.
Van himself is supplying the DIP financing which keeps control of the company through the Chapter 11 process. That’s a extremely positive sign.
 
The reason for the cracks on laser cut parts is known. Van’s developed and specified a process for cutting the holes, moving the laser in a prtezel-shaped pattern to allow cooling along the edges by cutting in little chunks. The contractor decided to save time by zipping around the perimeter, and the time under heat caused the problem. The contractor owes Van’s 100% of the costs incurred by the laser cut parts issues. They were completely out of line not following the specifications they’d contracted to perform.
 
The reason for the cracks on laser cut parts is known. Van’s developed and specified a process for cutting the holes, moving the laser in a prtezel-shaped pattern to allow cooling along the edges by cutting in little chunks. The contractor decided to save time by zipping around the perimeter, and the time under heat caused the problem. The contractor owes Van’s 100% of the costs incurred by the laser cut parts issues. They were completely out of line not following the specifications they’d contracted to perform.
Problem is, Vans QC shoulda caught it. The contracts I deal with say “if you catch a parts problem, I’m responsible. If you accept and use the parts, it is your problem” or words to that effect.
 
The copium on this topic promises to be epic. I'm sure they've started deleting posts over on the ministry of truth on that other site. buh buh hangErs aRe fullz and gA is tHriVibin' :stirpot:

Tribal affinity for the toy notwithstanding, they weren't immune from the covid fomo that overtook all manners of living in this country since 2020, and now a good clip of folks are dealing with the receding tide. My question as a sleepy leopard on a tree patiently stalking the resale market, what the impact will be on the legacy support. This reorganization may lead to the outcome everybody is emotionally fighting, Glasair 2.0. I'm hoping with some loss of marquee support on the older lines, prices may adjust, though I feel it will be the aggregate consumer economy receding in 2024 that would have a more significant impact on EAB resale prices, than whatever final form this reorganization ends up materializing as.

Sucks for the order holders of incomplete kits, they're getting re-priced and subsequently stiffed. Straw poll on reddit says most of the fomos are letting the kits go if they get re-priced. Which they will. Lots of "RV grins" turned upside down, and not because they're doing acro.

Rvs are not going anywhere, but this was irrational exuberance, and the OEM got rolled up in their own imprudence. The value is still there, which is why glasair boy will make short work of this me thinks.
 
Problem is, Vans QC shoulda caught it. The contracts I deal with say “if you catch a parts problem, I’m responsible. If you accept and use the parts, it is your problem” or words to that effect.
How do you catch a lie until it's exposed? By then it may be too late. We don't know that the contractor lied, but I do know of another company that found out a bit late that a contracting company said they were producing parts in the USA, when in reality they were producing them in Mexico with different quality standards and relabeling them after bringing them across the border. Stuff happens.
 
What on earth are they spending 300-500k per week on? That's like tech bro burn rate.
 
The business is very viable. Vans got hit with two huge issues that led to this.
Isn't there a 3rd significant issue: reservation holders had prices locked-in that were not economically feasible for Van's to fill after significant inflation in material and labor costs. This is why current reservation holders are being given the option of paying current (and they better be economically viable) prices.
 
How do you catch a lie until it's exposed?
By having QA/QC oversight on your subcontractors whose express purpose is to catch this kind of thing *before* it causes problems like we have now. As for the example of fraud you posted, same-same.

Nauga,
in the loupe
 
What on earth are they spending 300-500k per week on? That's like tech bro burn rate.
Tooling for ramping up production...maybe production staff also? Sounds like they didn't transition well to mass production.
 
By having QA/QC oversight on your subcontractors whose express purpose is to catch this kind of thing *before* it causes problems like we have now. As for the example of fraud you posted, same-same.

Nauga,
in the loupe
Oh, I know, but I'm thinking something broke down there.
 
How do you catch a lie until it's exposed? By then it may be too late.
It is prudent for any business to track/evaluate incoming shipments for quantity, adherence to specs, etc. Vans didn’t and got badly burned. OR they intentionally accepted the parts at their own risk, some of which they effectively passed to their customers.
 
It is prudent for any business to track/evaluate incoming shipments for quantity, adherence to specs, etc. Vans didn’t and got badly burned. OR they intentionally accepted the parts at their own risk, some of which they effectively passed to their customers.
Or they did and the sample ratio wasn't good enough? There's more than one way for things to go wrong.
 
How does one find a “microcrack” and what is “micro” in this instance?
 
And now we know who knows what Six Sigma is and what it means. You can't sample your way to perfection. ;)
 
Problem is, Vans QC shoulda caught it. The contracts I deal with say “if you catch a parts problem, I’m responsible. If you accept and use the parts, it is your problem” or words to that effect.

That's what I am used to in contracts as well (work in aerospace manufacturing), however many companies still have contract language which gives them a way to recoup costs from the contractor through a process called assertion.
 
The Kitplanes article seems to have the most information on the announcement
 
How does one find a “microcrack” and what is “micro” in this instance?
Usually found via x-ray, dye penetrate or eddy current.

Also when approving a new supplier or a supplier process change you generally want to perform more rigorous destructive testing (aka "qual" testing), which could have been another gap here. For my suppliers we flow down that they cannot change anything in their process without notifying us so that we can properly document and test.
 
My former employer at the big airplane company specifically didn't allow laser or plasma cutting within 0.005" of a finished edge because of micro cracking.
How do you keep that from happening? Audit your suppliers, use source inspectors, only do business with suppliers with a good reputation. All common sense.

Chapter 11 will not be the end of Vans.
 
These so called micro-cracks are not so “micro” ….
 

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Usually found via x-ray, dye penetrate or eddy current.

Also when approving a new supplier or a supplier process change you generally want to perform more rigorous destructive testing (aka "qual" testing), which could have been another gap here. For my suppliers we flow down that they cannot change anything in their process without notifying us so that we can properly document and test.
I’m familiar with all those types inspections and have used them myself countless times in numerous aircraft production and maintenance programs.

I was just curious how deep/long these “microcracks” were to get feel if they were truly worth worrying about. For example, every disc in a USAF engine is assumed to have an internal flaw and an inspection interval is set such that the flaw will not grow to failure during that time. Known as “fracture critical” parts and includes airframe structure like spars and attach fittings.

Edited to add after posting the photo in #30.

Definitely not “micro” but might not be fracture critical.
 
My question as a sleepy leopard on a tree patiently stalking the resale market, what the impact will be on the legacy support.

So does this mean you’re a seller of your recently busted plane, or you’ve already changed your leopard spots and are in the market for a replacement, lol?!
 
Current kit builders with pre paid orders are getting screwed over. Their choice is to either pony up more unsecured money to Vans in the hopes that the company survives chapter 11 and isn’t bought out by someone before they get their kits or they can refuse to pay more and get in line with all the other unsecured creditors and hope they can recoup a fraction of the money they originally paid. This is on top of all the builders who already can’t finish their kits because quality control at vans was non existent and they have parts or assemblies that are not airworthy. As much as Vans has been a big part of the home built community you would have to be stupid to give them any more money right now unless your parts were in stock and ready to ship.
 
I was just curious how deep/long these “microcracks” were to get feel if they were truly worth worrying about.
Your extensive experience notwithstanding, even Vans has acknowledged that some are "truly worth worrying about[sic]," and mitigation is one of the contributors to their current situation.

Nauga,
cracking up
 
It's just a sad day as a whole that selling a 2 place airplane kit with no engine or avionics at 40K+ isn't a profitable business anymore.
I prefer pathetic, but yes indeed. M2 imprudent juicing has consequences.

The US is quickly pricing itself into the dustbin of sunsetting empires, 9 million "traitors" (expat) unofficially (state dept no longer publishes it) making use of geoarbitrage to compensate for this decay in material and purchasing standards. It doesnt work for everyone, but it's an undeniable reality nonetheless.
So does this mean you’re a seller of your recently busted plane, or you’ve already changed your leopard spots and are in the market for a replacement, lol?!

Huh? I dont think you grasp the analogy. As a bona fide seller, I already sold my "busted" plane a month ago, in less than 2 weeks. Which is a heck of a lot more than i can say for these unserious so called sellers, going on more than 6 months listings. Clowning themselves and pretending like their moonpie listings are the going rate.

I sold at a loss, because that is what was required to move the inventory in present circumstances. But the post covidian future bag holders don't want to hear it. The market is indeed in retreat, and few listings are moving for moonpie prices. For the record, i got my listed price, which again it's more than i can say about these space cadets wasting buyers time.

On the buyer side of this, housing took 4-5 years to drop the 30 pct nationally (median) during the height of the last housing crash. Just because something doesnt materialize in less than a year doesnt mean it isnt happening, hence the leopard comment. I know, the american attention span is a legit cognitive crisis.

So no, I didnt lose my leopard spots in the least. i saw these clowns on the way up, I'll see them on the way down.
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The copium on this topic promises to be epic. I'm sure they've started deleting posts over on the ministry of truth on that other site. buh buh hangErs aRe fullz and gA is tHriVibin' :stirpot:

Tribal affinity for the toy notwithstanding, they weren't immune from the covid fomo that overtook all manners of living in this country since 2020, and now a good clip of folks are dealing with the receding tide. My question as a sleepy leopard on a tree patiently stalking the resale market, what the impact will be on the legacy support. This reorganization may lead to the outcome everybody is emotionally fighting, Glasair 2.0. I'm hoping with some loss of marquee support on the older lines, prices may adjust, though I feel it will be the aggregate consumer economy receding in 2024 that would have a more significant impact on EAB resale prices, than whatever final form this reorganization ends up materializing as.

Sucks for the order holders of incomplete kits, they're getting re-priced and subsequently stiffed. Straw poll on reddit says most of the fomos are letting the kits go if they get re-priced. Which they will. Lots of "RV grins" turned upside down, and not because they're doing acro.

Rvs are not going anywhere, but this was irrational exuberance, and the OEM got rolled up in their own imprudence. The value is still there, which is why glasair boy will make short work of this me thinks.
I'm not really sure what point you're making, but if it's that you think Vans is going under, I'll take that bet. There's very little chance of that. Chapter 11 will allow them to cancel or reprice sooner unprofitable contracts and escape some debt. Vans has a profitable business, notwithstanding a few short-sighted financial decisions.
 
I was just curious how deep/long these “microcracks” were to get feel if they were truly worth worrying about.
In general, I don't think the micro-cracking would generate a fleet wide "fracture critical" type issue as you mentioned. Unfortunately, with this type of construction rivet hole prep is everything and when its not you run into possibilities where those micro-cracks start to run beyond the rivet head and sometimes for several inches. The bad thing is it usually doesn't happen for several years then you start to get smoking rivets or multiple cracks on each skin. Imagine where Vans may have been if they didn't stop it at the build level and had to deal with field level performance issues which probably would cost 3x more vs the cost of replacing the raw parts at the time of discovery.
 
In general, I don't think the micro-cracking would generate a fleet wide "fracture critical" type issue as you mentioned. Unfortunately, with this type of construction rivet hole prep is everything and when its not you run into possibilities where those micro-cracks start to run beyond the rivet head and sometimes for several inches. The bad thing is it usually doesn't happen for several years then you start to get smoking rivets or multiple cracks on each skin. Imagine where Vans may have been if they didn't stop it at the build level and had to deal with field level performance issues which probably would cost 3x more vs the cost of replacing the raw parts at the time of discovery.
That *is* the situation with builders who progressed rapidly and with a substantial inventory of quick-build kits. Van's had the opportunity to pump the brakes hard something like a year, year and a half ago and basically told people to build-on. So there was a 6-12 month period where Vans was knowingly distributing flawed parts and telling builders "nothing to see here". That's what turned a $3M problem into a $10M problem.
 
I hope they are able to make it through this. Seems to me that Vans makes a very deep and positive impact on folks who commit themselves to building a plane.
 
The US is quickly pricing itself into the dustbin of sunsetting empires, 9 million "traitors" (expat) unofficially (state dept no longer publishes it) making use of geoarbitrage to compensate for this decay in material and purchasing standards. It doesnt work for everyone, but it's an undeniable reality nonetheless.

US Expats are traitors? What? And what does that rantlet have to do with the predicament Vans aircraft is in currently?
 
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