Vans Files For Chapter 11 Bankruptcy

kyleb said:
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.
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Interesting. Were any of those kits completed and flying? Never realized they let it go for that long. Reap what you sow as the saying goes.
 
Thousands of builders with partially built kits. Sounds like a very captive market. What else can you do but wait? Sure some of the really impatient folks may sell, but then the new owner will wait. I think Vans has a lot more wiggle room than most. The aluminum recycler aint much of an option.

C.
 
Sad news, I don’t know much about Vans but sounds like they couldn’t make up with their creditors. To the other poster, I’m surprised that creditors could get 97 cents on the dollar. That’s impressive. I’m also surprised that insurance isn’t involved in what I’m reading (manufacturing issues). Probably the typical pass the buck game that leaves the company with no other options.

Good luck to anyone involved in the process.
 
They have made mention several times that they have made personnel changes at the top. I wonder if there was some shady business going on or they simply weren't doing their job. I just find it hard to believe that a company that sells as many planes and parts as they do for what didn't seem like a budget price was so far upside down. Admittedly I don't think they kept up with pricing on some of their carry through items. For example, the last time I needed tires and tubes I ordered them through Vans because they were half the price of Spruce.
 
Bell206 said:
Interesting. Were any of those kits completed and flying? Never realized they let it go for that long. Reap what you sow as the saying goes.
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There are almost certainly some flying airplanes with laser cut parts embedded. There are a ton more kits with laser cut parts embedded in closed structures like wings, stabilizers, ailerons, and fuselages which will need to be partially (or substantially) deconstructed to replace the parts. Those builders are the group which (IMO) has taken the biggest hit. I'm sure Vans will provide new parts at some point, but it'll be hard to compensate a builder for (potentially) hundreds of hours of do-over, plus the scars that are created when you drill apart a metal airframe. The guy with an untouched kit in the corner? $500 of new parts from Vans and he's whole again.
 
Lindberg said:
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.
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Going under? Nobody said that, I certainly didn't; they're filing chapter 11 after all. I simply said given the overseer choice, Glasair 2.0 sounds like a very probable blueprint.
 
Gotta watch the bottom line, this is the most inexcusable part of this IMO. You also have to quickly identify and fix problems. Ramping a company is very difficult. They lost sight of what they should have been doing and now are paying the price. Unfortunately, their present customers will have to pay for past sins if they want an airplane. Van's sounds like it needs a substantial cash infusion which will mean giving up some or all of the present ownership.
 
PaulS said:
Gotta watch the bottom line, this is the most inexcusable part of this IMO. You also have to quickly identify and fix problems. Ramping a company is very difficult. They lost sight of what they should have been doing and now are paying the price. Unfortunately, their present customers will have to pay for past sins if they want an airplane. Van's sounds like it needs a substantial cash infusion which will mean giving up some or all of the present ownership.
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Van himself stepped in to loan the company $6(?)M as part of the bankruptcy filing.
 
Well, the bankruptcy filings have been a very informative read. Had no idea they were dealing with that kinda keesh against big dady Lyco, #1 on the list of 20-primary/preferred/potato secured creditors. In fairness, Lyco prices are stupid wacked out too, so in reality it's probably not that many engines, as far as Lyco's global order book is concerned.

On the little people side of the ledger, some of the future unsecured creditors have managed to post their $0.02 (which is about all they'll get when they punt at the re-price contract). Their take is not too different than the anecdotes on reddit, which inform my conjecture that this is not going to be a case of most people acquiescing to the kit re-pricing, currently purported at a 32% markup, yikes.

As to dear leader, filings make it clear he's the primary DIP lender, unusual for a Chap 11. So those millions he's got in play are first-dibs insured in the event this re-org attempt goes south. The name of the game is control it seems. Granted, the filings haven't been approved yet, but the boilerplate manner in which this filing was submitted doesn't lend any inclination the proposed plan (mainly and most importantly imo, the Motion to Reject Customer Contracts) will get rejected. The latter motion is what this filing was ultimately all about imo, nothing surprising or controversial to me about that COA.

172andyou said:
They have over 100 employees. At 85K average (just a guess), that's about 200K just in direct salary costs, before employer taxes and benefits. Doesn't take too much on top of that to get to 300-500.
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110 employees according to the filing. 340K bi monthly, pre-petition. No wonder they were MLM'ing the opex with customer deposits end game.
1701830349571.png

Don't disagree with the petition, that if they were to stiff the W-2 folks, they would walk and this whole thing collapses right ricky tick.

Of course, in the end, the lawyers and "managers" of this future corporate spinoff/dismemberment are getting puh puh paid son.
 
So people working at Vans were making on average around 60k ? Seems low …
 
I am kind of bothered by the level of mis information and censorship over there on the vansairforce forum!
 
Warmi said:
So people working at Vans were making on average around 60k ? Seems low …
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You've got a lot of crate builders, machine punch operators, and the like. Running semi-automatic machines probably doesn't pay like welding, fabricating, or other higher skilled trades.
 
hindsight2020 said:
On the little people side of the ledger, some of the future unsecured creditors have managed to post their $0.02 (which is about all they'll get when they punt at the re-price contract). Their take is not too different than the anecdotes on reddit, which inform my conjecture that this is not going to be a case of most people acquiescing to the kit re-pricing, currently purported at a 32% markup, yikes.
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That's the emotional response. I think most of 'em will ultimately come around and the ones who don't just saw the value of their existing kits (excluding issues around laser cut parts) increase by something like 32%. So they should come out whole if they sell their kits.
 
kyleb said:
That's the emotional response. I think most of 'em will ultimately come around and the ones who don't just saw the value of their existing kits (excluding issues around laser cut parts) increase by something like 32%. So they should come out whole if they sell their kits.
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Perhaps. I could argue stay-the-course/sunk cost fallacies are also an emotional response. We'll have to wait and see how the cookie crumbles on this one.
 
I'll go out on a limb here....I bet there is a fix to those scrapped lazer cut parts......drill out the holes and make them oversized to remove the damage? If it makes them usable....there's now value in that scrap.
 
Checkout_my_Six said:
I'll go out on a limb here....I bet there is a fix to those scrapped lazer cut parts......drill out the holes and make them oversized to remove the damage?
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Who's going to do it?

If the end user, then they are still getting screwed as they paid for final drilled parts. Something like 40,000 holes in a RV10

If Vans, it's cost prohibitive.
 
Salty said:
Who's going to do it?

If the end user, then they are still getting screwed as they paid for final drilled parts. Something like 40,000 holes in a RV10
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well....vs what else.....trash?
 
Checkout_my_Six said:
I'll go out on a limb here....I bet there is a fix to those scrapped lazer cut parts......drill out the holes and make them oversized to remove the damage? If it makes them usable....there's now value in that scrap.
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How big are you willing to go oversize? I've seen reports that some of the affected areas would require drilling beyond 1/8", which is way to much for me for a 3/32" rivet spec and a bunch of rivets. Not to mention the parts that are already installed in Quickbuilds, etc.

Nauga,
who knows size matters
 
nauga said:
How big are you willing to go oversize? I've seen reports that some of the affected areas would require drilling beyond 1/8", which is way to much for me for a 3/32" rivet spec and a bunch of rivets. Not to mention the parts that are already installed in Quickbuilds, etc.

Nauga,
who knows size matters
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yup....that could be a deal killer. ;)
 
Someone on VAF pulled some of the bankruptcy filings and posted them. The basic plan to turn the company around appears to be modification or cancellation of existing orders. They report having "over 3,500" customer orders for kits, engines, propellers, avionics, miscellaneous parts, and aircraft, all of which are contracts with price terms that Van's cannot perform. Their plan is to contact kit customers with a choice between applying their deposit toward a re-priced kit or cancelling the order and becoming unsecured creditors as of January 15. Engine, propeller, and avionics orders will be handled similarly except that they need to work with the third parties (Lycoming, Hartzell, etc.) on timing.

They have been putting customer deposits into an escrow account since October 6. They plan to keep doing that.
 
172andyou said:
They have over 100 employees. At 85K average (just a guess), that's about 200K just in direct salary costs, before employer taxes and benefits. Doesn't take too much on top of that to get to 300-500.
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Where I work, they figure an average $150K/year cost per employee including benefits, overhead, etc. Granted we have a lot of engineers but we also have a lot of unskilled button pushers.
Checkout_my_Six said:
I'll go out on a limb here....I bet there is a fix to those scrapped lazer cut parts......drill out the holes and make them oversized to remove the damage? If it makes them usable....there's now value in that scrap.
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It might be theoretically feasible for a kit builder to open up holes and use a larger rivet (IF there's room for a larger rivet and IF the crack hasn't progressed too far), but at the factory I guarantee it's cheaper to make them over and sell the bad ones by the pound as scrap.
 
Salty said:
Who's going to do it?

If the end user, then they are still getting screwed as they paid for final drilled parts. Something like 40,000 holes in a RV10
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Big deal. Sioux air drill, good drill bit, if you're a Van's builder it's no big thing. There are places where upsizing from an AD3 to AD4 rivet is not a big issue. Probably not a viable strategy if you've already dimpled the parts and have a crack, of course. I haven't looked at the list of parts, and I don't really keep up with posts on VAF any more, but the guys producing and building these kits are not stupid and will probably figure out where a workaround like that is applicable.
Capt. Geoffrey Thorpe said:
https://www.asapspares.com.au/pdf/065-nas1097rivet.pdf Same size head, larger shank.
Or, does Vans use poop rivets?
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I've used "oops rivets" on occasion when necessary. There's guidance from Van's about how many you can use in a line of rivets, but with the reduced holding power you can't just substitute NAS1097 rivets for all of them. Or even "lots of them".
 
Dana said:
Where I work, they figure an average $150K/year cost per employee including benefits, overhead, etc. Granted we have a lot of engineers but we also have a lot of unskilled button pushers.
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Yep. People who haven't done payroll for a large group of employees often find it hard to believe how much labor actually costs once fully loaded.
 
Checkout_my_Six said:
I'll go out on a limb here....I bet there is a fix to those scrapped lazer cut parts......drill out the holes and make them oversized to remove the damage? If it makes them usable....there's now value in that scrap.
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You can usually get away with a few oversized rivets but not large sections or whole panels as the designs already have most holes close to edge distance limits to still remain structurally sound.

For unassembled parts a creative builder could use them as a template and make their own replacement parts with drilled holes out of sheet stock.
 
hindsight2020 said:
Well, the bankruptcy filings have been a very informative read. Had no idea they were dealing with that kinda keesh against big dady Lyco, #1 on the list of 20-primary/preferred/potato secured creditors. In fairness, Lyco prices are stupid wacked out too, so in reality it's probably not that many engines, as far as Lyco's global order book is concerned.

On the little people side of the ledger, some of the future unsecured creditors have managed to post their $0.02 (which is about all they'll get when they punt at the re-price contract). Their take is not too different than the anecdotes on reddit, which inform my conjecture that this is not going to be a case of most people acquiescing to the kit re-pricing, currently purported at a 32% markup, yikes.

As to dear leader, filings make it clear he's the primary DIP lender, unusual for a Chap 11. So those millions he's got in play are first-dibs insured in the event this re-org attempt goes south. The name of the game is control it seems. Granted, the filings haven't been approved yet, but the boilerplate manner in which this filing was submitted doesn't lend any inclination the proposed plan (mainly and most importantly imo, the Motion to Reject Customer Contracts) will get rejected. The latter motion is what this filing was ultimately all about imo, nothing surprising or controversial to me about that COA.


110 employees according to the filing. 340K bi monthly, pre-petition. No wonder they were MLM'ing the opex with customer deposits end game.
View attachment 123048

Don't disagree with the petition, that if they were to stiff the W-2 folks, they would walk and this whole thing collapses right ricky tick.

Of course, in the end, the lawyers and "managers" of this future corporate spinoff/dismemberment are getting puh puh paid son.
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Do you have a link to that, or did you have to pay for the BK filing from the PACER system? I'd be interested in seeing anything committed to that doc from the unsecured "little people" side of things that are pushing back on the price increase...
 
DaleB said:
Big deal. Sioux air drill, good drill bit, if you're a Van's builder it's no big thing.
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Oh really? So all the gushing about how nice final drilled parts is was all BS? No, I disagree. It sucks.
 
172andyou said:
Yep. People who haven't done payroll for a large group of employees often find it hard to believe how much labor actually costs once fully loaded.
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National average fringe rate is 30% of gross pay, according to BLS. My experience over the last 15 years owning and running a business has consistently been within 2% of that. It's really hard to move that needle.

The math gets fuzzy when people try to slip other overheads into the number, to try and represent "cost" to an outside customer. But for actual cost to the employer, 1.3x is a very reliable number.
 
Ed Haywood said:
National average fringe rate is 30% of gross pay, according to BLS. My experience over the last 15 years owning and running a business has consistently been within 2% of that. It's really hard to move that needle.

The math gets fuzzy when people try to slip other overheads into the number, to try and represent "cost" to an outside customer. But for actual cost to the employer, 1.3x is a very reliable number.
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"try to slip"

I mean, having an HR department costs money and is part of the cost of a medium to large business. That overhead has to be accounted for somewhere. IMO, the world is bigger than fringe and it's never seemed wrong to me to include them in the fully loaded costs for employees. I would almost say *especially* to an outside customer since whatever the customer has to pay has to cover all those costs. Not just salary and benefits.
 
172andyou said:
"try to slip"

I mean, having an HR department costs money and is part of the cost of a medium to large business. That overhead has to be accounted for somewhere. IMO, the world is bigger than fringe and it's never seemed wrong to me to include them in the fully loaded costs for employees. I would almost say *especially* to an outside customer since whatever the customer has to pay has to cover all those costs. Not just salary and benefits.
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G&A expenses vs fully loaded wage rates is always a fun discussion and only really matters for accounting purposes; the fact is profit what’s left over once all the expenses are paid.
 
TCABM said:
G&A expenses vs fully loaded wage rates is always a fun discussion and only really matters for accounting purposes; the fact is profit what’s left over once all the expenses are paid.
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How true. If you can’t sell a product at a price to make a profit after all costs, you won’t be in business long. Unless like a saying goes “Losing money on every one but making it up on volume”:cool:
 
X3 Skier said:
How true. If you can’t sell a product at a price to make a profit after all costs, you won’t be in business long. Unless like a saying goes “Losing money on every one but making it up on volume”:cool:
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That always reminds me of the SNL skit about "First Citywide Change Bank."
Ron Wanttaja
 
Salty said:
Oh really? So all the gushing about how nice final drilled parts is was all BS? No, I disagree. It sucks.
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Been there. Done it. It's really not that big of a deal. Yeah, it adds time, and if I were unused to having to do it, yeah, it's extra work. But not that big of a deal, really. You have to debur anyway, drilling or reaming adds a few seconds per hole.
 
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DaleB said:
Been there. Done it. It's really not that big of a deal. Yeah, it adds time, and if I were unused to having to do it, yeah, it's extra work. But not that big of a deal, really. You have to debur anyway, drilling or reaming adds a few seconds per hole.
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With prepunched parts clecoed together, you're right. Redrilling the parts takes little time. You're gonna test fit the pieces anyway. But some of the prepunched stuff wan't supposed to require deburring. So if it is 5 seconds to upsize a hole, it is probably 20 seconds to deburr the hole (both sides, both pieces). Over the 15,000 rivet holes in an RV, that adds 100+ work hours. So it isn't trivial.
 
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