Thursday, November 4, 2010

OurPlane bankruptcy filing docs now available on line

From the better-late-than-never department: a copy of the OurPlane bunkruptcy (hm, interesting Freudian slip there) is now on line.

Field report from Graham Casson's bankruptcy hearing

Robert Hyams attended OurPlane's bankruptcy hearing on November 2 and wrote up this report:

Hi All, here is my impression of what occurred at the bankruptcy hearing this morning in Buffalo NY.

I arrived early and watched how Mr Horowitz conducted the hearing, i witnessed him run through the preliminary hearings of 3 couples, who were clearly down on their luck, broke, out of money..he was very compassionate and not judgmental or officious. Then it was time for the OurPlane hearing, Casson and his attorney Mr. Larson sat right next to me, while we waited for about 5 mins for mr horwitz to get his stuff together, of course Casson had no idea he was sitting next to me..we had never met before, Mr Larson was about 80 to 85, seemed like the elder statesman for that court house, everyone acknowledged his presence, Mr Larson and Casson were talking about his 3 kids and everyday stuff, i noticed Casson brought his papers in a leather flight bag, with the little tag that said "Flight Crew-Flight Safety" pompous [bleep]!

Mr Horwitz called the case number and Casson and Larson sat at the table, i stood up introduced myself and Mr. Horwitz seemed very pleased that i showed up. The real purpose of this hearing is just to read the rules, ask for Identification, and mr horwitz asked all the right questions right off the bat, he was not exactly mr nice guy with Casson, He clearly had read or listened to everyone who called and wrote him, he knew how to steer the questions to our problems. One of the major issues in this hearing is to establish if he is a plantiff in any lawsuits, and Casson is part of a big lawsuit against Eclipse. Then Mr Horwitz asked about the Eclipse that is sitting in Florida, and what is the story with that aircraft, which is the only property listed on the bankruptcy form as still owned by OurPlane. Casson explained the plane is for sale, and the owner is suing him. Then Mr Horwitz looked at me, and smiled and asked Casson, "so what is the story of all those other aircrafts, that has been written about on the web?"

I smile back, graham is not sure how to answer that question. The OurPlane lease agreement comes up and then mr horwitz asks me if i would like to ask mr casson any questions. I prepared a quick synopsis of my invovlement and the money i gave to OurPlane, which summed up our situation pretty efficiently. Then i read the paragraph where it says we all will get money upon the sale of the aircraft, and i ask Casson to find and read for me the section and paragrah about the FAA lien..he starts reading section 40/41 and i stop him and ask him to tell me what that section is called, he acts like he doesn't understand what i am asking, but then says "section 40 is Security for Early Termination" he reads the paragraph and then mr horwitz says, "but Mr Hyams did not end his agreement early, so how does this apply to him?"...Horwitz smiles at me...very cool guy. Graham says some thing about the title of the section is not important and horwitz says that he "disagrees, but that is not his job to decide that, a judge will"

The meeting breaks up after a few more minutes.. the whole thing lasted about 20 minutes, and horwitz wants to see a whole bunch more documents, and says that he "finds,even at this early stage that this will be very complex, and Casson needs to prepare much more work, especially about the single engine aircrafts"

That was it, i guess it goes into a lot of more hearings, then a judge decides how to relieve casson of his debts? Horwitz said he will notify us to the next step. He was great, definitely sees that Graham is using the Bankruptcy court to snake his way out of his debts, at least that was my impression.

Friday, October 8, 2010

Can you say hubris?

AvWeb reports:

Casson said it's 'unfortunate' there were clients who lost their investments but the company provided them with the legal means they needed to protect their money. 'I can lead a horse to water...,' he told AVweb.

Excuse me? Exactly what horse does Casson think he was leading? I was never told that I had a "legal means" of protecting my money. And notwithstanding that some foresightful people did it anyway, the plain fact of the matter is that the contract prohibited us from filing a lien.

Then there's this:

Casson wouldn't say if there was money left after the secured creditors were paid or what happened to it.

Imagine that.

A smoking gun

Thanks to commenter Cary I decided to take a closer look at the OurPlane contract. The word "lien" occurs twice. Both occurrences are in paragraph 18(g):

Pilot shall not cause or permit, through any act or failure to act, any liens, claims or encumbrances to attach to the Aircraft and Pilot agrees to indemnify OurPLANE for any and all costs incurred in defending against or removing any such lien, claim or encumbrance, including its reasonable attorneys fees.

Let's play that again, shall we? "Pilot shall not cause or permit ... any liens ... to attach to the Aircraft ..."

So not only is it an insulting insinuation that our losses are our fault because we failed to file liens, we were actually contractually prohibited from doing so!

I'd say Mr. Casson has got some 'splainin' to do.

[UPDATE:] I was mistaken. The word "lien" also occurs here:

33. Events of Default. For the purposes hereof, the term "Event of Default" shall mean the occurrence and continuation of any of the following events of default hereunder:
b) the causing or permitting by Pilot, through any act or failure to act, of any lien, claim or encumbrance to attach to the Aircraft, other than such lien, claim or encumbrance that is pre-approved in writing by OurPLANE;

So not only are we contractually prohibited from placing liens, such a placement would constitute an "event of default" on our part.

Caveat emptor

Mr. Casson has broken radio silence. He is quoted by AOPA Online as saying:

"I understand there’s some unhappy customers, but those that are unhappy are the ones that did not secure their refund via a lien on their aircraft. That option was always available to them. It’s built right into the fractional share purchase agreement. If our customers didn’t follow through on that option then that’s unfortunate."

In other words, Mr. Casson is saying to his former customers: you had a legal recourse that you failed to avail yourself of. Therefore the mess you find yourself in is your fault, not mine.

(Pardon me for a moment while I conceal my disgust.)

Yes, it is true, we all could have filed liens against the plane, and many of us didn't because we were trusting shmucks who thought that there was an ethic in the aviation community of mutual trust and respect based on our common goal of going up in the air and getting safely back down again. Apparently Mr. Casson conducts himself according to a different ethic, an ethic of free-market capitalism where anything goes as long as you make a buck and don't violate the letter of the law. Actually, whether or not he has violated the law is still an open question, but that is neither here nor there. This is not about the law. This is about how you do business.

The problem with Mr. Casson's business ethic is that he kept it hidden. If people know ahead of time that you're going to, say, embezzle money and then cover yourself by declaring bankruptcy then they can protect themselves. But here's the thing: protecting yourself against being screwed like that has costs associated with it. You have to take the time to read contracts, to file liens, to pay lawyers. It's expensive, and we pilots have better things to do, like making sure the plane doesn't crash. That is not as easy as we make it look. If we had to take the time to make sure that everyone we deal with in this incredibly complex web of services that make up the aviation industry is not trying to pull a fast one on us the whole thing would come to a screeching -- and possibly flaming -- halt.

But all this obscures a much more important question: what happened to the money? If, as Mr. Casson implies, we could all have been made whole if we'd just had the foresight to file liens, then the money to cover us must have been available at some point in the past. Where is that money now? Is any of it lining Mr. Casson's pockets, or financing his new company?

As always, if I have gotten any of this wrong I invite Mr. Casson to contact me and set the record straight. His lawyer has my contact information.

OurPlane 101

A few days ago it was announced that a company called OurPlane was declaring bankruptcy. This would normally be an event of little note in this economy, but it matters to me because I was, apparently, a creditor of this company. The reason I say "apparently" is that I thought I was an something else, an "owner", and the bankruptcy has left me holding a very large bag.

The reason I'm starting this blog is that I am not the only person who has suffered a loss as a result of this bankruptcy. Others have taken much bigger hits than I have. But even that is not really the problem. The problem is that the company's president, a gentlemen (I hesitate to use that word because his conduct has been anything but gentlemanly) named Graham Casson, has conducted himself in what I and others consider to be a thoroughly disreputable manner. I am not a lawyer, but it certainly seems to me that what Mr Casson has done could be considered fraud. At best Mr. Casson's conduct has been, in my opinion, unethical. But even that is not the reason for starting this blog. The reason for starting this blog is that the ink was barely dry on OurPlane's bankruptcy filing when Mr. Casson opened a new company with the exact same business model. I am writing this blog because I think people considering doing business with Mr. Casson have a right to know how he treated his last batch of marks customers.

OurPlane (I can't link to it because the web site no longer exists) was a company whose product was something called a fractional aircraft ownership. Its customers are private pilots who want to own their own airplane but either can't afford to own one outright or don't want to have to deal with the considerable administrative hassles that aircraft ownership entails. OurPlane would collect groups of between four and eight people who would pool their money to buy an aircraft which those people would then share. OurPlane took care of all the maintenance and administration. After five years the plane would be sold and the proceeds either put towards buying a new aircraft, or returned to the "owners."

The reason I put "owners" in scare quotes is that we weren't really the owners of the plane despite the fact that it was bought with our money. The owner of record was OurPlane, and what we actually bought according to the fine print on the contract was a "use license". But to say that the marketing downplayed this fact would be quite the understatement. The product was called "fractional ownership." The marks customers were invariably referred to as "owners" by the company. Event the name of the company, OurPlane, implied that we owned the plane. But we didn't.

I bought into "my" plane, a Cirrus SR-22 tail number N880P (pronounced "eight eight zero poppa") in June of 2004. I, along with my fellow "co-owners" flew it for five years. I actually made the last flight in that plane, from Las Vegas to Santa Ana, California, on May 25, 2009, to deliver it for its annual inspection before being put on the market.

Of course, it was not the best time to sell an airplane, and N880P sat on the ground for over a year before finally being sold in August of this year. One month later, OurPlane declared bankruptcy, and a few days after that (as far as I can tell) Graham Casson, CEO of OurPlane, started a new company selling fractional "ownership" in very light jets.

All this naturally left me wondering: where did the money go? OurPlane was supposed to take the proceeds of the sale of the plane and distribute it to the "owners", but they didn't. A few of the "owners" were foresightful enough to file liens against the plane, and they got their money. What happened to the rest of it? And, as long as I'm asking questions that I'm unlikely to ever get answers to, where did the money come from to finance Mr. Casson's new company?

I have been trying unsuccessfully to get in touch with Mr. Casson so he can explain himself but he has not returned my calls. According to his bankruptcy attorney the money went to pay off "other creditors." I infer from this that Mr. Casson took out a loan and put up "our" airplane as collateral. This may be legal, since OurPlane was the owner of record, but if this is in fact what happened I would consider that to be thoroughly unethical.

I'm going to stop there for now because I am still clinging to the faint hope that Mr. Casson will contact me and that all this can be resolved amicably. If there is anything I have said here that is factually incorrect I invite Mr. Casson or his representatives to contact me and set me straight. In the meantime, if you're considering doing business with Graham Casson, be careful.