Van's Aircraft reports turning corner
Reorder goals exceeded; reorganization plan to follow
More than 81 percent of thousands of Van's Aircraft customers awaiting deliveries have signed updated agreements to pay more for their orders, company officials announced on YouTube February 17—extending until February 22 the company's deadline for others to do the same.
The eight-minute video (above) features company founder (and now its biggest creditor) Richard VanGrunsven and Greg Hughes, whose current role with the company was not identified, leading with far more upbeat news than the company has delivered since filing for Chapter 11 bankruptcy protection in December: The company has secured agreements with more than 81 percent of its customers to pay price increases of 30 percent (closer to 50 percent more in at least one case) for their unfilled orders, easily exceeding the 70-percent threshold that the company previously reported is essential for successful reorganization. VanGrunsven made it a point at the outset to “thank everyone for their continuing support, particularly those that have decided to continue building and reorder their kits, and engines.”
Hughes called the customer response “overwhelming,” more than adequate to proceed with finalizing a reorganization plan to submit to the federal bankruptcy court in Oregon in early March. He also encouraged any customers who have not accepted new terms to do so by 11:59 p.m. (time zone not specified) on February 22. Hughes reported that 93 percent of engine customers and 78 percent of aircraft kit customers, as well as more than 80 percent of those waiting for propellers, have signed new agreements "so far," inviting others to respond by the newly extended deadline.
According to court records, more than 500 creditors filed claims by the February 12 deadline set by the court, a fraction of the roughly 4,800 customers who had paid for orders not yet filled at the time of the December bankruptcy filing. The potential creditor pool also included hundreds more customers who had received parts with laser-cut holes that developed cracks in the raised dimples that the company at first agreed to replace out of hand, later reconsidering after its own engineering study determined that the parts in question were not compromised in strength or life limits, and that only select parts subject to higher loads during operation would be replaced.
The company has built 254 new kits in the last six weeks, Hughes said, most of them already shipped. About 9 percent of the orders awaiting replacements for laser-cut parts have also been filled.
“Everybody here is working really, really hard to produce parts, to get things crated up and shipped to customers as quickly as possible,” Hughes said.
Hughes said Hartzell Propeller and Lycoming will continue to offer bundle discounts through 2024, with Hartzell offering a $500 price reduction and Lycoming a $1,000 reduction when customers purchase an engine and propeller together. The pair also acknowledged the 5-percent rebate offered by Dynon to affected Van's Aircraft customers in January.
While the majority of Van’s Aircraft customers with outstanding orders (and potential claims) agreed to higher prices, many of the 532 claims filed in the case came from other customers, whose dissatisfaction is manifest in documents attached to their claim. Most claims are well below $100,000, but there are a few notable exceptions, including the largest single creditor in the case, the Richard and Diane VanGrunsven Trust, which filed claims totaling $9.8 million for loans made to the cash-strapped company prior to the bankruptcy petition. According to a document filed February 20 (an amended motion requesting the appointment of legal counsel to represent the company as special counsel), current and former company employees have filed 33 proofs of claim that total more than $3 million.
VanGrunsven and Hughes said the reorganization plan will be forthcoming in early March, and such documents typically begin to clarify how much of the money owed to unsecured creditors (primarily customers) will be repaid, though final decisions by the court will still be months away.
Meanwhile, factory tours and demonstration flights will likely resume in March, and the company confirmed it will have its usual presence at EAA AirVenture Oshkosh in Wisconsin in July, though the company will not dispatch staff to the spring shows, Sun 'n Fun Aerospace Expo in Florida, or Aero Friedrichshafen in Germany.
“For the spring events what we decided… we're just going to focus our energy on the work that we're doing here, and getting it done, making parts, and getting things shipped,” Hughes said.
