Van Doren to Pay Off Its Creditors : Judge Approves 4-Year, $12-Million Reorganization Plan
Van Doren Rubber Co., the Orange County maker of the Vans sneakers popularized nationally in a 1982 Hollywood movie, will emerge from nearly 14 months in U. S. Bankruptcy Court on Dec. 20, with a reorganization plan that will pay about $12 million to its creditors over the next four years.
The plan, proposed in August and approved by the Bankruptcy Court in Santa Ana on Monday, will repay all creditors the full $9.7 million in principal owed but will not pay interest to unsecured creditors, said Gordon Lee, vice president and co-owner of the company.
Among the secured creditors that will receive interest and principal is the company’s major lender, Security Pacific National Bank, which was unwilling to renegotiate a $6.7-million loan when it came due last year. At that point, Van Doren Rubber sought protection under Chapter 11 of the federal bankruptcy laws on Oct. 27, 1984. Chapter 11 allows a company time to reorganize its business in an attempt to pay off creditors.
Meantime, James Van Doren, the company’s president, withdrew from the company as part of a management shake-up. His brother, Paul, continues as chairman and chief executive, and co-founders Serge d’Elia and Lee continue as vice presidents.
“We’re delighted this (bankruptcy) was able to be accomplished in little more than a year,” said company attorney Leon Cooper of the Los Angeles law firm of Pacht, Warne, Bernhard & Sears. “These kinds of cases usually take two to four years. It’s a good example of people able to work their way through problems and the company (able) to get support from its creditors.”
The reorganization plan sets up seven classes of creditors to be paid off at various times. Unsecured creditors due less than $500, for instance, will be paid off immediately while other creditors will be paid off periodically for up to four years.
Anticipating approval from creditors and Bankruptcy Judge Peter M. Elliott, the company already began paying off its debts, Cooper said. The Security Pacific principal, for instance, has been cut to about $4 million.
The company will emerge from bankruptcy a smaller but continuing operation. Most of the reductions in staff--from 2,000 to 1,100 employees--and stores--from 61 to 50--occurred before the firm had filed for bankruptcy.
Founded in 1976, Van Doren Rubber saw its Vans canvas-and-rubber-sole shoes become popular among the skateboarding set in Southern California. One sign of the popularity was the lawsuit the company filed in 1980 against Kinney Shoe Corp. and Mitsubishi International on state and federal claims of unfair competition. The two defendants agreed in a 1981 settlement to stop selling their copies of shoes with waffle soles like those on Van Doren’s “Off the Wall” shoes.
Vans shoes gained national attention when the popular black-and-white checkered tennis shoes were worn by the spaced-out Spicoli character in the film “Fast Times at Ridgemont High.” The company tried to capitalize on the movie by expanding nationwide, but it soon found itself with a cash-flow problem.
“The company will concentrate on what it historically has done best--the traditional canvas wear, rubber-soled shoe,” Cooper said. While the number of styles it offers has been cut to 120 from 850, he said, the company will still produce special styles “as they come up.”