[kirkbauer]

Over two years ago, I ordered the RV-10 tailcone kit, QB fuselage, and QB wings. About a year later, I had enjoyed the building process so much, and my personal finances took a bit of a hit, that I ordered a slow-build fuselage kit instead. Unfortunately, I let them keep my full deposit (from the QB wings and fuselage). I was still unsure of how I would ever afford to finish building, but I thought I could get that deposit back (minus $500) if needed.

I was almost done with my fuselage kit before the LCP fiasco. Right now I'm on hold. I will need to rebuild almost everything that I have completed so far.

I'm trying to decide whether or not I'm going to keep building or give up on the effort. As part of that, I'm trying to figure out what's going to happen with my deposit.

Here is what I do and don't know about my options.

Scenario A: "Give Up Now"; if I don't agree to the new pricing, my deposit will end up as part of the Chapter 11 process.
Scenario B: "Build On"; if I agree to the new pricing, is it possible that I'll need to pay additional cash towards the deposit?
Scenario C: "Give Up Later"; If I agree to the new pricing, but then before making the final payment I decide to cancel after all, what happens to my deposit then? Especially if I have to put more cash in?

 

[sc_pilot]

Never thought of Scenario C. That might be a way to get your refund and avoid Ch11… but I’m sure their legal team will have thought of that.

 

[N8DAV8R]

Scenario B: "Build On"; if I agree to the new pricing, is it possible that I'll need to pay additional cash towards the deposit?

So far, statements by Van's (I *think* heard mention in the hearing as well) is that existing order holders will have to agree to new pricing but will not be asked to make an additional deposit.

 

[calvid]

Never thought of Scenario C. That might be a way to get your refund and avoid Ch11… but I’m sure their legal team will have thought of that.

I wouldn't be surprised if the new agreement we enter into says "no refunds". At least for pre-bankruptcy deposits.

 

[kirkbauer]

If agreeing to the new pricing prevents me from receiving a refund in the future, I'm afraid I'll need to give up on building now. I wonder how many builders they are going to lose as part of this process and how that will affect their future revenue.

I can think of a lot of ways I could keep building but I'm not sure they are thinking the same way. There is something like $60k of future revenue on the line... or more since I would likely have been a repeat builder.

But given the lost money and time I have already experienced, the recent dramatic failures of Van's Aircraft, and my own uncertainty around funding, I'm not seeing a path forward if it means I have to potentially sacrifice my deposit.

 

[DanFrazer]

All this talk about new agreements makes me wonder what that will actually look like.

Is there going to be some new fine print type document that is part of us agreeing to the new terms? Maybe I should have read more closely when I gave my deposits prior to the Ch 11 announcement, but I guess there were terms spelled out for those deposits?

Does anyone know have an idea what the new terms will be? The thing I'm most interested in is some "guarantee" that any new money we give to them is "safe" if the worst happens. I'm sure that's a tall request, but I heard in the hearing, and others talking about, that new deposits will be held in a separate place.

I do mind handing Vans a few thousand more dollars, especially if it's to pay for some shoddy QC on LCP and QBs, but it's a small price to pay compared to the total cost and I'm willing to do it to get my -12 flying.

I would NOT be OK handing them the balance of my engine kit and not receiving the kit and maybe losing most of that money being an unsecured creditor.

 

[Jose_Antonio]

The thing about Option B is that there is no way to know what it'll end up costing us. It's 32% today, but what if in six months, Van's still hasn't delivered and instead demands another 32% bailout? I get the inflation arguments, but they are no excuse for Van's going back on its word after taking our deposits. The question for me is whether I can afford to risk even more money with Van's without a clear "stop-loss" commitment from them. Otherwise, the only way for me to stop potential loses is to get up and walk away from this craps table.

Can you imagine how much Van's is going to have to spend on marketing to convince future builders that it's a safe gamble?

 

[airguy]

The question for me is whether I can afford to risk even more money with Van's without a clear "stop-loss" commitment from them. Otherwise, the only way for me to stop potential loses is to get up and walk away from this craps table.

What we're seeing right now is Vans version of the "stop-loss". They either stop losing money, or walk away from the craps table. Which would you prefer?

 

[Jose_Antonio]

What we're seeing right now is Vans version of the "stop-loss". They either stop losing money, or walk away from the craps table. Which would you prefer?

Like you, I prefer a version where Van's survives, and someone else pays for it. I get that folks with flying aircraft need a reliable parts supplier and that the resale value of their aircraft is impacted by whether Van's survives or not, but that doesn't mean I have to "prefer" a solution where I pay for it. My interests and yours may not be the same, but I'm not going to try to convince you that what is best for me is what you should want.

 

[newt]

If agreeing to the new pricing prevents me from receiving a refund in the future, I'm afraid I'll need to give up on building now.

It's completely normal to lose a deposit if you enter into a contract of sale and then unilaterally back out later before fulfillment.

The entire point of a deposit is to give you a reason to not do that.

It's 32% today, but what if in six months, Van's still hasn't delivered and instead demands another 32% bailout?

That's not a decision Vans gets to make, because they're in Chapter 11 and their affairs are being run by the bankruptcy court.

Is this something you expect a judge to decide?

- mark

 

[tfriske]

That's not a decision Vans gets to make, because they're in Chapter 11 and their affairs are being run by the bankruptcy court.

False. The entire purpose of the Chapter 11 petition is to allow Vans to reneg on the fixed price contracts with builders (to the tune of $22M). They are most certainly moving to a contract structure that allows further price increases and have already said so.

 

[Jose_Antonio]

It's completely normal to lose a deposit if you enter into a contract of sale and then unilaterally back out later before fulfillment.

The entire point of a deposit is to give you a reason to not do that.



That's not a decision Vans gets to make, because they're in Chapter 11 and their affairs are being run by the bankruptcy court.

Is this something you expect a judge to decide?

- mark

What about Van's going back on its word (on quality, delivery times and now on price) while holding our deposits hostage makes our decisions "unilateral?"

Also, the court hasn't decided how Van's should proceed. Van's is asking the court to let it renege on its promises while keeping deposits. This is their proposal.

 

[kirkbauer]

It's completely normal to lose a deposit if you enter into a contract of sale and then unilaterally back out later before fulfillment.

The entire point of a deposit is to give you a reason to not do that.

My understanding was that if I cancelled my order I would lose $500 out of my deposit. Weren't those the terms that I agreed to when I placed my deposit?

 

[lr172]

My understanding was that if I cancelled my order I would lose $500 out of my deposit. Weren't those the terms that I agreed to when I placed my deposit?

sadly the terms you agreed to no longer apply. That deposit and it's commensurate promises place you as a creditor to Vans. Chap 11 allows vans to break those promises and only deliver what they can, as approved by the court.

Larry

 

[lr172]

I


That's not a decision Vans gets to make, because they're in Chapter 11 and their affairs are being run by the bankruptcy court.

Is this something you expect a judge to decide?

- mark

It is a decision they get to make. The courts do not go down to that level of detail and definately do NOT set pricing for the company. at a very high level, courts give relief from creditors, ask for a plan to re-establish solvency and repayment of those creditors. They then approve plan and maybe a few status updates along the way. The judge does not set up shop at Vans and start making business decisions, like product pricing, for them. However, they will want to see lots of detail about how creditors will be treated, what they will get and when they will get it. This is all about calling off the dogs (creditors) for a while so that the company gets time to get their operations in order and regain positive cash flow. The court is mostly interested in how creditors are dealt with and only loosely interested in a general plan regarding path to solvency. The judges have limited business skill and couldn't evaluate the details of that plan if they wanted to. They will look, at a high level, that the plan is reasonable and has a chance of success, but that is mostly done by evaluation of the company experts testimony.

 

[Brantel]

My understanding was that if I cancelled my order I would lose $500 out of my deposit. Weren't those the terms that I agreed to when I placed my deposit?

Van's was granted a motion at the initial hearing to reject existing order contracts. With one stroke of the pen, the Judge wiped out 28 pages of customer contracts.

 

[GregInIdaho]

Van's was granted a motion at the initial hearing to reject existing order contracts. With one stroke of the pen, the Judge wiped out 28 pages of customer contracts.

Well, I think the motion was for the form of notice and rejection, not the right to reject. Van's was going to reject the contracts, the judge just ruled on the proposed mechanics of notice.

 

[Brantel]

Well, I think the motion was for the form of notice and rejection, not the right to reject. Van's was going to reject the contracts, the judge just ruled on the proposed mechanics of notice.

I am no lawyer and did not stay at a Holiday Inn Express but the first sentence states “hereby moves this court for authority to reject certain executory contracts”.

Seems like they thought they needed court authority……