5 December 2023
Van’s Aircraft has filed for Chapter 11 bankruptcy to protect the company while it reorganises and sorts out its debts.
“During this period of reorganization, we will continue to source, produce, and provide parts, service, and support to our customers,” said a statement from Van’s. “We will also be crating and shipping kit orders.
“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.”
Van’s founder Dick VanGrunsven explains the Chapter 11 filing in this video:
The financial crisis affecting Van’s is due to several factors including problems with laser cut parts, faulty primer and subsequent corrosion issues, and supply chain issues during Covid. More than 1,800 customers require new kit parts to replace damaged items.
Van’s statement said its goal is to start shipping replacement parts to customers this month [December], and to complete the delivery of replacement parts to all impacted customers before the end of 2024. More than 1,800 customers are affected.
Customers who have paid deposits on engines/powerplants, propellers, and avionics will have to wait until at least mid-January to hear of progress. According to Van’s Chapter 11 filing, the biggest creditor is Lycoming who supply engines.
Customers with open parts orders may face price increases. They will be contacted soon and be asked to confirm the revised prices. According to the filing, customers who do not accept the new prices by mid-January will have the orders cancelled and become an unsecured creditor of the bankruptcy estate.
An additional statement filed to the Chapter 11 bankruptcy court by Hamstreet Associates, a business reorganisation specialist, said:
“Mr Van Grunsven, who is now in his 80s, has been essentially retired from Van’s. However, the management team recently made him aware of the dire financial situation of the company and he has come in to do all he can to rescue Van’s from this financial crisis for the long-term benefit of its customers, employees and vendors.
“On or about August 10, 2021, Mr. and Mrs. Van Grunsven loaned Van’s $6,500,000 secured by a deed of trust on the main building and corporate offices.
“On or about September 29, 2022, Mrs. Van Grunsven loaned Van’s $650,000 for the purchase of a Trumpf 5000 punch press.
“On or about September 18, 2023, an additional $1,000,000 loan was made secured by the second building housing the engineering and technical design team, workshops and hanger space. Shortly thereafter, an additional $500,000 loan was made on an unsecured basis.
“Finally, on or about October 30, 2023, an additional $2,000,000 loan was made to Van’s secured by all real and personal property of the company.
“[The] Debtor will also be seeking court approval for a post-petition loan from the Trust in an amount up to $6,000,000 to help fund post-petition operations.”
That’s a total of $10.65m lent by Mr & Mrs VanGrunsven.