Representatives of Van’s Aircraft told an Oregon bankruptcy court they expect about 70 percent of existing customers to accept a price increase (reported to be 30 percent) on the parts they have on order with the company. Company officials and lawyers were in court on Thursday to begin the process of moving the company into Chapter 11 reorganization. They dealt mainly with procedural issues and answered numerous questions from the judge in the case. Another hearing is planned for Dec. 19 where more decisions on the process going forward are expected. In the meantime, the court agreed to allow Van’s to continue basic business operations, including manufacturing and delivery of ready-to-ship kits and parts.
A major part of the reorganization is restoring profitability from the sale of parts and structures, and there are more than 3,500 orders, placed by more than 1,500 customers, that will be subject to a price increase. In its filings before the court, Van’s has proposed that existing customers be allowed to accept the price increase and continue receiving parts. If they reject the price increase, they could forfeit the deposits they made on those parts and end up in the large pool of unsecured creditors to recover their money, or a portion of it, through the bankruptcy process.
The enormity of the case has sent ripples through the GA industry, and both EAA and AOPA say they are keeping a close eye on the developments. “Van’s is doing everything it can to continue operations and return to profitability,” EAA said in a statement to AVweb. “EAA is going to respect that process as they move it forward.” AOPA urged members who are Van’s customers to keep track of the proceedings. AOPA stresses that if you have dealt with Van’s in the past, “you need to be watching for any notices or claim deadlines,” AOPA said in a statement to AVweb. “If you do not comply with the notices or deadlines, you could lose any opportunity to recoup costs.”
The price increases while they hurt, I think are appropriate. cost has never been the main reason for building a RV in my opinion. building under Experimental rules allow putting the best available technology in the aircraft and provides great flexibility for maintenance and upgrades. It also is a great project and gives a lot of joy in the actual building. It does allow for some reduction in direct cost by substituting sweat equity for cost but it is not the driver. in general in this situation you can do it cheaper if you take the time you would have spent building, get a job, and use that $$ to purchase what you want.
having a good organization that supports the fleet well is one of the most important aspects of dealing with a good manufacturer like Van’s should be. To keep them flying there needs to be a reliable source for information, parts, etc.
My reason for building my RV-7 was that I never wanted to see double-digit groundspeeds again — and cost. Interest in building and motivation to complete are tested repeatedly over the months (years for some), but it’s well worth it.
Regarding the price increase, it’s like most decisions to buy something. What do competing products cost? The much awaited RV-15 will come in at a higher price than hoped for, but if it’s competitive with other bush planes of its type, then people will jump in.
Van’s is doing the right thing. It has always been a high integrity company. Prices will hopefully reflect their actual costs in the long run and let them keep innovating and providing amazing kits. I am finishing my second RV-9 project, and it is the most rewarding thing I have ever worked on.
I’m curious … why have you built TWO RV-9’s ? I’ve heard this story before.
I’m building a Kitfox, but just like RVs, people enjoy the build so much they fly the first one a while, then sell it to pay for a second build. That way they can improve on things they did the first time while having a great time doing it.
Forgive me, but that wouldn’t instill confidence in me if I were the purchaser of the first one.
That’s fair enough, but perhaps not because of what you think. Were I to buy anyone else’s build, I’d want it to be the fourth or fifth one s/he had done 🙂 However, even in our own factory-manufactured planes, I see things I wish were a little different or a little better — and I keep seeing new things over time. I can certainly see wishing I had swapped those two switches or placed that gauge just a bit up or (my favorite) not used a basic L/R/Both key but individual mag switches and a starter button. None of those things makes a plane unsafe or even un-flyable, but they can make the difference between basic flying and an afternoon of pure joy 🙂
VAN’s has always been a class act and I expect nothing to change in that respect! I have complete confidence that Van’s will come out OK in the end. Builders that aren’t willing to pony up the extra $ will have to wait a while for their refund, most likely measured in years.
Waiting for a RV-15 to be introduced will be equally as long maybe longer.
Seeing the amount Vans owes Lycoming and Hartzell, I would be very concerned if I had a deposit for an engine or propeller. People that locked in a price as far back as 21 could be in for a major price shock if that isn’t honored. So sad to see this happen to a great company.
“Van’s Expects 70 Percent Buy-In On Price Increase”…
“Expects” mmmm… I wouldn’t bet or deposit anything else until they get this game straight. The truth is coming out as installments, typical when more trouble is not shown or being hidden. “the company says it owes from $10 to $50 million” meeeeh what is the difference? $10 to $50 million he? LOL just a little here and there. LOL
“Gime mo mula” and the problem will be resolved. LOL
It’s sad to see a good provider pinched by the realities of business. Vans has made the investment in tooling and product development that gave ordinary people the confidence to build a really good airplane.
“Van’s Expects 70 Percent Buy-In On Price Increase”…
Irrational expectations comes to mind.
With inflation running rampant on essential goods and services, folks are going to have to look long and hard at spending extra bucks on discretionary play toys.
A few points about the Van’s Chapter 11 process: December 4, 2023
“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 Court plan.”
We’re making some changes and have taken our kit order forms and web store offline for a couple of days. They’ll be back soon for you to place orders as soon as we complete our work.
Not that I am involved, neither having anything on order there, but reading this, I would have serious doubt paying 30% (which can be any amount of $$$$$$) and seeing that evaporate also in a next phase of bankruptcy. I’d say it will be a devilish gamble, as an unfinished kit will also be difficult to sell later.
Or do I see it too dark?
the volume will collapse, pushing prices ever higher
Correct
Seems to me this is poor management, even a company good at providing kits doesn’t have to be good at management
Guys, is it only me that wondering how come ‘’Van’s Aircraft (Van’s)’’ have ‘’LYCOMING, Engine (as 1st Creditor for $598,323)’’ and ‘’Hartzell, Propellers (as 3rd Creditor for $130,056.34)’’ as ‘’Creditors’’?
I don’t ‘’Understand’’? As I figure it out, ‘’Van’s’’ was the ‘’Middleman’’ between ‘’LYCOMING, & HARTZELL’’ and their ‘’ (Van’s) Clients’’. As I see it, ‘’Van’s’’ have negotiated an ‘’Original Equipment Manufacturer (OEM) with ‘’LYCOMING, & HARTZELL’’ for all ‘’Van’s’’ sales. So, I don’t understand how come ‘’Van’s’’ own as much to ‘’LYCOMING & HARTZELL’’? ‘’Van’s’’, must have received payment from those ‘’Customers’’ that have made a ‘’Deposit’’ and then the ‘’Full Payment’’ prior to ship them ‘’Engine’s & Propeller’s Ordered’’! So, how come ‘’Van’s’’ own so much money to ‘’LYCOMING & HARTZELL?
I use to work for ‘’Pratt & Whitney, Canada (P&WC)’’ in the nineties, their selling structure was, for the ‘’Customer, ‘’List Price’’, minus (-) 15 to 25%’’ and for ‘’Approve Overhaul Shop (AOS), ‘’List Price’’, minus (-) 40%’’. So, the ‘’AOS’’, where at least doing 15% margin on ‘’ P&WC Parts’’ sale. I don’t say it is the same for ‘’Van’s’’, but it should be something as a ‘’Middleman’’?
My two cents, Jacques (pronounce as Jack).