EarthCruiser is closing!?!?!

[tkj23qe1387]

This post is general information not legal advice.

Generally, when a company still has “going concern” value, they may use the chapter 11 process to sell non-performing assets, terminate burdensome contracts (e.g., we work), and restructure its balance sheet (such as reducing debt with equity) so that the company may be more financially sustainable.

That’s why they call chapter 11 bankruptcy “restructuring.”

If the company is no longer a going concern, I.e., given time it would likely run to the ground, then the best outcome for creditors will be to liquidate all company assets (chapter 7) and orderly distribute the proceeds… secured debt first, priority unsecured, general unsecured…

IF EC EVENTUALLY FILES FOR CHAPTER 7 LIQUIDATION—

Deposits will be in a weird place unfortunately. Even though deposits were paid to commission the build of a specific vehicle, unless a security agreement was explicitly arranged, the buyer does not have “security” in that vehicle. What this means is that funds from the sale of those vehicles will be pooled with other funds to pay creditors in legal priorities. Only a small portion of a client’s deposits (a little over $3300 based on latest inflation adjustments) will be priority unsecured claims. The remaining portion will just be general unsecured claims.

Can’t really fathom what prompted EC’s decision as an outsider, but do know that debt can be very dangerous… especially variable rate debt.

 

[ReluctantTraveler]

This post is general information not legal advice.

Generally, when a company still has “going concern” value, they may use the chapter 11 process to sell non-performing assets, terminate burdensome contracts (e.g., we work), and restructure its balance sheet (such as reducing debt with equity) so that the company may be more financially sustainable.

That’s why they call chapter 11 bankruptcy “restructuring.”

If the company is no longer a going concern, I.e., given time it would likely run to the ground, then the best outcome for creditors will be to liquidate all company assets (chapter 7) and orderly distribute the proceeds… secured debt first, priority unsecured, general unsecured…

IF EC EVENTUALLY FILES FOR CHAPTER 7 LIQUIDATION—

Deposits will be in a weird place unfortunately. Even though deposits were paid to commission the build of a specific vehicle, unless a security agreement was explicitly arranged, the buyer does not have “security” in that vehicle. What this means is that funds from the sale of those vehicles will be pooled with other funds to pay creditors in legal priorities. Only a small portion of a client’s deposits (a little over $3300 based on latest inflation adjustments) will be priority unsecured claims. The remaining portion will just be general unsecured claims.

Can’t really fathom what prompted EC’s decision as an outsider, but do know that debt can be very dangerous… especially variable rate debt.

Fantastic post, thank you!

 

[86scotty]

On the latest Overlander News, there's an ad from Storyteller Overland about their lineup of vans for 2024. The ad is a perfect example of why many of the overlanding business models are unsustainable. (https://storytelleroverland.com/pages/2024-beast) At 1442/month (with 20% down) for 20 years at 7%, that van would cost a total of $346,000 -- for a van that will depreciate at least 40% in the first 5 years! By year 10, it's probably lost 60-70% of it's value or more. I'm a former financial planner and these types of purchases are exactly why a vast majority of Americans are unprepared for retirement.

It's really hard to beat the 4 chapters comment but I think a tragic comedy beats regular comedy and this nugget of truth is absolutely a tragic comedy.


Sent from my iPhone using Tapatalk

 

[ReluctantTraveler]

On the latest Overlander News, there's an ad from Storyteller Overland about their lineup of vans for 2024. The ad is a perfect example of why many of the overlanding business models are unsustainable. (https://storytelleroverland.com/pages/2024-beast) At 1442/month (with 20% down) for 20 years at 7%, that van would cost a total of $346,000 -- for a van that will depreciate at least 40% in the first 5 years! By year 10, it's probably lost 60-70% of it's value or more. I'm a former financial planner and these types of purchases are exactly why a vast majority of Americans are unprepared for retirement.

Right? The math on these only makes sense if you have **** money. Costs as much as a house, has the same loan terms, and loses half its value before you're anywhere near paying it off.

 

[tkj23qe1387]

Besides vintage cars, nobody would ever consider vehicles an investment. They are and always will be consumable products that people pay a premium for in exchange for convenience or enjoyment. Certain periods when supply and demand are out of whack may present transient opportunities to sell at a gain, but that is far from the norm.

 

[plh]

On the latest Overlander News, there's an ad from Storyteller Overland about their lineup of vans for 2024. The ad is a perfect example of why many of the overlanding business models are unsustainable. (https://storytelleroverland.com/pages/2024-beast) At 1442/month (with 20% down) for 20 years at 7%, that van would cost a total of $346,000 -- for a van that will depreciate at least 40% in the first 5 years! By year 10, it's probably lost 60-70% of it's value or more. I'm a former financial planner and these types of purchases are exactly why a vast majority of Americans are unprepared for retirement.

a 20 year loan on a van! good lord. What banker would think that is a good idea.

 

[waveslider]

a 20 year loan on a van! good lord. What banker would think that is a good idea.

Federal Vanlife Loan Forgiveness Program?

 

[Ozarker]

a 20 year loan on a van! good lord. What banker would think that is a good idea.

I'll take that money! My cost of money is less than 4% and you're paying 5,6,7 points over that, yep, I'll take that money all day long.

 

[86scotty]

a 20 year loan on a van! good lord. What banker would think that is a good idea.

Bankers who put profits over common sense, or the opportunity to school a perspective buyer instead of enabling their foolish behavior simply because they have the credit.

 

[kmacafee]

I've had clients with massive amounts of liquid capital and none of them would go near that deal ever. They would offer cash in lieu of a significant discount and most would have them owned by a trust or one of their companies so its a write off.

As for vintage car investing, that too is not without its peril. A good friend restores classic Mopar Iron and top prices for those have dropped significantly since the late 2000's.

 

[kmacafee]

Bankers who put profits over common sense, or the opportunity to school a perspective buyer instead of enabling their foolish behavior simply because they have the credit.

My bet its not a bank or credit union but an outfit like Trident Funding which is a big RV, boat and plane lender.

 

[Steve_382]

I see that EC has removed the for sale units from their website.

Not sure it's a sign of a weak market or just the fact that there have been so many Earth Roamers made and sold over the years, but there are 16 pre roamed on the ER website. I think that's the most I have seen.

 

[plh]

I see that EC has removed the for sale units from their website.

Not sure it's a sign of a weak market or just the fact that there have been so many Earth Roamers made and sold over the years, but there are 16 pre roamed on the ER website. I think that's the most I have seen.

Back to the office mandates, already had my fun for a couple years, trying to get out before more depreciation hits, finding out that full time isn't as fun as Insta makes it look... Upgrading? so many reasons.

 

[plh]

I'll take that money! My cost of money is less than 4% and you're paying 5,6,7 points over that, yep, I'll take that money all day long.

even with great credit, the bank is going to want its collateral worth something. A 15 year old RV on a 20 year note isn't worth much. At 8% on a $200K rig in 15 years you still owe $82K.

 

[Photomike]

a 20 year loan on a van! good lord. What banker would think that is a good idea.

I know a number of RV dealerships that were/ are doing 20, 25 and even 30-year loans on rvs.

People think it is great because they never read the fine print.

If they read the fine print they would find that for the first 10 years they're only paying off interest / service charges like the FREE yearly winterizing. After 10 years they start paying down some of the principle but they're still paying interest till the final payment.

Many people are now finding out that they got roped into this because they're trying to sell their spur of the moment purchase. When they check how much is left on the loan they're finding out they owe more than what the units worth NEW and they have been paying for 4 or 5 years.

In fact even before Covid a number of RV dealerships were offering amazing refinancing deals for people who already owned rvs. They were knocking their payments down half or even a quarter of what they were paying. Paying off their credit cards. Or even giving them "FREE" trips. Again people never read the fine print to find out that they're paying two to three times what they owed just in interest on the so-called good deals and their 8 year old unit that they refinanced is going to be 34 years old before it is paid for.