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Flight Design insolvency

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I can tell you personally that there has been a lot of misinformation and speculation here.

 

Not a single posting person here or from any country has all the facts.

 

Watching from the sidelines I suspect Roger has information he is not sharing...If so, how about it?  What do you know?  Why allow people to speculate if you have answers?

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"I will volunteer this. Tom P. of the US has gone out of his way in extremes to help the US crowd.  He isn't responsible for the world. FD USA is not FD Germany and they are a separate entity."

 

If Tom can get air frames and parts from AeroJones and build new aircraft from that, indefinitely, I would be gratified. Of course the international situation is another matter.

 

Cheers

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Tom P is a standup guy.  He offered to warranty my old CTSW but I couldn't take his money wouldn't have been right.  He does go the extra mile.

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It isn't my place. I was ask to allow proper communications through channels.

 

 

And because Eddie said,

"if they asked how I knew that. "It's only common sense" or "Because Roger says so" would not suffice for me:bad_day-3329:  :fainting-1344: 

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As roger said. Same for me.

I would call Tom a friend. When he asks me to let him speak for himself, I respect his wish. Know this: Tom is not the only one scrambling to make things right. Give them time to communicate. Though, I hope they do soon.

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                                                            AEROJONES AVIATION TECHNOLOGY CO., LTD

With the recent news of Flight Design’s struggles, we would like to introduce you to our company, AeroJones Aviation Technology Co. LTD.  Started in 2012, AeroJones Aviation is headquartered in Taichung, Taiwan centrally located in the Republic of China.  Taichung is the “Silicon Valley” of Taiwan where many high tech companies are located.  AeroJones Aviation is a well-funded company, privately owned and independent.  Taiwan is a western oriented country with strong ties to the United States and Europe with whom it shares key values and a familiar way of life.         

AeroJones Aviation has to date been producing the CTLS series primarily for the Southeast Asian market and worked with Flight Design of Germany for more than two years in an exclusive agreement to license their products and the associated aerospace composite technology. The program included our own complete tooling, production worker training, quality management training and the gradual build up to finished airplanes which first occurred in 2014.                                                                                                                   

 The process has been managed and audited by engineering staff from Europe where Flight Design has the original production line for the their aircraft.  So far the production facility has passed numerous audits including the awarding of a Production Certificate by the Chinese CAAC at the end of last year.

 

As roughly 35% of a CTLS comes from the USA (Wheels, tires, Brakes, Radios, antennas, GPS, autopilot, EFIS and EMS systems, intercom, Whelen lights BRS parachute, ELT, headsets, miscellaneous parts like the gascolator.  Meanwhile, the Austrian-made Rotax engine, propeller, composite materials, windshield and windows, paint, seats and numerous miscellaneous parts come from Europe.  The planes made by AeroJones Aviation should correctly be called “world aircraft” (just like Boeing and Airbus) as only about 25% will be of non-western origin. 

 

The production facility located in Xiamen includes almost all of the production processes under one roof.  In-house production equipment includes a CNC, TIG welding and of course, the composite layup and post cure ovens.   A modern paint booth is on site as is assembly and test equipment for the electrical harnesses.  Our belief is that the overall quality, fit and finish will be as good as anything you will see anywhere the Light Aircraft market, worldwide.        

 

 

Chi-Tai Hsieh

Executive Vice President of AeroJones

Hello Tai,

 

Welcome to the party! Your post was most appreciated. I have a bottom-line question for you: If FD Germany were to cease operations completely, where would it leave AeroJones? In other words, if they cannot recover from their current financial dilemma, will you continue with the CTLS line?

 

As a former Cirrus owner, I lived through ownership transition, but it never involved a full-blown licensed alternate manufacturer.

 

:)

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This has been quite the saga, but IMHO probably should have been carried out behind the scenes in PMs. Upon research via google search, this forum is the only source for FD's current problems except for one disgruntled customer. But as we all know, google gives hierarchy to searches based on the results of roaming bots and for anything FD related, this forum comes up first. So what I'm trying to say, what is being said here can be rather impact-full on the future of FD. Chi-Tai Hsieh was kind enough to join the forum and answer questions and just maybe FD will hold its market share in a very fickle industry. There is another manufacturer of a composite high wing plane that probably would be willing to fill the void left by FD's temporary lack of production. The retail prices are comparable, the other product is superior.   

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I suppose FD will move all tasks under the AeroJones umbrella and they will give up at European market after they took a lot of money from the clients.

FD Germany will bankrupt after one or two years and the market will forget what management team made here.

It's a typical  robbery business... 

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This statement has recently appeared directed to European business partners:

 

Dear Partners,

 

As you know, the last 4 years have been very difficult for Flight Design. A combination of events including delays with the 912iS, the investment required for Production Organization approval and the Russian invasion close to our factory in Ukrainehave all worked against our company.

 

To account for this situation, Flight Design had broadened out into engineering services, primarily for a South Korean engineering firm and technology transfer for the CTLS series to AeroJones Aviation in Taiwan. The income from those projects, were used to greatly reduce our order backlog and AeroJones financed also separately the development of the C4.

Despite these efforts, we have had a few individuals that have threatened us if we didn’t follow their demands and have started also commercial court cases against us. This occurred during a very sensitive time when we were close to gaining the investment we needed. As we cannot deliver all of the airplanes or pay everyone at once we understood that we had to act immediately in the interest of our creditors, customers, partners and employees.

 

We are officially notifying you that we have applied for a planned receivership which allows for reorganization of the company. During the time of reorganization, the court has appointed Mr. Knut Rebholz from Mönning -Partnerhttp://www.moenning-partner.comtobe in managing the affairs of the company.

 

Despite the receivership we are glad to be able to continue technical support for our customers and dealers at: customer.care@flightdesign.com .We will soon be sending information to you to assist you in confirming your debt or claim as a creditor with the appointed receiver.

 

Sincerely,

Your Flight Design Team

 

 

 

Flight Design GmbH

Zum Tower 4

D-01917 Kamenz

Tel.: +49 (0)3578 / 37335 - 0

Fax: +49 (0)3578 / 37335 - 69

Web: http://www.flightdesign.com

Commercial Register: DresdenHRB 32961 VAT ID No.: DE 147857992

Board of Directors: Matthias Betsch(CEO)-Daniel Günther-Christian Wenger

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IrishAl,

It would not be proper for anyone on this forum to call anyone, or any action, a fraud based on information presented here. In fact, in the U.S. our courts would hold us liable if such statements were proven false.

We have heard from folks who claim they paid for planes they have not received, but we're not a party to those deals. We don't know if the claims are true. The internet is rife with scam artists who threaten companies with smear campaigns. We haven't read the contracts. We don't know the terms.

We don't know if money actually changed hands, and into whose hands it flowed. Was it held by the local distributor pending delivery? Did it go to FD Germany? Did it go to their suppliers?

Those are matters for a court to determine... and it sounds like that activity is underway.

Also, as has been pointed out before, the thought of a consumer paying for a plane in-full, up-front is very foreign to the US members of this forum. We might pay a deposit for a position on a waiting list, or as a result of having ordered a specific set of options which makes the plane unique, but I wouldn't expect that to be more than 10-20%, with the rest due on delivery. Our sympathy toward those who claim losses is tempered by bewilderment at what appears to us to be a lack of business savvy. Apparently that's a difference in local business practices, but it is hard for us in the U.S. to wrap our heads around.

Mike Koerner

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Hi Mike,

Thank you for your comments.

 

First, it is beyond all reasonable doubt that FD Germany has taken full payment for aircraft (I don’t know how many) from private individuals and that those individuals did not receive the goods.

 

In some cases, individuals complained publicly and eventually got their aircraft after many broken promises and missed delivery dates.

In some cases, this ‘fobbing off’ went on for several years, with promises of delivery made in writing as recently as a few months ago when there was absolutely no possibility of that happening.

Unfortunately, it’s the most patient and accommodating customers, so it seems, who have ended up with nothing.

 

These are facts.

 

The above actions constitute deliberate deception and fraud, by definition of the words.

Continuing to trade while insolvent is also illegal, and it seems the German authorities may prosecute for this.

 

We talk of ‘restructuring’ failed companies, and that is a legitimate and useful tool to save  a company that has gone over the edge.   Sure, there’ll always be collateral damage to others, but that’s life.

 

However, when company directors maintain a charade of lies in order to dupe members of the public out of their money, and then blame those same customers for the demise of the company when they go to court to get their money back, such people are not to be trusted and should be exposed wherever possible.  That is my motivation for commenting so strongly on this.

 

I am not saying, nor have I said, that FD USA are at the heart of this dishonesty and deception.

 

I did express the view that FD USA are very much at the heart of the whole FD business, and because of that, it is ‘ludicrous’ to think that they didn’t know what was happening in Germany.

 

And because of that knowledge, they are, in some sense, complicit, even if that is only morally.

 

That is my view and the purpose of this forum is to express opinion, and I have expressed mine.

 

The silence from FD USA doesn’t help, and until we hear from Tom, I simply cannot see it any other way.

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The purpose of this forum is to express opinion and share conjecture, so here’s my view, based on what I know at present, of what’s going on and where all this will end up.

 

I would say:

 

1.       FD Germany currently has no assets and will close for good.

2.       The key assets the company owned in the past were

a.       the rights to the CTLS and its derivatives, and

b.      the C4

3.       The right to manufacture the CTLS range has been licensed to AeroJones.

4.       The directors in Germany have no further interest in manufacturing.

5.       AeroJones will be the only manufacturer in the world.

6.       The C4 will continue development between AeroJones and FD USA & possibly Germany.

7.       AeroJones will manufacture the C4 if it comes to fruition.

8.       FD USA has a share in the C4 project as a result of their involvement in its development.

9.       AeroJones are, (quite reasonably so), introducing themselves to the FD community as a precursor to marketing their product to the world.

10.   The product line’s principal markets will be the Far East and North America.

11.   Europe will soon follow.

12.   The Directors in Germany will eventually sort out the mess and retire with substantial income from licensing agreements with AeroJones.

 

I think the product line is too good and the C4 is too promising for it all to crash and burn.  Flight Design will re-establish itself as a market leader.

 

Please remember, this is just my own conjecture.  

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Al,

With regard to your earlier post: You say, "These are facts." I say, again, lets let the courts decide what the facts are.

It's unimaginable to me that you would expect a distributor in the U.S. - who is apparently still doing a fair business with his supplier - to somehow warn the rest of the world if he suspects that supplier is headed down the tubes. Any such aspersions would be 1) interference in the supplier's right to conduct their business; 2) potentially self-fulfilling; 3) libelous if incorrect or overstated; and 4) unethical and illegal if based on privileged information.

Furthermore, it would be naive to expect FD USA to say anything at all at this point, in regards to past events.

With regard to your subsequent post: This is a nice summary. Thanks.

I am hopeful you are right about items 1-11.

I disagree with item 12. All income from licensing agreements belongs to the corporation, which is now apparently controlled by a court acting on behave of creditors. The former owners walk away with nothing.

The sad truth is there is not much money in making airplanes. Even FD - with a great design, loyal following, and low cost labor - was not able to make it work forever.

Mike Koerner

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IrishAl,

It would not be proper for anyone on this forum to call anyone, or any action, a fraud based on information presented here. In fact, in the U.S. our courts would hold us liable if such statements were proven false.

We have heard from folks who claim they paid for planes they have not received, but we're not a party to those deals. We don't know if the claims are true. The internet is rife with scam artists who threaten companies with smear campaigns. We haven't read the contracts. We don't know the terms.

We don't know if money actually changed hands, and into whose hands it flowed. Was it held by the local distributor pending delivery? Did it go to FD Germany? Did it go to their suppliers?

Those are matters for a court to determine... and it sounds like that activity is underway.

Also, as has been pointed out before, the thought of a consumer paying for a plane in-full, up-front is very foreign to the US members of this forum. We might pay a deposit for a position on a waiting list, or as a result of having ordered a specific set of options which makes the plane unique, but I wouldn't expect that to be more than 10-20%, with the rest due on delivery. Our sympathy toward those who claim losses is tempered by bewilderment at what appears to us to be a lack of business savvy. Apparently that's a difference in local business practices, but it is hard for us in the U.S. to wrap our heads around.

Mike Koerner

Maybe you don't know the practice of FD in Europe.

After you paid a deposit, after few month they issued an invoice because the plane is ready for delivery.

After you pay, you get a lot of excuses and postpones of delivery.

I paid total amount in June 2013 because a MC type aircraft is in the backyard, ready for delivery and in January 2014 they send me an email and they informed me that this type of plane they don't delivery at all.

I switched for a CTLS light with delivery in May 2014 and delivery term was push in September, in December, end of January and end of March 2015. On 7th April I sent a notification regarding the cancel of the contract, in June my lawyers sent the last notification and, after that, we went to the court.

We agreed an arrangement of the payment in 6 installments, via the court, and they paid nothing again.

From April to mid of January I didn't receive any kind of message from FD, nobody contacted me.

They inform me in January 2016 that they postpone the payment of the first installment, as we agreed via the court, and that after 2 weeks after the term of payment.

And now days, to say that the clients are guilty for present situation it is very hard to accept:

 

"Despite these efforts, we have had a few individuals that have threatened us if we didn’t follow their demands and have started also commercial court cases against us. This occurred during a very sensitive time when we were close to gaining the investment we needed. As we cannot deliver all of the airplanes or pay everyone at once we understood that we had to act immediately in the interest of our creditors, customers, partners and employees."

 

If this is the true, why they didn't send me an information about the situation, some proposal for the payment, any thing which should help me to understand what is the situation, before to pay lawyers for a legal action.

When nine months after I sent the notification they didn't contact me at all, what is the expectation of them?!

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This has been quite the saga, but IMHO probably should have been carried out behind the scenes in PMs.

 

I could not disagree more.

 

If I were pondering placing a deposit on a CT, I might come to this forum to see how owners felt about the plane and the purchase process.

 

If it appeared everything was rosy, and I later lost deposit money, I'd be quite irate if I found revelatory, damning information was going back and forth in PM's and not being shared with forum members at large.

 

If any of the claims are fraudulent, truth has a way of rising to the surface. If someone felt themselves wronged and is literally making things up, it will be found out if lines of communication are kept open. And it's not our fault if we're only getting one side of the story - the other side remaining mute may speak volumes.

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I could not disagree more.

 

If I were pondering placing a deposit on a CT, I might come to this forum to see how owners felt about the plane and the purchase process.

 

If it appeared everything was rosy, and I later lost deposit money, I'd be quite irate if I found revelatory, damning information was going back and forth in PM's and not being shared with forum members at large.

 

If any of the claims are fraudulent, truth has a way of rising to the surface. If someone felt themselves wronged and is literally making things up, it will be found out if lines of communication are kept open. And it's not our fault if we're only getting one side of the story - the other side remaining mute may speak volumes.

 

Ed,

 

Through your posts I have developed a respect for you, so we can agree to disagree. I would think a potential buyer of a new FD aircraft would join and participate in this forum rather than be a lurker. Then other members could PM that potential buyer and explain the current situation.

 

All I'm saying is don't underestimate the power of this forum and if the goal is to see FD continue after the dust settles, maybe some restraint should be exercised. We all know how fragile this industry is, and if FD was the only game in town and had the best product, it could probably weather this storm, but it isn't on both counts. If Pipistrel didn't exist, FD would have placed 1st in the NASA Challenge, but they do exist so FD got a distant 2nd. This is a competitive niche market that FD has been the sales leader for a number of years, and they have done it with a great plane in this market segment but not the best plane.    

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I think there's two reasons why FD got to the top in the US for so long:

 

1 - They were early adopters. In fact, the first sport pilot examiners were trained in a CT2K in OK city.

 

2 - Tom Peghiny. Yeah I'm putting him on a pedestal, but we just saw a flurry of posts praising him, and I think I've only seen a couple cases of people saying something negative, and I feel it's because they had unreasonable expectations. His attitude towards his customers tends to trickle down the line to his employees and distributors that work with him. In addition, he greatly contributed towards point 1.

 

That said, if TP was not in the picture, I'm sure there would be a very different ranking in the US. It's a shame that FD Germany is treating everyone the way they are. It's still a good airplane... but the rotten apples are spoiling the brand...

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Mike Koerner, I wish you were in my shoes. You would not talk like that. My story is basically the same as DECZRs. I made the first deposit of 10k Euros in March of 2012 but was promised/pressured into paying the full 100% for a prompt delivery within 3 months of full payment. So I paid in full, 93k Euros, in November of 2012. And then nothing.... Maybe in the US things are very different than in the rest of the world (pretty sure they are!), but this is / or was FD Germany's business practice until now for countries outside the US, mainly Europe and Latin America. I know of at least 1 French, 2 Polish, one Czech and 2 Mexican cases. And really, I don't even care if FD USA knew or didn't, what were they supposed to do? From all of you and my own limited experience with Tom P. I know it to be true, that he does all he can for his customers in the US. As for the rest of the world, we are/were not that lucky to have a champion like that.

So to express in this forum my/our rage of being taken for a ride, and calling it what it is, namely fraud, is the least we can do to warn people. But then, to be blamed in FDs letter for their company's problems (quote: "Despite these efforts, we have had a few individuals that have threatened us if we didn’t follow their demands and have started also commercial court cases against us. This occurred during a very sensitive time when we were close to gaining the investment we needed.") and by people like Mike Koerner in this forum as fraudulent people, is a bit much and I strongly protest against this victim bashing. What would be my motivation to stirr up such a mess? Do you know how impotent one feels being treated like this? I am loosing faith in the honesty of people! I am Austrian living in Mexico, I never imagined being treated like that by a German company. So, yes, all I could do is sue them because of statutory limits of responsability (3 years in Germany) to protect myself.

For me this is not just the possible loss of 93k Euros, but also the end for the dream of owning an airplane.

Sorry for the rant, thank you for reading.

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http://www.moenning-partner.com/news/details/news/detail/News/knut-rebholz-vorlaeufiger-insolvenzverwalter-der-flight-design-gmbh-sieht-nach-erster-analyse-sanierungsshychancen-fuer-den-hersteller-und-einen-der-weltmarktfuehrer-bei-den-leichtflugzeugen.html

 

English version

http://www.moenning-partner.com/news/details/news/detail/News/knut-rebholz-interim-receiver-of-flight-design-gmbh-sees-after-his-first-analysis-redevelopment-opportunities-for-the-producer-and-one-of-the-world-leaders-of-non-complex-light-aircraft.html

 

I quote from the text:

"According to the management, the insolvency application has become necessary after an international customer has not settled a bill of over seven digit Euros to date."

 

The lowest 7-digit number is 1 million € :tut_tut-3315:  I don't believe them, because "according to the management" my CTLSi is in production. :laughter-3293:

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Again, blaming the customer(s)... Total BS. To get to 1 mio Euros they have to sell at least 8 planes, and they delivered them to a customer without payment? I don't think so...

 

http://www.moenning-partner.com/news/details/news/detail/News/knut-rebholz-vorlaeufiger-insolvenzverwalter-der-flight-design-gmbh-sieht-nach-erster-analyse-sanierungsshychancen-fuer-den-hersteller-und-einen-der-weltmarktfuehrer-bei-den-leichtflugzeugen.html

 

English version

http://www.moenning-partner.com/news/details/news/detail/News/knut-rebholz-interim-receiver-of-flight-design-gmbh-sees-after-his-first-analysis-redevelopment-opportunities-for-the-producer-and-one-of-the-world-leaders-of-non-complex-light-aircraft.html

 

I quote from the text:

"According to the management, the insolvency application has become necessary after an international customer has not settled a bill of over seven digit Euros to date."

 

The lowest 7-digit number is 1 million € :tut_tut-3315:  I don't believe them, because "according to the management" my CTLSi is in production. :laughter-3293:

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The only way you are going to get your airplane, or $$$, is to let the process go forward.  It's a long-shot, but otherwise you have nothing.  I'm sure the courts' first order of business is to take care of bills and undelivered product.  The receiver states "...complete the remaining work and to hand over the remaining aircraft to the waiting customers".  At this point, generating a bunch of negative publicity and organizing a lynch mob is not going to help you at all.  Individual lawsuits concerning orders will be factored into the reorganization or proceed on their own merit.

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There is finally some news coverage of the situation... a good article from ByDanJohnson.com .  Far from being Gloom & Doom, they've announced a new model, the CTLSi 2020 !!!   

This is very good news for us in the USA.

 

Cheers

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It will be interesting to see those new CTLS units arrive from AeroJones.  Both the timing and quality level.  That's not a complaint.  If they come through on time and with good quality, that will be a major achievement for FD USA.

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