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Hobbico - files for Bankruptcy

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Jim Purcha11/01/2018 01:02:24
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Read it here:

http://www.news-gazette.com/news/local/2018-01-10/hobbico-files-bankruptcy-layoffs-next.html

David Ovenden11/01/2018 06:54:54
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Lucky my recent Tower Hobby order arrived last week then!

John Tee11/01/2018 07:58:54
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I know nothing about running a company but the finance people don't seem to have much idea. They have between 200 and 999 creditors, 10 to 50 million Dollars in assets and 100 to 500 million dollars of debt. What happened to accounting?

John

Frank Skilbeck11/01/2018 08:50:24
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Posted by John Tee on 11/01/2018 07:58:54:

I know nothing about running a company but the finance people don't seem to have much idea. They have between 200 and 999 creditors, 10 to 50 million Dollars in assets and 100 to 500 million dollars of debt. What happened to accounting?

John

I think their accountants know the exact numbers, but the US (Chapter 11) bankruptcy filing doesn't have to be exact and think there bands you file under. Note Chapter 11 in the US allows companies to continue to trade while they restructure. General Motors and Chrysler both filed under chapter 11 in 2009.

Don Fry11/01/2018 11:35:53
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Is Chapter 11 the one where the Company gets court protection from its creditors?

Biggles' Elder Brother - Moderator11/01/2018 12:12:35
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As someone who follows the advice of Mr Micawber* I find the finance world an increasingly Alice Through the Looking Glass experience! How you can end up having $50M of assests and $500M of debt in a properly managed company is simply beyond me! But then I'm a simple soul!

BEB

* "Annual income twenty pounds, annual expenditure nineteen [pounds] nineteen [shillings] and six [pence], result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery." - Charles Dickens, from David Copperfield.

Don Fry11/01/2018 12:40:55
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Arrrrrrrr BEB, it is the world where you lighten your pension fund of £700 million, sell the carcass to some lightweight for a quid, repay £350 million, and walk away with £350 million in yer trouser pockets and a knighthood for services to the retail industry..

Don Fry11/01/2018 12:45:24
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But I have just did some work rather than be lazy, and answered my own question. A quote from Trumpland courts website.

This chapter of the Bankruptcy Code generally provides for reorganization, usually involving a corporation or partnership. A chapter 11 debtor usually proposes a plan of reorganization to keep its business alive and pay creditors over time. People in business or individuals can also seek relief in chapter 11.

KiwiKid11/01/2018 13:46:03
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I have been following developments with Hobbico for 18 months or so and it really has been a slow motion train wreck.

What first raised my concern was a noticeable and increasing trend for Tower Hobbies items to be out of stock. I have been using Tower for years and they had some very good deals, often with free domestic shipping which I utilized to have the goods shipped to a US NZ Post depot. Anyways, I was not alone in my concerns and Hobbico's woes have been well documented and have impacted their staff both in terms of layoffs and their employee stock ownership plan.

The group has over 50,000 individual products, but has struggled to compete with overseas competition pricewise and I was somewhat staggered to see one of their proposals to increase profitability was to increase prices! I think Hobbico hesitated too long to get into the electric RTF market and they may not be able to ever recover. Their Flyzone line was a year after Horizons eflight, and had both reliability issues and cost more. They still have not embraced providing cheap batteries and electronics, so HobbyKing is eating their lunch in that field.

I raised my eyebrows at the comment that "a series of one-time events with key suppliers" had impacted on profitability. I will leave you to draw your own conclusions from that statement.

I must say that the service from their staff is excellent and they have some very knowledgeable and long serving employees.

We live in interesting times.

Edited By KiwiKid on 11/01/2018 13:48:52

ChrisB11/01/2018 14:16:59
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Does it mean we're likely to see the demise of the TopFlite and Great Planes brands, given Hobbico own them?

KiwiKid11/01/2018 15:05:49
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Well, not in the short term as Ch11 sort of puts things on ice and those brands are part of Hobbico's assets, so it will depend on how the restructuring, refinancing and finding of investors/purchasers goes. TopFlite and Great Planes had some nice products but I feel part of Hobbico's problems stemmed from the fact that their entire line was old school products that many of the newer modelers are not interested in.

Don Fry11/01/2018 15:12:00
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Take a look at the price a Top Flite kit sells on E Bay. You don't have to wait long to get just about any of them. They can't be selling many at retail with all that new "old" stock coming through. Shame.

ChrisB11/01/2018 15:24:28
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Posted by KiwiKid on 11/01/2018 15:05:49:

Well, not in the short term as Ch11 sort of puts things on ice and those brands are part of Hobbico's assets, so it will depend on how the restructuring, refinancing and finding of investors/purchasers goes. TopFlite and Great Planes had some nice products but I feel part of Hobbico's problems stemmed from the fact that their entire line was old school products that many of the newer modelers are not interested in.

I think you've probably hit the nail on the head. I love the Topflite and Great Planes kits, particularly the big warbirds. The ARTF's are ok. But, the range of models they have are limited and they haven't moved with the times, introducing newer beginners models, gliders and foamies for example. As with many companies, if they don't adapt, they will die. With such a huge world wide corporation, a small decline in the attractiveness of their products across the world can lead to a collapse, perhaps unlike a smaller company that has a USP.

KiwiKid11/01/2018 15:32:23
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Actually Don, what you have identified there was definitely one of Hobbico's (and the industries) problems. There is a glut of RC equipment and parts available on ebay, craigslist, BMFA and swap meets. Lots of people getting out of the hobby plus hobby shops going out of business makes a lot of items available in brand new or near new condition for cheap. Tough times.

Paul Marsh11/01/2018 17:44:17
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Hobbico were supposed to expand into the UK market a while ago. They had a stand at Weston Park for a couple of years, but you could never get their products over here. Then they stopped doing the shows, and not heard of any products that they were bringing out at all

Only the Tactic sets made an impact, but that is more a drop, as they are not well know, although I have one and been quite happy with it, but quite cheaply built...

Percy Verance11/01/2018 20:16:48
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Tought times indeed Kiwikid, and no doubt destined to get even tougher as more companies throw in the towel. The result will mean that it will become more difficult to source items we've previously taken for granted. Difficult times ahead?

From what I've seen of Hobbico's range of models at least, they look to me to have rather limited appeal. Surely one of the basics of doing business is to understand your market? They appear to have overlooked that, and perhaps that explains much of what has gone wrong.

Tom Sharp 211/01/2018 20:35:16
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Sounds like Austin Rover et al.

Geoff Sleath11/01/2018 20:56:07
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Posted by Don Fry on 11/01/2018 12:40:55:

Arrrrrrrr BEB, it is the world where you lighten your pension fund of £700 million, sell the carcass to some lightweight for a quid, repay £350 million, and walk away with £350 million in yer trouser pockets and a knighthood for services to the retail industry..

Yes, I watched a Panorama programme last night on the BBC iPlayer about so-called bankrupt millionaires who were still running round in £100,000 + cars and living in luxury. One guy who was supposedly banned from having and directorship or being involved in managing a business doing just that and getting away with it.

T'was ever thus.

Geoff

cymaz11/01/2018 22:44:50
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Here is a page from the Hobbico site. Bankruptcy at thr top of the page , sale pitch at the bottom..?

 

Edited By cymaz on 11/01/2018 22:45:08

john stones 111/01/2018 23:55:35
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Owe £500 on your rent/mortgage and your out on your ear, kids as well, screw up big time, ah well no harm done, have another try. Where's Oliver Cromwell when you need him ? crook

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