Is it normal for a Balance sheet total Assets vs Liabilities and equity to be equal for a company in a situation like Vans?

Or are the inventory numbers being adjusted to make the equation come out perfectly.

Which balance sheet numbers are actual vs estimates.

Yes, a balance sheet are defined as
Asset = Liab. + Equity

It would be unlikely the inventory is estimated. There may be some formulas or rounding, but not estimated.

We also don’t know if the Financial Statements are “compiled”, “reviewed” or “audited”.

Yes understood a Balance sheet must Balance. But in a situation where the company is in dire straits and pulling money from various places to stay afloat. Then going into bankruptcy it seems like there would have to be items estimated to make the balance sheet come out perfectly.

Some would be real numbers but it must be skewed somewhere. Accounting is not that perfect.

The question is which numbers...

There are a lot of numbers on a balance sheet that are estimates, but there are rules for how it's done. The "plug" to make it balance is equity.

Latest update from Van's.

[YouTube]https://youtu.be/fnSxXp_cxsc[/YouTube]

Repaired link.

The negative equity number

they posted an update today

Excellent update, very well done!

Dan

There are some things going on.
- On VAF yesterday some noted that they have been waiting on Quick Build kits ordered in 2021. One received bills for a 73% increase in price for an undelivered RV-14A QB Fuselage kit and a 55% increase in price for the undelivered QB Wing kit. A couple others said they got bills with over 50% increase.

* Apparently Vans sent a letter out stating that they would hold price increases to 50% (for now).

- This week was the deadline for Claims Filings against Vans - all creditors - customers, vendors, employees, lenders, tax authorities, etc.
https://www.bmcgroup.com/restructuring/Claims.aspx?ClientID=537 Click on "Show Details"

* There are 532 Claims. Highlights:
Apparently Vans hasn't been paying taxes - Marion County Tax Assessor Collector owed about $110K (secured ahead of everyone else) and Texas State Comptroller about $56K, Tennesse Dept. of Revenue about $30K and the State of Minnesota Dept. of Revenue about $10K.

There are usual suspects like Hartzell - $170K, Portland General Elec. - $20K, Boeing -$17K. I don't see Textron/Lycoming - maybe that is a separate agreement involving 442 engine deposits under contract.

The biggest claims are from the Van Grunsven family - about $9.3 million in total. The Balance Sheet shows that the ESOP also loaned about $730K to Vans and there may be claims under employee names - for instance the HR VP at Vans has about $640K in multiple claims which may be ESOP.

The irony is that although the Builders/customers have completely financed Vans from day one (with their pre-paid advances) and are really the single biggest creditor group - they have no say, no senior rights and no protection in this Chapter 11 "Reorganization". To add insult to injury they, as a group, are committing to provide he real DIP financing by being asked now to allow Vans to break the purchase contracts and to pay upwards of 50% more (and more likely in the future) on the approx. $52 million in annual Revenue. Look at the Balance Sheet - Builders have advanced (loaned) Vans $26.5 million.

In the Reorg Proposal the Van Gruesven family proposes to advance up to about $6 million to Vans at about 10% interest. Where is the interest payment to the Builders for their "loans" of cash to Vans?

This is a pre-packaged reorganization in which the Van Grunsven family holds all the cards. The Van Grunsven family owns a controlling stake in the company hidden in the ESOP. Richard Van Grunsven is the Chairman. Through these years of operational and financial mismanagement, the Van Grunsven family has been fully aware of the negative cash flow and loaned money to Vans which they secured with all the assets of Vans including Intellectual Property. The Van Grunsven family are both secured by all the Assets in Vans and are filing Claims against Vans Aircraft at the same time thereby covering any outcome.

Via Hamstreet advisors, they have rammed this down the Builders throat before they realize what is going on or can organize as a group. In reality, the Builders should be receiving equity, in exchange for allowing Vans to break the contracts and raising prices immediately. Instead they are being told to just be happy that they can get kits at all by paying higher prices.

Vans will likely get through this. Existing builders will pay substantially higher prices than contracted or expected. The Van Grunsven family probably consider the entire process fair since builders "should have been paying 50% more all along...." The Van Grunsven's will get their money/loans back and continue to control Vans. Reputation and relationships will be altered for some unknown period until everyone forgets.

As a manufacturer, I can say that my raw materials over the last 4 yrs has not on risen, it has been astronomical. The bigger the organization, the harder to track raw material price increases. One would think it’s easy but it’s not. Most people see cost at supermarket or at gas station increase 30%-50% or more and don’t realize that those things are yet just the tip of the iceberg in manufacturing. Oil prices has a direct relationship to metal cost. Add in inventory issues then lead times, then throw in a beta error (part you think is good but is in fact not), and you have the perfect storm.if you have 25% margin, and metal doubles due to inventory and other issues, you are already behind the eight ball. I had my metal double in one week. One week on one order I was loosening money. How long was this going to last? Can I even get metal? The wood bill is on a 90 day cycle so after 3 months, that bill tripled? Oh crap. Transportation then doubled even though we already quoted a low rate. And we are just a small company. The change is so rapid that most companies have a hard time with change. Customers have a difficult time with change. The normal 2-3% inflation rate year over year really needed to be 100% over a month and then more.

Sometimes it’s hard to connect the dots when it comes to cause and effect. The Covid debacle with the mandatory stay at home policy, coupled with payouts for staying at home, coupled with cash for overseas military operations in the billions, along with environmental oil policies, all had a part in this. Not judging, it’s just simple economics. We all were impacted and some lost businesses and some lost a lot of money. We still haven’t recovered. Seems like the only ones who benefit from bankruptcy are the lawyers. Not knocking lawyers, but that’s just the way it is.