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HobbiCo / Great Planes / Tower Hobbies

You got to feel bad for the 300+ employees who are going to end up unemployed because I sincerely doubt there is 300+ available jobs in the Champaign area for them.

On a much more selfish note, I only have interest in Axial and Futaba still being available out of Hobbico's 40ish brands. Arrma has some cool vehicles and OS engines are great but I wasn't going to buy anything from either of those product lines.

If Tactic dies, does this mean Axial RTRs will start getting better electronics? :lmao:
 
mikemcE said:
Hobbico "has determined that it may be necessary in the near future to permanently close and discontinue all of its operations in connection with a bankruptcy case to be filed under chapter 11 of the United States Bankruptcy Code," wrote human resources Director Howard Salazar in a letter dated Wednesday obtained by The News-Gazette.


Well interesting read


Hang up and Drive
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This ^^^ and this:

"In its filing for bankruptcy protection, Hobbico said it has an estimated 200 to 999 creditors, $10 to $50 million in assets, and $100 to $500 million in liabilities."

**** they are in a shit ton of debt! I don't see them surviving. Dammit! :evil:

The article hints at trying to find a buyer. I don't see anybody taking on that debt.

Man I don't get bummed by business closings often, but this one could potentially suck donkey balls!
 
svt923 said:
You got to feel bad for the 300+ employees who are going to end up unemployed because I sincerely doubt there is 300+ available jobs in the Champaign area for them.

On a much more selfish note, I only have interest in Axial and Futaba still being available out of Hobbico's 40ish brands. Arrma has some cool vehicles and OS engines are great but I wasn't going to buy anything from either of those product lines.

If Tactic dies, does this mean Axial RTRs will start getting better electronics? :lmao:
Click to expand...

Futaba will have to find a new US distributor. That is probably something that they have had in the works, as I'm sure they were well aware of Hobbico's financial issues and their ability (or inability) to maintain US distribution.

Axial is Hobbico's property, so we have to wait and see if they get sold off to someone else.
 
JatoTheRipper said:
The article hints at trying to find a buyer. I don't see anybody taking on that debt.
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I don't know the first thing about how bankruptcy works, but doesn't filing Chapter 11 give them a lot of flexibility in being released from a lot of their debt? I suspect that filing makes them much more appealing to potential buyers.
 
Jim85IROC said:
I don't know the first thing about how bankruptcy works, but doesn't filing Chapter 11 give them a lot of flexibility in being released from a lot of their debt? I suspect that filing makes them much more appealing to potential buyers.
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I've been trying to educate myself on it. It isn't as harsh as a Chapter 7, which is straight up liquidation of the company's assets. However, when a company reorganizes, they are expected to put future earnings from the reorganization towards debt. The big part about it is the "automatic stay", which prevents creditors from making individual collection attempts.
 
Jim85IROC said:
I don't know the first thing about how bankruptcy works, but doesn't filing Chapter 11 give them a lot of flexibility in being released from a lot of their debt? I suspect that filing makes them much more appealing to potential buyers.
Click to expand...

Good question. Thankfully I'm not familiar with bankruptcy.
 
Ditchrat said:
I wonder about that, what company would do interest free loans? Is tower absorbing the interest or are they self financing.
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It's just like a credit card where the company servicing the unsecured debt charges Hobbico a transaction fee ranging from 1-4% most likely. So the company still makes money and will make more if you revolve it past the initial interest free term as it likely will charge the consumer 25%+ interest starting from purchase date.


JatoTheRipper said:
"In its filing for bankruptcy protection, Hobbico said it has an estimated 200 to 999 creditors, $10 to $50 million in assets, and $100 to $500 million in liabilities."

**** they are in a shit ton of debt! I don't see them surviving. Dammit! :evil:

The article hints at trying to find a buyer. I don't see anybody taking on that debt.

Man I don't get bummed by business closings often, but this one could potentially suck donkey balls!
Click to expand...

Most likely closer to 50mil assets and 100mil liabilities. Going on the opposite ends would mean an extremely unhealthy company. It also means they have been in a loss position for quite some time creating negative equity.


Jim85IROC said:
I don't know the first thing about how bankruptcy works, but doesn't filing Chapter 11 give them a lot of flexibility in being released from a lot of their debt? I suspect that filing makes them much more appealing to potential buyers.
Click to expand...

skinnyj said:
I've been trying to educate myself on it. It isn't as harsh as a Chapter 7, which is straight up liquidation of the company's assets. However, when a company reorganizes, they are expected to put future earnings from the reorganization towards debt. The big part about it is the "automatic stay", which prevents creditors from making individual collection attempts.
Click to expand...

The goal of Chap 11 is usually to continue operating while negotiate a sale of the business or a settlement with debt/bond holders all the while not putting their employees out on the streets immediately. Keep word is continue to operate. Usually there's quite an effort put into forming a plan of reorganization by selling some assets, paying half the debt, etc. in order to exit Chapter 11 with a healthier balance sheet and less debt leverage allowing the company to hopefully gather their bearings and operate profitably again. Of course the unsecured debt from vendors usually take a hit and will be paid pennies on the dollar. Long term debt and bond holders usually end up with better treatment. Often times, a plan is never agreed upon or never successfully implemented and the case will inevitably turn into a Chap 7 where all assets are liquidated to pay pro-rata shares to the liabilities.
 
I really don't know what to say except I feel bad for the employees. I have been ordering from them since I have been involved with rc. I hope everything comes out for the better, which I really don't see happening though. :cry:

Cheers
Wade
 
Yes this is sad to hear.Have been ordering from Tower for decades now.There has been semi loads of packages delivered to my house that came from Champagne,Illinois.Always a Tower Hobbies catalog/flyer on the end table.When I told the wife about Towers predicament she got a little smirk on her face.Whats up with that?
 
Yeah Traxxas ...... they don’t want all brands distribution. Most likely is a mix of shareholders, dump debt, restructure, lose more money, sell off brands, fade away into memory land of baby boomers.....


Hang up and Drive
 
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