Van’s Aircraft has filed for Chapter 11 protection while it reorganizes with the goal of maintaining existing services and emerging as a solvent company again. In a statement posted late Monday, Van’s tried to assure owners of 10,000 finished aircraft, builders and future customers the company has a future. “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,” the company said.
The company blamed a maelstrom of issues for the decision, which was made about a month after company founder Dick Van Grunsven announced the company was pausing certain functions while it addressed a serious cash flow crisis. Two separate quality control issues, along with an imbalance of orders and deliveries due to COVID, led to the crisis. “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,” the statement, which is copied in full below, says.
Statement By Van’s Aircraft On Chapter 11 Filing
On December 4, 2023, Van’s Aircraft filed for protection under Chapter 11 of the federal bankruptcy code, a key step in the reorganization of our company. 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.
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. 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.
During that time, Van’s built up a significant and high-value parts inventory. As we manufacture the additional parts needed to balance this inventory, we will leverage it to fulfill orders for kits and parts over the next 12 to 18 months.
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. 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.
Hard to believe
The best selling experimental in the world
Out selling all other experimental’s put together
Going bankrupt?
A good product doesn’t necessarily mean a well managed company.
It’s ironic and sad that a great company like Van’s is forced into Chapter 11 bankruptcy while hundreds of “green energy” companies got billions in funding from the Federal Government’s Green New Deal. Perhaps Van’s could have put an electric motor on the front of an RV-12 and gotten all the funding they needed.
Completely non sequitur, but ok.
Why not go yell at the clouds?
Van’s is a victim of its own success doing its best to refine, deliver, and continue to expand its RV designs. I believe they are a company of integrity with e genuine desire to offer a superlative product. But it the volume, scope, and sheer size of its accomplishments at a time of so many business challenges including Covid, cheap financing followed with significant inflation culminating in high interest rates and credit tightening, especially business credit, results of poor quality outsourcing decisions, low water levels of the Panama Canal, war in Ukraine, now in the Middle East, etc… even the best run companies can run into cash flow difficulties. It’s not a lack of business… it’s a lack of steady cash flow for a variety of previous mentioned reasons plus many more. Bankruptcy allows for reorganization to improve its overall business activity facilitating a better run, more efficient company that ultimately bring forth an improved product for the consumer. These are business lessons that must be endured through the learning curve of running an ever growing business that very few could have projected 20 years ago attaining this level of success. Van’s is doing the right thing. Yes, embarrassing, frustrating, heartbreaking for Dick and his wife, but necessary for future success. Dick has retained an outstanding company to facilitate Van’s restructuring and ultimate long term viability. I believe they will come out stronger business wise for both support of the existing 10,000+ fleet and expansion of additional designs. Virtually all of the existing aviation companies have either been sold to foreign investors or declared bankruptcy because of cash flow issues while selling good products. Like Piper, Cirrus, Diamond, Lancair, Gipps Aero, etc…Van’s will succeed in being a long term viable aviation company.
I totally agree Jim – it seems to me working capital is the issue here, which based on my financial education is a fairly basic management skill
When does that ol’ boy get to retire?
I think he tried to. But the people they brought in to run the business side clearly weren’t up to the task.
Ch 11 just means that they get court protection from creditors while they get their act together based on the reorganization plan which has to be approved by the judge. After a certain period, they come out of it with more equity and less debt and hopefully some idiot executives fired and blacklisted.
It almost always means the owners lose all of their equity. Ownership is typically transferred to the creditors.