Hobbico Chapter 11 Bankruptcy Filing

I am heavy into RC and had seen a huge decline over the past two years in the Great Planes/ TopFlight/ Tower line.  RC was the largest segment and the bulk of market income for Hobbico, but they seemed to refuse to adjust to complete with a bunch of new, low cost retailers in the market.  HobbyKing has eaten Hobbico's lunch in the drone market, where I can buy a battery for $11.99 from HK, where Hobbico wanted $33 for the same type of battery. Horizon and a new, family owned player, Motion RC, made ready made foam RC much more affordable than Hobbico's FlyZone line.  Traditional RC, which is kit building, was negleted by Hobbico for a number of years ago and those customers, whome I was one of, felt alienated and formed a market has been taken over by a new cottage industry of kit cutters and suppliers.  

The story of Hobbico is almost identical to Kmart/Sears, another huge retailer that is predicted to be extict by the end of the year because they didn't timely adjust their business model to compete with Wamart, Amazon, Costco, and IKEA.  

modelmaker66

Plenty other fish in the sea. Nothing that cannot be acquired from other mfg. Revell hasn't been meaningful since the 1970's

 

Not all of us feel that way.  I, and a number of my friends, really like the new stuff they have been putting out for the last three or four years- not  the repops but the new mold stuff.  They are now producing great molding with fine detail, at great prices.

Their KK Midget racing car was a real gem, but I think the subject was not of enough appeal for it to have much success.  Their 1:48 Stearman is a beautiful kit at a super-low price.  Their casting of the cabane struts solves the old biplane dilemma of how to attach the upper wing while keeping it parallel to the bottom.  I have not seen it yet, but the talk is their new 1:32 P-51D is a really great kit.

https://www.indeed.com/cmp/Hobbico/reviews

I found this interesting.  The more recent reviews were the most critical.  I hope those who are working there can maintain their positions and don't suffer any further monetary loss.  

Bankruptcy means the stockholders, the real owners of the company, are at the very end of the line to receive any assets. In other words, the stock is now valueless so any employee who had an ESOP now has nothing. If the company emerges from bankruptcy new stock will be issued which won't help the current owners. Sad all around.

KnightTemplar5150

At the end of the day, it's not just the Revell-Monogram line that is jeopardized by the Chapter 11 action. Hobbico has a long list of proprietary brands that span the gamut of the hobby industry from all types of R/C to Estes rockets and general hobby tools. In addition, they are the exclusive US importer for the Italeri line and have also imported a good deal of the Hasegawa stock. There is a great deal at stake for all manner of hobbies if the company folds, not just us scale modelers.

Even more tragic is this move threatens the loss of over 300 jobs. If the company has to resort to lay-offs to stay afloat long enough to reorganize, those employees are not only out of work, but their personal stock in the company will depreciate greatly at a catastrophic rate. The news is that individual employee owned stocks worth over $27,000 last year have currently fallen in value to around $5,000, which leaves those employees without much in terms of a retirement fund or a financial cushion until they can find new jobs. The longer this drags out, the less those stocks will be worth.

The company reports $10-50 million in assets against liabilities of $100 to $500 million in liabilities to upwards of 300 different creditors. You don't need to be an accountant to understand just how long a road the company has to go just to remain solvent enough to stay in business.

This may hurt our hobby, but it directly impacts the lives of those who make it possible for us in ways many of us will not appreciate until it's gone.

 

 I am not affiliated with RC or other areas of Hobbico. I am sure that there are other qualified distributers to pick up Hasegawa and Italeri, and yes Revell Germany has made great prodcts in the last 10 years. I was not referencing them. I meant that Revell and Monogram have not even really tried to bring out much in new plastic since Monogram merged with them years ago. It's only re releases or licence products. They may have been in better shape if they tried to innovate. The debt load is brutal though! Maybe the rc portion of Hobbico is what has generated the debt. That stuff is really expensive. I know the local Hobby Town lives almost exclusively on RC and airsoft, Kits don't really do much.

Wow thats a horrible debt load.

Usually a judge in a 11 will settle the employees out if they live in a state with decent labor laws. Mine for example but not in my experience.

Peanuts compared to the lending banks.

At the end of the day, it's not just the Revell-Monogram line that is jeopardized by the Chapter 11 action. Hobbico has a long list of proprietary brands that span the gamut of the hobby industry from all types of R/C to Estes rockets and general hobby tools. In addition, they are the exclusive US importer for the Italeri line and have also imported a good deal of the Hasegawa stock. There is a great deal at stake for all manner of hobbies if the company folds, not just us scale modelers.

Even more tragic is this move threatens the loss of over 300 jobs. If the company has to resort to lay-offs to stay afloat long enough to reorganize, those employees are not only out of work, but their personal stock in the company will depreciate greatly at a catastrophic rate. The news is that individual employee owned stocks worth over $27,000 last year have currently fallen in value to around $5,000, which leaves those employees without much in terms of a retirement fund or a financial cushion until they can find new jobs. The longer this drags out, the less those stocks will be worth.

The company reports $10-50 million in assets against liabilities of $100 to $500 million in liabilities to upwards of 300 different creditors. You don't need to be an accountant to understand just how long a road the company has to go just to remain solvent enough to stay in business.

This may hurt our hobby, but it directly impacts the lives of those who make it possible for us in ways many of us will not appreciate until it's gone.

stikpusher

And all the 1/48 bombers... or Century Series...  1/72 U-Boat and Gato... who else does a 1/48 Ventura? That’s affordable? 

Everything that they make and is also made in Asia costs twice as much at least and most of those are riddled with basic shape errors or very problematic to build. 

Not good...

 

stikpusher

And all the 1/48 bombers... or Century Series...  1/72 U-Boat and Gato... who else does a 1/48 Ventura? That’s affordable? 

Everything that they make and is also made in Asia costs twice as much at least and most of those are riddled with basic shape errors or very problematic to build. 

Not good...

 

https://www.youtube.com/watch?v=R-2puqqmycM

Actually more bankruptcies are due to not being able to keep borrowing cash. In this case I would suspect that the Hobbieco buy had a refinance that just didn't work with the banks.

It's a little known fact that most businesses that start, end in failure.

I've had mine 30 years now, and it's taken a much bigger toll than I would have signed on for if I'd known.

So they've taken a shot at a lot of new issues. I hope that Revell of Germany keeps going. They've been a great source now for a while. The $$ just sucks against foreign currency, so maybe they can buy the rest of the company.

If they are not able to come out of bankruptcy and get their feet back on the ground, the brands, production assets and the like are way to valuable to just disappear.  The company and/or the assets would just be bought by another large company.  Monogram/Revell and anything else of value from hobbico are not going anywhere.

Bankruptcy can mean many things.  It may not be bad or slow sales.  It may be bad and greedy management doing a poor job of managing cash flow.  More bankruptcies are due to idiots at the top of big companies that have missed managed the cash and run the company too thin.

And all the 1/48 bombers... or Century Series...  1/72 U-Boat and Gato... who else does a 1/48 Ventura? That’s affordable? 

Everything that they make and is also made in Asia costs twice as much at least and most of those are riddled with basic shape errors or very problematic to build. 

Not good...

Oh, and a new Flower Class Corvette, this time in 1/144.

That kit is a real gem, nothing like it.

modelmaker66

Plenty other fish in the sea. Nothing that cannot be acquired from other mfg. Revell hasn't been meaningful since the 1970's

 

modelmaker66

Plenty other fish in the sea. Nothing that cannot be acquired from other mfg. Revell hasn't been meaningful since the 1970's

 

Examples would take pages, but the new M48 is as good as anything else on the market.

That ^^^^^

Plenty other fish in the sea. Nothing that cannot be acquired from other mfg. Revell hasn't been meaningful since the 1970's

That does sound good at all...

Yes, this is the company that was formed out of Great Planes and Tower. Here is one of the local newspaper's take on it - it sounds even more dire  - http://www.news-gazette.com/news/local/2018-01-10/hobbico-files-bankruptcy-layoffs-next.html

That's not good, don't they also run Tower Hobbies and Great Planes?