Hobbico files bankcrupcy

[jharkin]

Back on the topic of Hobbico:
I did some digging and found the filing.

Go to the website for the District of Delaware Bankruptcy court.
District of Delaware | United States Bankruptcy Court

The main docket number for the Hobbico bankruptcy petition is 18-10055. If you want to view it, you have to sign up for a "pacer account" and then you can view /download a PDF of the filings for a nominal fee... I think around 10 cents per page.

There are two documents worth reading - #1 voluntary petition for chapter 11, and #34 affidavit in support.

From these documents, they currently have $53.M in assets and $143M in liabilities. In FY17 they did $248M of gross revenue. The petitions lists the top 30 unsecured debts and #1 is Futaba - owed $2.3 million. The next 5 creditors appear to be trade organizations, importers, an IT vendor and what appears to be their law firm, all owed over a million each.

In the sections that talk about the reason for the bankruptcy they mentioned that they took on a lot of debt to fund acquisitions over the years, and the recent softness in the industry and a lack of product innovation at Hobbico hurt revenue and made servicing the debt unsustainable. They also specifically called out problems with their R/C car lines - The bankruptcy of HPI and Traxxas leaving Hobbico - as factors that pushed them over the edge.

There where separate petitions filed for Hobbico, Great Planes, Tower, Axial, Estes, Revell and United Models

[Train Fixer]

Thank you jharkin, some good info in that last post, and the one after this.

[jharkin]

I’ve been reading more.

They have had a string of bad luck. Revenue decline from 360m in 15, to 320m in 16 to 248m in 2017. They cited a few factors:

#1. Drone revenue which initially climbed to 20m fell off a cliff when their China suppliers began selling cheap drones direct to consumer.

#2 HPI went bankrupt and was bought by ripmax. HPI was their #2 selling brandafter Traxxas.

#3 Axial r/c cars main factory in China went bankrupt and closed.

#4 Traxxas left Hobbico and is suing them for patent infringement.


All of these hurt sales to the point they could not keep up payment on their loans. The banks initiated default and they where negotiating to sell the business but that didn’t happen fast enough so they where forced to go chap 11. They are still trying to sell the company.


From all of this I gather that RC cars are by far their biggest seller, dwarfing planes, much less helis. I also dont see anywhere near the massive 50% sales decline in a year some members here think is happening.

[Nytro97]

A few other bankruptcies listed in the courts that are in the works. In the word of business this is so common.

[Nytro97]

Originally Posted by jharkin

I’ve been reading more.

They have had a string of bad luck. Revenue decline from 360m in 15, to 320m in 16 to 248m in 2017. They cited a few factors:

#1. Drone revenue which initially climbed to 20m fell off a cliff when their China suppliers began selling cheap drones direct to consumer.

#2 HPI went bankrupt and was bought by ripmax. HPI was their #2 selling brandafter Traxxas.

#3 Axial r/c cars main factory in China went bankrupt and closed.

#4 Traxxas left Hobbico and is suing them for patent infringement.


All of these hurt sales to the point they could not keep up payment on their loans. The banks initiated default and they where negotiating to sell the business but that didn’t happen fast enough so they where forced to go chap 11. They are still trying to sell the company.


From all of this I gather that RC cars are by far their biggest seller, dwarfing planes, much less helis. I also dont see anywhere near the massive 50% sales decline in a year some members here think is happening.

I have always thought the money was in the cars and trucks.
Thanks for sharing.

[fastang]

Great work jharkin. This clarifies a lot of things. The loss of Traxxas and the lawsuit with them alone has to be a HUGE hit to their bottom line.

[dschertz]

I seen something that Traxxas was only being made until February 2018. Does anyone know of anything else that is involved with the future of the company. Doesn't effect me personally, just curious.

[GREYEAGLE]

I’ve been reading more.

They have had a string of """bad luck """. Revenue decline from 360m in 15, to 320m in 16 to 248m in 2017. They cited a few factors:


Do NOT Operate on Luck - If they did EVERYONE would be in Profit generation -
If you believe in LUCK you should not be in any sort of business - It is Not Socialism.

Nor is it anyone's business - too be sicking their nose in someones else s business - even by paying some sort of fee for access - too make it their business.

The WE factor is not part of a successful business model.

Such Vanity under the Sun ; For all is Vanity >

Will they return to Dust ?? Maybe / Maybe Not : But Not OUR BUSINESS


To make it Simple ? They did Not tend to their Garden - Full of Weed's

[stablehover]

Originally Posted by GREYEAGLE

I’ve been reading more.

They have had a string of """bad luck """. Revenue decline from 360m in 15, to 320m in 16 to 248m in 2017. They cited a few factors:


Do NOT Operate on Luck - If they did EVERYONE would be in Profit generation -
If you believe in LUCK you should not be in any sort of business - It is Not Socialism.

Nor is it anyone's business - too be sicking their nose in someones else s business - even by paying some sort of fee for access - too make it their business.

The WE factor is not part of a successful business model.

Such Vanity under the Sun ; For all is Vanity >

Will they return to Dust ?? Maybe / Maybe Not : But Not OUR BUSINESS


To make it Simple ? They did Not tend to their Garden - Full of Weed's

Pretty succinct thoughts on your part GE. Another bloated,insignificant business to most that lost it way and it’s customers. Either the business was failing to maintain the stock and inventory that relevant customers desired, the business practices they used were inappropriate, shipping, customer service etc. etc. or perhaps market demand is so small that the business model was no longer relevant. Sure hope the other shoe does not drop.

[fastang]

Originally Posted by GREYEAGLE

I’ve been reading more.

They have had a string of """bad luck """. Revenue decline from 360m in 15, to 320m in 16 to 248m in 2017. They cited a few factors:


Do NOT Operate on Luck - If they did EVERYONE would be in Profit generation -
If you believe in LUCK you should not be in any sort of business - It is Not Socialism.

Nor is it anyone's business - too be sicking their nose in someones else s business - even by paying some sort of fee for access - too make it their business.

The WE factor is not part of a successful business model.

Such Vanity under the Sun ; For all is Vanity >

Will they return to Dust ?? Maybe / Maybe Not : But Not OUR BUSINESS


To make it Simple ? They did Not tend to their Garden - Full of Weed's

As all of us are a part of this and other hobbies that this company is all about. It is our business when news such as this is released. Does it affect us directly, probably not unless a member is an employee. But I have no problem with jharkin taking the time to read thru something that is public record.

[jharkin]

Guys, Hobbico did not make HPI go bankrupt, or make Axial China factory close. Those ARE factors out of their control, so call it whatever you like but it was not deliberate.

Grey, I Did NOT pry in anyone’s private business. Court proceedings are public record by law. If you wanted to physically drive to that courthouse you could view them free.

[Mariner85]

I emailed Tower Hobbies and this was their response. Either they're putting a cheery spin on things or things aren't as bad as they seem.

Dear Tower Hobbies Customer,



Thank you for contacting Tower Hobbies. Our parent company, Hobbico, has filed for restructuring under Chapter 11 of the Bankruptcy Code. Please know that this type of bankruptcy filing is NOT one in which the company is liquidated. This action is being taken to position the company for future growth. The reorganization will allow our company to invest in additional inventory from leading hobby brands, while adding exciting new products.



We will continue to operate the business throughout the bankruptcy and restructuring process, while minimizing any impact to our customers. Our team will deliver the same high level of service, as our top priority remains meeting or exceeding customer’s needs.



Gift cards, gift certificates, credits, Super Saver Club memberships, warranties and backorders will continue to be honored.



Thank you for your continued support and business.



Heather

Tower Hobbies Customer Service


Phone: 800-637-6050 | 217- 398-3636

Web: http://www.towerhobbies.com/

[CZorzella]

Originally Posted by Mariner85

Gift cards, gift certificates, credits, Super Saver Club memberships, warranties and backorders will continue to be honored.

IMO, the promise they make of honoring all that was mentioned above is a firm indication that they really will to continue on business.

Carlos

[jharkin]

One of the things that was in the chapter 11 filing was a petition to get temporary loan funding to pay some of their big offshore distributors (probably futaba) so they could get stock moving and fulfill orders to help get things back on track.

I did my part. Put in a big order for a new TX this morning that I have been toying with buying for a year now. I called it in over the phone because I had a special request for some customization from the service department. The sales rep seemed cheery on the phone.

Next....

[mattbeau]

I'm waiting for them to get more R7003SB's in and I'll be placing an order too.

sactownhobby.com

[gwright]

Matt,
It appears those receivers should be in early next week on tuesday. However, that is always an estimation due to all the moving parts of getting containers in the country, clearing, trucking to warehouse, etc. The majority of the time it's amazingly accurate, usually within a day or two either way.I'd suggest placing a backorder

I've resisted posting in this thread until now. I normally just frequent the synergy groups and low headspeed groups on here, but reading through this thread reminds me of a certain Mark Twain quote
"The reports of my death are greatly exaggerated"

[mattbeau]

Thanks!

I'll do that.



sactownhobby.com

[CZorzella]

Originally Posted by gwright

I've resisted posting in this thread until now. I normally just frequent the synergy groups and low headspeed groups on here, but reading through this thread reminds me of a certain Mark Twain quote
"The reports of my death are greatly exaggerated"

Gary, thanks for chiming in here. I'd like to express my deepest sympathy and wishing well that Hobbico will survive to this misfortunate moment of their company history.

Carlos

[Staub]

Great info from Jharkin.

[Garland]

Originally Posted by newbheliusr

Wow!! Angry much? You need a to take a hit or a drink and calm the hell down. lol Times change, change with them or be left behind. I don't like drones or quads or any of that crap. I just like helicopters. But I'll be looking at you in my rear view mirror as you hope some day the old days return.

oh and I am pretty sure politics is a no no of conversation here now.

Hey gentle snowflake guy NAIVE MUCH?? Im sorry if I offended you in your padded PC room society has coddled you in it seems. Its not politics if I call ALL politicians dirty on some level so put on your big boy pants on and listen. YOU need to grow the hell up!

Times change thats fine, but it was purposely engineered to slow down our economy and let China run over the USA by our own politicians. I'll be looking at you newbheliuser if any opposing view you cant seem to cope with enters your "safe space"