Welcome To GiantScaleNews.com

GSN is the BEST in an RC online community. Less corporate BS and more down home fun. Better conversations with REAL RC'ers. Don't settle for the biggest when you can have the best!
  1. If you are new to GiantScaleNews.com, please register, introduce yourself, and make yourself at home.

    We're 1st in Giant Scale RC because we've got the best membership on the internet! Take a look around and don't forget to register to get all of the benefits of GSN membership!


Alert! Is HOBBICO Next? Hobbico files for bankruptcy

Discussion in 'Giant Scale News' started by Xtreme_Power_RCS, Jan 10, 2018.


  1. More sad news in the R/C world yet again.

    : Biz tips? Email Ben Zigterman at bzigterman@news-gazette.com
    Link: Click Here

    CHAMPAIGN — Hobbico filed for bankruptcy protection Wednesday, which could result in 332 layoffs at its Champaign facility.

    In a statement, Hobbico said that it plans to sell the company and will continue operating throughout the bankruptcy process.

    Hobbico also said that as it has grown, it has added too much debt and hasn’t been able to succesfully restructure, especially facing “an increasingly competitive industry, market headwinds and a series of one-off events with key suppliers.”

    In its filing with the United States Bankruptcy Court in Delaware, Hobbico said it has an estimated 200 to 999 creditors, $10 to $50 million in assets, and $100 to $500 million in liabilities.


    Photo by: Stephen Haas/The News-Gazette

    “Despite Hobbico’s core strengths, our business has faced a number of challenges in the last few years, and we have taken steps to ensure all available options to restore the stability of the Company have been exhausted,” said Louis Brownstone, Hobbico’s president. “However, while these efforts were taken to rebuild revenue and profitability, they did not sufficiently address our challenges and we decided to pursue a Chapter 11 reorganization and attempt to attract new capital investment.”

    In a notice sent to employees Wednesday, the distributor of hobby products said the layoffs, if they happen, could begin in April.

    Hobbico “has determined that it may be necessary in the near future to permanently close and discontinue all of its operations in connection with a bankruptcy case to be filed under chapter 11 of the United States Bankruptcy Code,” wrote human resources Director Howard Salazar in a letter dated Wednesday obtained by The News-Gazette.

    The letters were sent as a formal notice under the Illinois Worker Adjustment and Retraining Notification Act, which requires employers to notify employees and the Illinois Department of Commerce and Economic Opportunity 60 days before they plan to make mass layoffs.

    "I can't speak for the company, but it's usually one of the last steps," said Jacquelyn Reineke, spokeswoman for the IDCEO. "Most of the time, it's pretty serious."

    Hobbico said it could avoid the layoffs, as it has been trying over the past several months to restructure the company's obligations to creditors.

    "That plan provides for continued funding during the bankruptcy case to support the Company's business operations, including the preservation of employee jobs and related wages and benefits, until the Company can be sold," Salazar wrote.

    However, Hobbico said that it can't assure that the buyer would continue employing people at its Champaign location.

    "Thus, upon the sale of the company, it is possible that there will be a permanent shut down of all Hobbico operations and locations and the permanent termination of all Hobbico employees, including the permanent layoff of all 332 employees assigned to the Company's facility at 2904 Research Road, Champaign," Salazar wrote.

    Additionally, Hobbico said that to continue receiving funding, it has to meet several conditions, "which cannot be assured," Salazar wrote.

    "If those conditions are not met, then it is possible that the Company may lose access to those funds, and the Company may be forced to shut down its operations."

    In closing, Salazar reiterated that the company hopes to stay open.

    "We realize that the uncertainty regarding the future of the Company may be concerning to employees, and we hope to be able to keep the business open through the bankruptcy and sale of the business, in order to minimize the disruption to the lives of our employees and their families," he wrote.

    In its statement, Hobbico said filing for bankruptcy protection “is difficult, but it will help preserve the value of our business.”

    “And it’s the right thing to do for our company and our employees,” Brownstone said. “Under the process afforded to us under Chapter 11, we hope to reach an agreement with our creditors that will allow us to implement a restructuring plan that fully addresses our financial challenges while simultaneously identifying a prospective buyer that shares our vision of providing the best possible outcome for our employees and the future of Hobbico.”

    Hobbico was formed in 1986 when Clint Atkins combined two companies he bought: Don Anderson's Great Planes Model Distributors and Bruce Holecek's Tower Hobbies, which was founded in 1971.

    According to its website, Hobbico is the largest U.S. distributor of hobby products and has 12 different facilities, including five in Champaign-Urbana and others in Germany, the United Kingdom, California, Colorado and Nevada.

    And according to the latest top employers report from the Champaign County Economic Development Corporation, Hobbico is the 19th-largest employer in the county.

    But it has been in a rough patch lately.

    The U.S. Department of Labor is investigating Hobbico's employee stock-ownership plan after the company deferred payments.

    After deferring those payments at the end of 2016, then-CEO Wayne Hemming wrote to employees that, "It is expected that 2017 will also be a challenging year for the business."

    The share value of employee stocks recently declined by more than 80 percent, with one former employee saying the value of her ESOP account dropped from just over $27,000 to less than $5,000.

    Hobbico also recently announced it will close its 200,000-square-foot distribution facility in Reno, Nev., on Feb. 28.

    "This step follows a number of actions Hobbico has taken over the past 18 months to control our costs, reduce our debt and improve our overall financial position. Among other things, we have taken steps to refinance our debt, increase product pricing and improve product profitability, improve operational efficiencies and develop new product lines to address declining sales," HR manager Megan Huppert wrote Jan. 4 in an email to employees obtained by The News-Gazette.

    "Despite these efforts, our business continues to face significant challenges. As we have shared before, we are experiencing increasing competition and our leading product lines have been negatively impacted by market headwinds and a series of one-time events with key suppliers."

  2. AKNick

    AKNick 150cc

    Sad news indeed, and like previously said, I hope the best for everyone involved. Wish that I heard some good news about/from the sister(?) companies that rely on Hobbico like Futaba and OS Engines.
    Travis Haney likes this.
  3. Saw this one coming for the last couple years. Can’t say I feel sorry for them either. They brought it all on themselves. As a GP Dealer, they have been dealing me one blow after the other for the last several years. That being said, I hope they get things worked out and get back to their former glory.
    stangflyer, Bill Hand and AKNick like this.
  4. I have to agree with Mike. It started when they paid a bunch of money for Lanier and Goldberg only to kill the lines completely. Then they started chasing the toy drone market and sold out their core customers the traditional modelers (for the record I think drone guys can also be considered traditional modelers if they are the type that build and tune their own quads).

    I have found myself ordering less and less from Tower over the last few years and ordering more and more from places like Sig, Brodak, TDRC and so forth. I've even been buying hardware from the LHS more often or buying direct from Dubro, Sullivan, K&S, Williams Bros and so on.

    When I opened up the 2018 Tower master catalog and found like 6 pages of chincy toy drones to every one page of real modeling stuff I just threw it in the can. I can't be the only person who did that, or something similar.

    I do hope they right the ship, at least enough to keep some of the mainstays around like Monokote, 21st Century, Great Planes, The TopFlite warbird line and others. I doubt they will ever return to what they once were though.
  5. Sad indeed, hopefully they can avoid selling out and do a little restructuring.....become great again!
    Xtreme_Power_RCS likes this.

  6. Yes, I gave up trying to find a decent model airplane magazine a couple of years ago because it was cover to cover kwadflawpers and foamies, except for the UK mags but they're 10 to 12 bucks a copy at the book stores.
    stangflyer likes this.
  7. tailskid

    tailskid 70cc twin V2

    Time will tell....
  8. I could never understand why the Nevada Center was there. Poor business decision considering the speed of today's commercial and postal delivery systems. There are some strong model lines, such as Phoenix Model, that will suffer if dropped by Tower.
    pawnshopmike likes this.
  9. Luchnia

    Luchnia 70cc twin V2

    I do know over the last few years I dropped off buying much from them as I went to larger planes and they don't really target those. They are always efficient with getting an order to you which is nice.
    stangflyer likes this.
  10. stangflyer

    stangflyer I like 'em "BIG"!

    I am inclined to agree with you gents. Beside the fact that in the past Hobbico as basically told me to get "bent" over something that needed attention and was completely under warranty, the hobby industry is changing so rapidly that it is difficult for anyone to continue as things were in the past. Back in the day of my glow flying, I remember purchasing more from Tower that obviously was sustained by Hobbico than any other source. If I looked back at previous invoices, the total sum would no doubt equal the amount of what I have in my hangar at present day. However I have purchased probably no more than a thousand dollars worth over the last few years. The companies such as TDRC and of course the online places such as Ebay and others has made it easier to obtain otherwise difficult to purchase items. I understand that the market gears and gravitates towards the items that are in largest demand. Quad, drones and small electric foamies are the craze. But it would be nice if a company would cater to us larger plane drivers.
    Luchnia, Balsaboy and pawnshopmike like this.

Share This Page