Valken is Done

[Trbo323]

Gino started NPS back in the day. He was known for showing up to fields he supplied and undercutting them for his trunk in the parking lot. But that was a long time ago.

Wait, so he would supply event paint and then sell the same paint straight to players out of his car?

Wow.

I know of NPS so that helps put a name to it thanks

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[Drcemento]

Doesn't seem like much has changed. shady as hell but the paint always seemed to flow. scuttlebutt at the field this weekend from a reliable Paint distributor was that they are saying they are starting production up oversees again since they lost all their domestic machines and saying the paint will flow again, sorry for the inconvenience. Whether it happens or not remains to be seen.

[MrBarraclough]

So basically we'll soon have the option of buying random encapsulator of the month white box paint with our choice of D3FY or V-Tac branding?

[Drcemento]

Theres no question the imported graffitti was better than what they were able to make here. i'd say its a good thing. we've been forced to use defy in the absence of Valken lately - on the whole the progressive is not terrible, esp. for the price. I have Tried d HK and GI and its always been awful.

[MrBarraclough]

To be fair, I have had far more positive experiences with D3FY than negative, and even had the monthly subscription for it from ANS for a while. Even their level 1 stuff tended to have impressively consistent roundness, even if it was a bit tough/bouncy. The one time I recall getting truly bad D3FY it was dimpled as hell, which I took to be from improper storage in transit.

Even convinced my local field owner to give stocking it a try. That didn't last long, though. The problem was longer lead times than his purchasing/storage cycle was set up for, as well as D3FY's infuriating habit of overloading pallets to the point of squishing the bottom layer of cases. They kept trying to squeeze in 40-50 more cases per skid than other brands, resulting in a higher minimum order but delivering less usable paint due to the flattening and dimpling.

[PBGunny]

I'm sure there will be lots of talk at World Cup about it.
Should be interesting to hear all the rumors.

[vijil]

Is it weird that, for once, I'm actually happy to see a paintball company go out of business for normal reasons?

Like, so, they ran out of money and went into debt and folded, because they were mismanaged and/or whatever normal issues.

Pretty standard stuff. Boring even.

That's a breath of fresh air compared to the shell games, sell-to-yourself, plausible deniability, ethically bogus loophole-gamesmanship that seems to have become the norm in PB and big business generally. Kore, basically.

Don't get me wrong I'm sad to see them go. But at least they went out the way companies are supposed to go out.

I take back everything I said above.

All shady AF.

The PB industry is all pretty much just organized loophole crime at this point.

[MrBarraclough]

Now that the case has converted and a Chapter 7 trustee appointed, the trustee has filed notices of intended abandonment for virtually all the physical assets. In this context, "abandonment" simply means abandoning them from the bankruptcy estate and allowing the secured creditors to repossess and sell their collateral without having to seek specific permission from the court. The notices indicate a litany of secured creditors with potentially overlapping claims. I have done this exact same thing in plenty of my cases. Cases that convert from Chapter 11 to Chapter 7 tend to be pretty hollowed out, asset-wise.

If anyone has plans to carry on any parts of the business using the existing physical assets, they'll have to either buy them at auction from or negotiate directly with whichever creditor(s) has/have the senior priority lien(s).

It finally occurred to me the other day to reach out to this trustee colleague-to-colleague and offer to answer any questions he might have about the sport or industry, so I wrote a polite email inviting him to do just that if he felt the need. So far no response, and none expected. I did at least presume enough to point out that there are lots of fields out there with Valken MI-series masks in their rental fleets, so the molds for making replacement lenses and any associated IP may hold not-insignificant residual value.

[Trbo323]

[ court. The notices indicate a litany of secured creditors with potentially overlapping claims. [/QUOTE]

I'm confused by this part. How would 2 creditors own the same, let's say encapsulation machine ?

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[MrBarraclough]

[ court. The notices indicate a litany of secured creditors with potentially overlapping claims.

I'm confused by this part. How would 2 creditors own the same, let's say encapsulation machine ?

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If the machines are subject to bona fide leases, then there won't be competing claims. There will be only the lessor who owns the machine. At least a couple of the newer machines are ostensibly leased. As I mentioned in a previous post in this thread, often "leases" are really disguised sales with security agreements, and bankruptcy courts are empowered to see through that and treat the transactions as what they really are and not what they pretend to be, if they find that the underlying economic reality differs from the labeling. That appears to be a bit academic in this case, as the lessor of those machines has already been granted relief from stay to go enforce its rights by repossessing them. But I do not know if those were the only encapsulation machines, and certainly there is other equipment as well.

But to more directly answer your question: Setting aside leases versus disguised security interests issue for a moment and looking at only your "normal" secured transactions, in those cases the creditors do not own the collateral, at least not in the complete sense that we usually mean when we say someone "owns" something. They own a security interest in the collateral; that is, a right to force the sale of that particular asset to satisfy the debt that they hold. And usually the security agreement will also grant them a power of sale, which is the right to repossess and sell it themselves for that purpose. This creates the somewhat counter-intuitive situation in which someone might not "own" something outright themselves but nevertheless have the legal power to convey good and complete title to it to someone else. And more than one party can own a security interest in the same collateral. Second mortgages and HELOCs are prime examples. So returning to Valken, Summitbridge might have a broad security interest in all inventory, equipment, fixtures, supplies, etc.--essentially all tangible assets, not to mention a bunch of intangibles like accounts receivable as well. And another creditor might have been granted a security interest in equipment, or in specific pieces of equipment. And another creditor. And another. The law of course provides the means of sorting these out and establishing an order of priority, of whose claim gets paid first, second, third, and so forth. Uniform Commercial Code Article 9. There's an entire course in law school devoted to how valid security interests are created, how they are perfected, and how the order of priority is determined (and when weird exceptions might apply). When the collateral gets liquidated, the senior priority lien gets paid first, and any leftover proceeds are then applied to the next claim in line, and then the next, until the funds are exhausted or all the claims are paid.

The trustee in Valken's case wants none of that noise, apparently. And I don't blame him. Once he determined that whatever the order of priority is, the claims exceed the collateral value, he doesn't need to care because the bankruptcy estate is netting zero. So he files his notice of abandonment and once it becomes effective, the creditors can go sort it out themselves.

[Trbo323]

Thanks for writing all that up. It's interesting to me, I probably still don't completely understand it, it's obviously a big hairball but your explanation did help so thanks

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[RPP]

Yeah, I really enjoy/appreciate your insight MrBarraclough. I don't understand it all but its very interesting.

[russonti]

Thank you for giving us and update MrBarraclough! That is really good info. I guess the big question is, is anyone going to jump on this opportunity? If not I feel like i'd at least have to email summitbridge and then a bank. I know this is way out of my league and i have no chance at all but the opportunity to make a dream come true then i feel obligated to at least try if no one else does

[MrBarraclough]

I spoke on the phone with the trustee in Valken's bankruptcy case for about 45 minutes yesterday. He took me up on my offer to provide some subject matter knowledge as a paintballer and fellow trustee. I wouldn't want to go into too much detail about a private conversation, so I'll share only a few broad strokes. The first meeting of creditors, also known as the Section 341 meeting, is still pending later this month. This is not a court hearing, but more like a typically brief open deposition in which the trustee presides and asks questions about the debtor's assets and finances and creditors are given the opportunity to do the same. A representative of the corporate debtor will testify, usually the principal. I presume it will be Gino himself. I gave the trustee my suggestions for some topics of inquiry, including nailing down what intellectual property Valken has and whether there is any intellectual property that might be held by any affiliated entities.

There are known industry players who have expressed interest in acquiring at least some of Valken's assets. You all are more than capable of guessing. I explained to my colleague that the dearth of domestically made paintballs and the current climate of unpredictable tariff risk probably gives industry players a strong incentive to acquire stateside encapsulation capability.

Encapsulation machines can be repurposed from paintball to other applications relatively easily, so the list of interested parties extends beyond the paintball industry names you and I would recognize.

The trustee understands that there is ongoing demand for consumables to support previously sold Valken products, particularly lenses for masks.

Trustees routinely scrutinize any transfers or transactions between the debtor and affiliated entities, including (and especially) entities owned by or associated with the principal(s) of the debtor. That does not necessarily imply that any such transfers or transactions are improper; but be assured they will be examined.

So, it looks like it was premature for me to conclude that he was intending to wash his hands of this case. We'll see how things shake out from the Section 341 meeting.

[russonti]

Thanks for this update. I was actually just about to email him. I was going to do it earlier this week but i have been working around the clock day and night for the past 4 days (every single hour i thought to myself, starting a paintball manufacturing company is looking more appealing day by day). i do realize encapsulating machines can be used for many things and i might be up against some big players. i figured there might also be other paintball companies interested as well. i understand my chances are slim to none. i figured it couldn't hurt to email him to try to get some info like this and maybe let him know i have interest before they just go auction it off to big pharmaceutical or whomever else. after that i was going to email summitbridge and maybe try and sign up to pull the paser paperwork to see who else i should email. i mean i still have to put together a full business plan and find an investor. the problem is time because i know the next hearing is at the end of the month. MrBarraclough do you think it's worth the effort for me to try to pursue this? or do you think one or more of these other companies are going to snatch it all up because i'm just a nobody. the one nice thing is, i am in pa and not that far away. i have actually driven to valken before to buy paint. but i would obviously want to transport everything and setup my operation her in pa. jersey taxes are brutal

[MrBarraclough]

russonti If you think you might be able to put together a business plan that could attract enough capital, go ahead and try. The trustee is simply trying to maximize the value to the estate, so if he has anything to sell it is simply going to the highest bidder. He doesn't care how big or small you are. He won't have a good handle on that until the section 341 meeting. You'll want to find out when that is (look for the Form 309 notice). If they are conducting the meeting by teleconference (which we do in my district), all the better, as you should be able to call in and listen, just not ask any questions since you aren't a current creditor of the debtor.

You probably want to find out who the landlord is at the relevant facility and make contact with them too. Someone who can put together a credible proposal to lease the premises and buy the equipment who wants to use it in situ is often a more attractive buyer than someone who wants to haul it all off (or worse, part of it) somewhere else. I'm facing that in one of my own cases. I've got tons of industrial woodworking equipment sitting in a rented building. The landlady would much prefer that someone buy the equipment and lease the building from her to use it there than haul it off. For one thing, most of these machines have been bolted to the floor for decades, and removing them without damaging the building would be extremely difficult. Place has been gathering dust for over a year, so she might cut a sweet deal on the lease just to get someone in there generating some rent rather than none.

[russonti]

Thank you very much MrBarraclough for the great information yet again. I don't know why but ever since the news dropped i felt like i have to at least try. Hearing and learning all this makes me feel a tiny bit better of actually having a chance. I thought that i had until this 341 meeting at the end of the month to seal some deals. I also did not know that i could join and listen it. I will make sure i do that. Thanks for that. I did end up emailing the trustee on friday. Hopefully he gets back to me.

You have a very good point. Just picking up where they left off would probably be the best case scenario. I really don't want to move to new jersey and the commute would be rough. I would obviously love to move everything near where i live however the cost savings and the higher chance of success might make all the difference. Maybe i come up with two plans.

Thabks again for all of this as well as keeping us all informed. I am at least going to write up some business plans and see how far i can take it. Whats the worst that could happen lol

[russonti]

sooo i joined the 341 meeting call as awkward as it was being not only the only party of interest to join but the first ever for everyone involved. This call did happen during my normal work hours so i was working on my work computer working while i also have kids and taking the Zoom call on my... (for the lack of better works, computer guts spilled out on top of a desk) and i almost never use zoom. While they were waiting on the owner of Valken they called me out immediately (which started the awkwardness) and i was able to unmute and say "hi my name is Russ and i am just an observing party thinking about starting a paintball manufacture company in PA and would like to see how this goes." The trustee was baffled and not sure what to do as he has never had a party of interest join before and wasn't sure if he had the power to boot me just as the owner of Valken joined. They went around doing introductions and then at my surprise asked for my introduction and full name (eek, i was not prepared). While juggling work, a 5 year old sneaking down the stairs to bug me for a snack, and zoom that i am not familiar with i tried to unmute and talk but it muted me while the owner of Valken demanded i be booted. People from work crying stuff is broken, 5 year old sweet darling begging for snacks, zoom meeting that got sweat starting to build on my eyebrows as i move the mouse over to click the leave button... and then a sweet voice of someone on the call saying "i would like to keep him on this call. It is a public meeting and he has every right". I immediately lifted off the mouse and let fait decide if i could be on the call and it did. I do not want to get into detail but it was like an 1.5 to 1/45 hours of asking questions to the owner of Valken about assets, their whereabouts, recent movements, current location, and various other "unanswered" questions. I believe i understand the purpose of this meeting but leave more confused. I understand the parties on the call have more information about the situation but i still find it strange. I did not know that Valken aquired APX Paintball in California in the last couple of years and that was the main manufacture of Valken paintballs. They did plan to build an equally as big plant in New Jersey but then covid happened. They did lease 2 new encapsulating machines for New Jersey but it is a different creditor than the blanket creditor SummitBridge. They never got to open that big paintball manufacture in New Jersey and I am not sure how much they actually manufactured in New Jersey. I do know they owe an ass ton of money to various parties. The owner did also admit to starting a new business call VTac and tried to void any connection to Valken other than "a product line Valken may have had in the past. like 2009". When they pressured it sounded like VTac is going to be a 3rd party retailer that uses other parties for warehousing and shipping?. It sounded like everything but paintballs. After that call it seemed very safe to say Valken/VTac has no interest in making paintballs again. I do not know for sure but he did not elude to paintballs at all.

I am very undecided. Paintball will not survive without paintballs. I feel like this is a make or break paintball opportunity. I do not know that i can do this own my own (i have kides lol). I am obviously still thinking about it. I would definitely need help and I think the paintball community needs this. We need more to survivie. If not then i am not sure of the future of paintball

[William the Third]

After that call it seemed very safe to say Valken/VTac has no interest in making paintballs again. I do not know for sure but he did not elude to paintballs at all.

Interesting, as we've been getting emails from V-Tac (I guess they are contact all of the old Valken dealers) stating that V-Tac is going to resume manufacturing paintballs "soon".

[The Hobbit]

I believe the industry rumor rag (willballforsoup) stated that vtac is distributing for Pro-shar? A polish paint company.

[William the Third]

russonti it's funny Gino stated that V-Tac has no employees, yet when V-Tac.com went live for that brief moment, it listed a number of employees. I really wish I would have thought of archiving the site before Gino took it down again. This isn't Gino's first rodeo (bankruptcy). In fact, he's pretty well known for them.

[russonti]

lol soo what you're saying is he lied under oath and was told he could be prosecuted if he did at the beginning of the call. I am not sure what they can do or if they even care to look into V-Tac. But i do know the trustee was not happy with him or any of his answers or when he found out about V-Tac. He did press for questions and but Gino acted like all he did was create the business name V-Tac and that he planned to sell products from other sellers and that's about it. I wonder why he took the website down lol.

[MrBarraclough]

sooo i joined the 341 meeting call as awkward as it was being not only the only party of interest to join but the first ever for everyone involved. This call did happen during my normal work hours so i was working on my work computer working while i also have kids and taking the Zoom call on my... (for the lack of better works, computer guts spilled out on top of a desk) and i almost never use zoom. While they were waiting on the owner of Valken they called me out immediately (which started the awkwardness) and i was able to unmute and say "hi my name is Russ and i am just an observing party thinking about starting a paintball manufacture company in PA and would like to see how this goes." The trustee was baffled and not sure what to do as he has never had a party of interest join before and wasn't sure if he had the power to boot me just as the owner of Valken joined. They went around doing introductions and then at my surprise asked for my introduction and full name (eek, i was not prepared). While juggling work, a 5 year old sneaking down the stairs to bug me for a snack, and zoom that i am not familiar with i tried to unmute and talk but it muted me while the owner of Valken demanded i be booted. People from work crying stuff is broken, 5 year old sweet darling begging for snacks, zoom meeting that got sweat starting to build on my eyebrows as i move the mouse over to click the leave button... and then a sweet voice of someone on the call saying "i would like to keep him on this call. It is a public meeting and he has every right". I immediately lifted off the mouse and let fait decide if i could be on the call and it did. I do not want to get into detail but it was like an 1.5 to 1/45 hours of asking questions to the owner of Valken about assets, their whereabouts, recent movements, current location, and various other "unanswered" questions. I believe i understand the purpose of this meeting but leave more confused. I understand the parties on the call have more information about the situation but i still find it strange. I did not know that Valken aquired APX Paintball in California in the last couple of years and that was the main manufacture of Valken paintballs. They did plan to build an equally as big plant in New Jersey but then covid happened. They did lease 2 new encapsulating machines for New Jersey but it is a different creditor than the blanket creditor SummitBridge. They never got to open that big paintball manufacture in New Jersey and I am not sure how much they actually manufactured in New Jersey. I do know they owe an ass ton of money to various parties. The owner did also admit to starting a new business call VTac and tried to void any connection to Valken other than "a product line Valken may have had in the past. like 2009". When they pressured it sounded like VTac is going to be a 3rd party retailer that uses other parties for warehousing and shipping?. It sounded like everything but paintballs. After that call it seemed very safe to say Valken/VTac has no interest in making paintballs again. I do not know for sure but he did not elude to paintballs at all.

I am very undecided. Paintball will not survive without paintballs. I feel like this is a make or break paintball opportunity. I do not know that i can do this own my own (i have kides lol). I am obviously still thinking about it. I would definitely need help and I think the paintball community needs this. We need more to survivie. If not then i am not sure of the future of paintball

Thanks for posting this. Welcome to my professional world. You did that trustee a favor without knowing it, by creating something unexpected for Valken's principal to react to and revealing his nervousness. Whoever wanted to keep you on the call probably realized the benefit of seeing if the presence of a mysterious third party made the principal squirm.

It's gratifying to hear that my giving the trustee a heads-up that something might be afoot with V-Tac apparently paid off.

[russonti]

You're welcome. Your world is... interesting lol. I definitely couldn't do it every day but it was quite the experience. I had no idea what to expect when I joined the call. I kind of assumed there would be a lot of people and I would just hide amongst the crowd quietly. Stirring the pot definitely did not come to mind. Although I do tend to find myself in getting in to unexpected situations so just roll with it lol. I am happy that I didn't nervously leave early and extremely happy for whom who will remain anonymous (i'm not sure if i should say who it was) spoke up and calmly said that I should stay on the call. At first I thought it was for the sake of having someone interested in the assets but then I realized it was more likely for like you said, making the principal squirm. I'm usually a really likable guy and never planned to make enemies but I don't think Gino likes me very much.

I dunno, part of me wants to still pursue this dream. The other part is realizing it's an expensive messy dream.

It is also gratifying to hear that you are the one that lead the trustee to ask "Oh, and what is this company VTac?...." and then proceed to drill in with questions for like 5-10 minutes lol.

[William the Third]

russonti Gino doesn't like a lot of people, he's a notoriously bitter man, and as such is also not a well liked man either. It's too bad really, as his companies have produced some nice products over the years.

[russonti]

yeea agreed, he may not be a likeable guy but he knows how to make some nice paint

[ford]

Holy cow, why have I been ignoring this thread? Now that the 341 meeting has happened, what's the next steps in this process?