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Van’s Aircraft files for Chapter 11, outlines reorganization plans

By Dayna Fedy-MacDonald | December 6, 2023

Estimated reading time 7 minutes, 53 seconds.

A private Van’s RV-6A in flight. Eric Dumigan Photo

Van’s Aircraft, a U.S.-based kit aircraft manufacturer, filed for protection under Chapter 11 of the federal bankruptcy code on Dec. 4, 2023. The company says the decision is aimed at facilitating the reorganization of Van’s Aircraft and addressing the challenges it has faced in recent years.

In a press release, Van’s cited a series of issues that contributed to its financial struggles, including “unprecedented supply chain challenges” during the Covid-19 pandemic, problems with faulty primer leading to corrosion issues on quick build kits, and challenges with laser-cut parts production in response to high demand.

“As a result of this combination of issues, the company experienced serious cash-flow problems from which it could not recover through the normal course of business,” Van’s Aircraft said.

During the reorganization period, Van’s Aircraft has assured customers that it will continue to source, produce, and provide parts and services while also fulfilling kit orders.

The company said it built up a “significant and high-value parts inventory” during its recent challenging period, which will be utilized to fulfill orders for kits and parts over the next 12 to 18 months.

In a video message explaining the Chapter 11 filing, Van’s Aircraft founder Dick VanGrunsven said that while the term “bankruptcy” can be “shocking,” the key word to focus on is “reorganization — which implies continued operation and improvement.”

VanGrunsven founded the company in 1972 with his RV-3 airplane design. Over the years, Van’s Aircraft grew to offer home-build kits for its RV series aircraft models, like the RV-6, RV-7, RV-9, and RV-14 — to name a few. In 2022, the company celebrated its 50th anniversary. Today, over 11,000 RV kits have been completed and flown.

“I want to apologize for the lack of definitive communication over the past month or more,” said VanGrunsven. “It has taken longer than expected to complete our internal assessment and decide on our action plan.

“Our doors will remain open and we will continue to work hard to serve our customers to help explain and clarify the situation.”

The company has outlined specific plans for various customer groups affected by the reorganization.

Laser-cut replacement parts for customers

Van’s Aircraft will be contacting customers who received laser-cut parts in their individual kits to provide information about the parts and the replacement program. Upon court approval, the company aims to start shipping replacement parts to affected customers this month, with a goal of completing all deliveries by the end of 2024. The company said there are over 1,800 customers affected by issues with laser-cut parts, some of whom have multiple affected kits.

“The cost to manufacture and ship replacement parts to customers will be very significant,” said Van’s Aircraft, so it will take time.

Customers with deposits on engines, propellers, and avionics orders

Plans for customers with deposits on engines, propellers, and avionics orders are in the works in collaboration with respective manufacturing partners. Van’s Aircraft said it does not expect to have answers for these customers before mid-January, due to the volume and nature of the orders.

“If we have meaningful information to share, we will update you sooner,” the company said.

Customers with open parts orders

Van’s said it is reviewing all open parts orders, and some may experience price increases. These customers “will be contacted soon,” and provided access to a website where they can review details of their existing orders or act upon order modifications proposed by the company.

“Orders which do not require modification will be processed and shipped in the normal course of business.”

Customers with deposits on aircraft kits

Van’s Aircraft plans to contact customers with open kit orders within the next seven to 10 days, offering them the option to apply their existing deposits toward the purchase of the same kit under new terms and conditions, including a price increase.

In-stock kit orders are to begin shipping within the next seven to 10 days, with prioritization based on financial considerations, rate and timing of order renewal, and availability of in-stock parts.

Vendors with open invoices

Van’s said it is working with its network of suppliers to “maintain continuity in manufacturing and production,” in order to continue delivering parts and kits to customers.

As the Chapter 11 process unfolds, Van’s Aircraft is aiming to file its proposed plan of reorganization within the next 90 days. VanGrunsven said the company is working with business reconstruction specialist Hamstreet & Associates, with Clyde Hamstreet serving as Van’s Aircraft’s reorganization officer.  

Throughout the reorganization process, the company has promised to maintain communication with customers, and will also provide updates on its website at the following link: https://www.vansaircraft.com/reorganization.

VanGrunsven noted that he and his wife have pledged an additional multi-million-dollar loan to the company to help ensure that Van’s can successfully emerge from bankruptcy.

“The entire staff at Van’s is reinvigorated by the challenge of restructuring and growing stronger,” he said. “We’re more dedicated than ever to offering you the best kits and services possible.”

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