BTW - INTELLECTUAL PROPERTY IS A FORM OF BUSINESS PERSONAL PROPERTY

Therefore Van Grunsven has secured his personal ownership to ALL THE TYPE CERTIFICATES, ENGINEERING DATA, DESIGNS, DRAWINGS for ALL Vans Aircraft. ALL FOR ONLY THE $2 MILLION LOAN ON OCTOBER 30.

And the Board allowed that to happen? Oh I forgot Van Grunsven is the Board.

Van Grunsven will actually make out better if the company is liquidated in Chapter 7. He is protected coming and going.

The builders are being taken to the cleaners.

If the recent $1 mil and $2 mil secured loans were made for inadequate consideration, then they could be undone as a fraudulent transfer (term of art not necessarily meaning that fraud was involved). However, that would only happen if an independent trustee were appointed by the bankruptcy court, most likely at the insistence of the unsecured creditors committee. Although, one would also need to see under what conditions the $6 mil DIP loan were made and whether that in any way affects such rights (not typical, but you never know).

If the recent $1 mil and $2 mil secured loans were made for inadequate consideration, then they could be undone as a fraudulent transfer (term of art not necessarily meaning that fraud was involved). However, that would only happen if an independent trustee were appointed by the bankruptcy court, most likely at the insistence of the unsecured creditors committee. Although, one would also need to see under what conditions the $6 mil DIP loan were made and whether that in any way affects such rights (not typical, but you never know).

Are you one of those builders, David? You sound quite informed and have strong opinions so I would guess so. I don’t think there’s any doubt that the builders that have deposits in place are going to end up taking a big hit. The whole thing sucks all the way around IMO.

You are correct that Sub V makes it much easier to confirm a plan over creditor objections. However, to qualify for Sub V, you can’t have more than $7.5 million in debt including secured debt. Sounds like they had this all planned out beforehand.

Customers as unsecured creditors rarely get much of or any seat at the table. If the secured debt significantly exceeds the value of the assets, they get nothing no matter how the assets are disposed of or distributed. Therefore, they don't get much say in the disposal and dividing process.

If there is a buyer for the assets willing to pay more than the secured debt, the unsecured creditors come into play. The judge may also decide that the secured creditors will take a haircut allowing some funds to go to the unsecured creditors as well.

The Van Grunsven family will likely end up losing a lot of money on the loans made since 2021. Yes, they are in the front of the line as secured creditors, but if funds are limited, they will take a haircut. The equity they held is now just as worthless as the ESOP shares. The $6m DIP financing appears to be a move to keep them in control of the bankruptcy and the newco if one emerges. The judge may or may not let that happen, and that also assumes the company can survive without an outside buyer coming in to buy the assets. That's far from guaranteed. In fact, I would be surprised if the company survives at all without an outside buyer. It is going to be really difficult to get new orders after you have failed so miserably and screwed so many existing customers. It's going to take someone with deep pockets and a lot of patience to save Vans.

Gifting the loans now is a typical estate planning move. They have a very low taxable value now because they are not likely to be paid back in full, if at all. If the company somehow survives and the loans get paid back, the kids get the upside. I wouldn't read any more into it than that.

That’s not the way DIP financing works. Not only will the lender be protected with the certainty of the bankruptcy court’s order, but it will do so in a superpriority status well ahead of other creditors and administrative expenses. Now, that doesn’t mean repayment is a sure thing because that would depend upon a successful reorganization or sale.[/quote]

Doesn't arms length financing come to play here? Van is not a third party and is not a financial institution that provides DIP financing. He is closely aligned to the company and has information beyond the normal financial statements. I understand the mechanics but some of this plays both sides of the street.

Matt has identified the central issue. If a deep pocket doesn't show up to buy the assets, everyone, including the family, will lose out.

What about Van himself as the third party? He may be closely aligned, but he sold the company. If he steps in with enough cash to buy out the assets and take over control he can say "The former owners were caught in a difficult and unexpected situation which proved disastrous for the company. As the founder of Vans I am here to do as much as I can to make it right to you, our customers..." etc.

He didn't contract for the laser drilled holes and he wasn't the owner of the company when it happened. Can he ride in on a white horse and end up looking like a hero?

He may not have deep enough pockets to pull it off by himself. Now with some nice private equity partners (from China or the Middle East), he might pull it off.

What about Van himself as the third party? He may be closely aligned, but he sold the company. If he steps in with enough cash to buy out the assets and take over control he can say "The former owners were caught in a difficult and unexpected situation which proved disastrous for the company. As the founder of Vans I am here to do as much as I can to make it right to you, our customers..." etc.

He didn't contract for the laser drilled holes and he wasn't the owner of the company when it happened. Can he ride in on a white horse and end up looking like a hero?

I don't believe this is true. The business needed a price increase. That's being done. Once that is in place (and assuming customers don't run away in droves) the business will go back to profitability and positive cash flow. it may take time to dig out of the hole, but the cashflow and profit should be there.

One of the things I figured out is that Vans apparently has a fair amount of what I'll call "trapped" inventory. Kit inventory that is 95% complete, but they are missing the (previously laser cut) parts to complete and ship the kit. When they convert that existing inventory to cash, things will begin to turn the corner.

Why WOULDN'T customers run away in droves? I think most will run. If I really wanted an RV, I would either buy used or wait a few years to see how things shake out. If a lot of buyers run or wait, the company won't survive without deep and patient pockets.

I don't believe this is true. The business needed a price increase. That's being done. Once that is in place (and assuming customers don't run away in droves) the business will go back to profitability and positive cash flow. it may take time to dig out of the hole, but the cashflow and profit should be there.

One of the things I figured out is that Vans apparently has a fair amount of what I'll call "trapped" inventory. Kit inventory that is 95% complete, but they are missing the (previously laser cut) parts to complete and ship the kit. When they convert that existing inventory to cash, things will begin to turn the corner.

That's what bankruptcy does - allows them to break the contract.