HobbiCo / Great Planes / Tower Hobbies

[Ditchrat]

"After a strong prior year, the softening of the overall drone market in 2016 led to substantial declines in sales for Hobbico," he wrote.
Two of its leading product lines also filed for bankruptcy in 2016, which led to "a double-digit sales decrease."

That's interesting.

 

[CM9000]

quote for quote. an email.

January 10, 2018



Dear hobby shop name edited out



Hobbico, Inc., parent company of Great Planes Model Distributors, announced today that it is filing for restructuring under Chapter 11 of the Bankruptcy Code and is pursuing a process to sell or restructure the company. It’s important to know that the restructuring/bankruptcy approach we chose means Hobbico will continue to operate the business and serve its customers throughout the process. This type of bankruptcy filing is NOT one in which the company is liquidated. Numerous companies across a range of industries (automotive, airlines, etc.) use this type of filing as a tool to get costs under control, create stability and build platforms for growth.

Hobbico intends to use the bankruptcy filing and a possible sale of the business to reduce our debt, restructure our liabilities, attract new capital investment and position the company for future growth. We carefully evaluated this against a number of other actions and concluded this was the best path forward.

Customers will not be impacted by the Chapter 11 filing. As Hobbico works through this process, we remain dedicated to serving our customers through our broad product assortment, product innovation and customer service. You can expect to receive the same high level of product support for the products you own, and the parts that you and your customers buy from Hobbico throughout the restructuring period. The same Great Planes and Hobbico teams will continue to support you and your day-to-day contact(s) will not change.



Hobbico is and remains one of the largest U.S. distributors of radio-control and general hobby products and we are profitable. Despite our core strengths, our business has faced a number of challenges in the last few years within an increasingly competitive industry. Our leading product lines were negatively impacted by market headwinds and a series of one-time events with key suppliers. In addition, we have taken on debt in an attempt to further grow our business and we have not been able to successfully restructure to help meet our financial obligations. Efforts to rebuild revenue and profitability have begun to show results, but not quickly enough to offset our challenges. The restructuring and a potential sale will allow us to address our debt, attract new capital and ultimately invest more in new products and offerings for customers.



We are committed to communicating with you openly during this process. I understand that you are likely to have many questions. Please reach out to the Great Planes Management team with your questions. In addition, attached please find a “Frequently Asked Questions” document designed to address some of the questions you may have.



Thank you, as always, for your business.



Sincerely,

Ken Cutler

EVP Hobbico





Frequently Asked Questions

Q. How will Hobbico’s decision to file for restructuring under Chapter 11 of the Bankruptcy Code impact me/my hobby shop?

A. Customers will not be impacted. We will continue to support all our customers and products as we complete the reorganization. Our plan is to ensure that our customers get the same high level of product support for the products they own and the parts that they buy from Hobbico throughout the restructuring period. Additionally, the same Great Planes team will continue to support you and your day-to-day contact(s) will not change.



Q. What impact will this filing have on Hobbico’s product offerings? Will you still be able to fulfill my hobby shops orders?

A. Our filing and reorganization will enable us to continue to invest in inventory and provide our customers with the products and services they want and need. We continue to develop some of the industry’s best-selling products and remain committed to strengthening our robust pipeline of popular new products.



Q. What does this announcement mean for the future of Hobbico’s business?

A. The filing and potential sale are intended to preserve Hobbico’s industry-leading business. The filing allows us to continue to invest in new products and serve all of our customers, as well as our extended business network.



Q. Will Hobbico continue to offer new products?

A. We continue to provide our customers with some of the industry’s best-selling products and remain committed to strengthening our robust pipeline of popular new products. Some recent new products include:

· ARRMA’s Outcast, Talion, Voltage and 4x4

· Axial’s new 2017 Jeep Wrangler Unlimited

· Futaba’s 7PX Computer Pistol Radio and the 16SZ Aircraft Computer Radio

· New Revell models appearing in Star Wars: The Last Jedi, as well as licensed model kits for Scooby Doo, Halo, Cars 3 and NASCAR

· Hobbico entering new consumer electronics markets with products like C-me and Flitt



Q. Why is it necessary for Hobbico to file for Chapter 11 restructuring and pursue a sale of the company?

A. Despite our core strengths, our business has faced a number of challenges in the last few years within an increasingly competitive industry. Additionally, our leading product lines were adversely impacted by market headwinds and a series of one-time events with key suppliers that negatively impacted our business. We intend to use the Chapter 11 filing and a possible sale of the business to reduce our debt, restructure our liabilities, attract new capital investment and position the company for future growth.





Q. Does Hobbico know who will buy the company?

A. We are in the process of actively exploring prospective buyers and/or investors. We don’t yet know whether the Company will be sold in one piece or several parts. Our top priority is to pursue a path that provides the best possible outcome for the future of Hobbico.





Q. How long will this restructuring and sale process last?
A. It is too early to definitively say at this time. We are already in the process of actively exploring prospective buyers and/or investors. Our invaluable customer relationships remain a top priority for us throughout this process and we hope to bring the sale to a conclusion as quickly as possible

 

[Jim85IROC]

Let's see if we can fix this...

January 10, 2018



Dear hobby shop name edited out



Hobbico, Inc., parent company of Great Planes Model Distributors, announced today that it is filing for restructuring under Chapter 11 of the Bankruptcy Code and is pursuing a process to sell or restructure the company. It’s important to know that the restructuring/bankruptcy approach we chose means Hobbico will continue to operate the business and serve its customers throughout the process. This type of bankruptcy filing is NOT one in which the company is liquidated (yet). Numerous companies across a range of industries (automotive, airlines, etc.) use this type of filing as a tool to get costs under control, create stability and build platforms for growth.

Hobbico intends to use the bankruptcy filing and a possible sale of the business to reduce our debt, restructure our liabilities, attract new capital investment and position the company for future growth screw our creditors and suppliers. We carefully evaluated this against a number of other actions and concluded this was the best only path forward.

Customers will not be impacted by the Chapter 11 filing (except for our complete lack of any actual product to sell to them). As Hobbico works through this process, we remain dedicated to serving our customers through our broad product assortment (of both things we still have in stock), product innovation and customer service (so long as you don't need parts). You can expect to receive the same high level of product support for the products you own, and the parts that you and your customers buy from Hobbico throughout the restructuring period. The same Great Planes and Hobbico teams (except for the 3/5 of our staff that we laid off. But not Bob. Bob's still here) will continue to support you and your day-to-day contact(s) will not change.



Hobbico is and remains one of the largest U.S. distributors of radio-control and general hobby products and we are (not) profitable. Despite our core strengths, our business has faced a number of challenges in the last few years within an increasingly competitive industry. Our leading product lines were negatively impacted by market headwinds and a series of one-time events with key suppliers (and a shitload of bad decisions). In addition, we have taken on debt in an attempt to further grow our business and we have not been able to successfully restructure to help meet our financial obligations (because we bought up a bunch of failing brands that somehow continued to fail after we overpaid for them). Efforts to rebuild revenue and profitability have begun to show results, but not quickly enough to offset our challenges mistakes . The restructuring and a potential sale will allow us to address our debt, attract new capital and ultimately invest more in new products and offerings for customers get rich by funneling millions in the form of additional debt into shell corporations that on the surface appear to be there to help.



We are committed to communicating with you openly during this process. I understand that you are likely to have many questions. Please reach out to the Great Planes Management team (Bob's 44 bosses are all still on the payroll) with your questions. In addition, attached please find a “Frequently Asked Questions” document designed to address some of the questions you may have.



Thank you, as always, for your business.



Sincerely,

Ken Cutler

EVP Hobbico





Frequently Asked Questions

Q. How will Hobbico’s decision to file for restructuring under Chapter 11 of the Bankruptcy Code impact me/my hobby shop?

A. Customers will not be impacted (unless they actually want to buy something). We will continue to support all our customers and products as we complete the reorganization. Our plan is to ensure that our customers get the same high level of product support for the products they own and the parts that they buy from Hobbico throughout the restructuring period. Additionally, the same Great Planes team (Bob) will continue to support you and your day-to-day contact(s) will not change.



Q. What impact will this filing have on Hobbico’s product offerings? Will you still be able to fulfill my hobby shops orders?

A. Our filing and reorganization will enable us to continue to invest in inventory and provide our customers with the products and services they want and need. We continue to develop some of the industry’s best-selling products and remain committed to strengthening our robust pipeline of popular new products. Yes, just make sure you only order Hobbico brands. Everybody else stopped selling to us because we owe them money.



Q. What does this announcement mean for the future of Hobbico’s business?

A. The filing and potential sale are intended to preserve Hobbico’s industry-leading business. The filing allows us to continue to invest in new products and serve all of our customers, as well as our extended business network. CEO bonuses.



Q. Will Hobbico continue to offer new products?

A. We continue to provide our customers with some of the industry’s best-selling products and remain committed to strengthening our robust pipeline of popular new products. Some recent new products include:

· ARRMA’s Outcast, Talion, Voltage and 4x4

· Axial’s new 2017 Jeep Wrangler Unlimited

· Futaba’s 7PX Computer Pistol Radio and the 16SZ Aircraft Computer Radio

· New Revell models appearing in Star Wars: The Last Jedi, as well as licensed model kits for Scooby Doo, Halo, Cars 3 and NASCAR

· Hobbico entering new consumer electronics markets with products like C-me and Flitt



Q. Why is it necessary for Hobbico to file for Chapter 11 restructuring and pursue a sale of the company?

A. Despite our core strengths, our business has faced a number of challenges in the last few years within an increasingly competitive industry very poor business decisions & acquisitions. Additionally, our leading product lines were adversely impacted by market headwinds and a series of one-time events with key suppliers that negatively impacted our business. We intend to use the Chapter 11 filing and a possible sale of the business to reduce our debt, restructure our liabilities, attract new capital investment and position the company for future growth.





Q. Does Hobbico know who will buy the company?

A. We are in the process of actively exploring prospective buyers and/or investors. We don’t yet know whether the Company will be sold in one piece or several parts. Our top priority is to pursue a path that provides the best possible outcome for the future of Hobbico. We haven't yet found a suitable sucker.





Q. How long will this restructuring and sale process last?
A. It is too early to definitively say at this time. We are already in the process of actively exploring prospective buyers and/or investors. Our invaluable customer relationships remain a top priority for us throughout this process and we hope to bring the sale to a conclusion as quickly as possible

I think I got most of it right.

 

[svt923]

Let's see if we can fix this...

You missed this part

Dear hobby shop name edited out

Hobbico, Inc., parent company of Great Planes Model Distributors, is busy pretending we are not ****ed beyond comprehension. For example, we tasked some guy that will be heartlessly cast out from the smoking remnants of our once profitable organization in the very near future with crafting a statement designed to fleece hobby shop owners into an illusion of normalcy and continuing ordering from us in an effort to maximize attractiveness for potential buyers. Ultimately, this statement will say nothing in hundreds of words. You will literally learn nothing more about the status of our company at the end of this statement. In reality, our management team is negotiating a potential sale where the top of the organizational structure will either receive significant severance packages and/or executive level roles in the purchasing company.


Sincerely,

(insert name of random executive)

EVP Hobbico

 

[calcagno45]

Time will tell on this one. Chap 11 grants a stay on existing debt and may allow certain vendors to become “critical vendors”. CV’s are typically paid a portion of their pre-petition debt in exchange for continuing to do business with the plaintiff and agreeing to set payment terms. It’s often a better position for vendors but it’s a court approved process as well. However, it seems like many vendors have been pulling out before Hobbico filed BK so not sure how that will shake out. Vendors are the key here in providing product to sell, unless their warehouses are packed full which doesn’t seem that way from shopping their site.

 

[JatoTheRipper]

No matter what happens to HobbiCo I don't see them having nearly the product line that they once did. Not their own and certainly not from other vendors since said vendors are currently swearing them off and going other routes. It's sad.

 

[Greatscott]

No matter what happens to HobbiCo I don't see them having nearly the product line that they once did. Not their own and certainly not from other vendors since said vendors are currently swearing them off and going other routes. It's sad.

I can see them going back to the business model that made them big, more of a distributor and less of a maker of RCs and parts. Most likely they'll keep their Duratrax brand.

The big question is Axial, that could go either way. I can see them selling it off to raise immediate cash, but it seems like they'd want to hold on to it because it is a cash-cow.

 

[JatoTheRipper]

I can see them going back to the business model that made them big, more of a distributor and less of a maker of RCs and parts. Most likely they'll keep their Duratrax brand.

The big question is Axial, that could go either way. I can see them selling it off to raise immediate cash, but it seems like they'd want to hold on to it because it is a cash-cow.

I think Axial will get sold off for immediate cash as well.

 

[RiZZa]

Jeep buys Axial ?!

 

[mikemcE]

Let's see if we can fix this...







I think I got most of it right.

And you’re a douche.
Everyone points fingers so quickly , especially when you have no investment in it..... Fawking Business experts here


Hang up and Drive

 

[skinnyj]

Jeep buys Axial ?!

Then Fiat/Chrysler can destroy another brand.

 

[Greatscott]

So, of the brands under the Hobbico umbrella, which stay, which get sold, and which die?

Hobbico by Greatscott, on Flickr

 

[BJoe]

I think HPI, Hasegawa, Italeri, O.S., and Futaba have exclusive or at least primary US Distribution through GP. Revell, Axial, and Estes were bought by them, and I think Carl Goldberg and possibly Williams Brothets were too. With the exception of FlightPower and TrackPower, the rest were their brands, much like E-Flite, ECX, and Vaterra are Horizon's self created brands.

The above said, I'm no longer working at a LHS and haven't even worked in any retail establishment since early June of 2016, so I could be having memory issues, things could have changed in that time, or I could even be partially wrong here.

 

[tuanies]

Then Fiat/Chrysler can destroy another brand.

If by destroy, you mean best sales the brand has ever seen and a model lineup that cashes in on buyer demands for CUVs, without compromising the Wrangler or Grand Cherokee, literally, doing what a car company is exactly supposed to do, then I guess you can call that a failure...

 

[wings_of_fire]

So, of the brands under the Hobbico umbrella, which stay, which get sold, and which die?

Hobbico by Greatscott, on Flickr

How and why did Futaba fall into that cradle?

 

[tuanies]

How and why did Futaba fall into that cradle?

Distribution agreements

 

[BJoe]

If by destroy, you mean best sales the brand has ever seen and a model lineup that cashes in on buyer demands for CUVs, without compromising the Wrangler or Grand Cherokee, literally, doing what a car company is exactly supposed to do, then I guess you can call that a failure...

Not to mention that the CUVs have packages that make them actually capable of going further off road than gravel roads.

 

[wings_of_fire]

Distribution agreements

So that means its still owned by the Japanese owner except that Hobbico has exclusive rights to distribute Futaba products.

 

[Col_Sanders]

I'm not into aircraft or boats so I couldnt tell you if any of those brands are any good. I'd think Axial and ARRMA are profitable. Hopefully some other company does not just buy them to end the brand.

Then Fiat/Chrysler can destroy another brand.

:roll: I love how people throw the Fiat jab in...Fiat owns Maserati and used to own Ferrari. They are huge elsewhere in the world. The vehicles made by Fiat Chrylser are far better than any vehicles Daimler Chrysler ever produced. They are selling more Rams and Wranglers than ever and they have much better resale.

ETA: I guarantee a new Cherokee (especially the Trailhawk) would destroy a stock XJ offroad. They're ugly soccer mom looking things, but the XJ was looked at the same way for a long time too.

 

[BJoe]

I'm not into aircraft or boats so I couldnt tell you if any of those brands are any good. I'd think Axial and ARRMA are profitable. Hopefully some other company does not just buy them to end the brand.



:roll: I love how people throw the Fiat jab in...Fiat owns Maserati and used to own Ferrari. They are huge elsewhere in the world. The vehicles made by Fiat Chrylser are far better than any vehicles Daimler Chrysler ever produced. They are selling more Rams and Wranglers than ever and they have much better resale.

ETA: I guarantee a new Cherokee (especially the Trailhawk) would destroy a stock XJ offroad. They're ugly soccer mom looking things, but the XJ was looked at the same way for a long time too.

I'll be honest, my '12 200 with the Pentastar/6 speed combo (the minivan drivetrain) as well as my Sister's '14 Challenger R/T Classic have been rock solid cars, better than her '06 Charger SE was and our parent's '06 Town and Country is, in some ways, I think the 200 is better than my XJ at the same age!