Fountain faces foggy futurePublished 12:22am Tuesday, December 27, 2011
2011 turned out to be another rough year at Fountain Powerboats.
After emerging from bankruptcy protection in 2010, the outlook appeared bright for the Beaufort County boatbuilder under a Chapter 11 reorganization plan.
But as 2011 draws to a close, the company struggles to stay afloat and its future might be decided in court.
The Fountain Powerboats story was selected by the Daily News as the ninth most significant story for 2011.
In 2010, Fountain’s $19.6 million bank note was purchased by Oxford Investment Group and U.S. Bankruptcy Court Judge Randy Doub approved a reorganization plan naming Liberty Investments as the majority owner.
Liberty, also majority owner of Florida-based Donzi Marine, Baja and Pro-Line boats, announced plans last November to consolidate all operations under one roof at Fountain. John E. Walker was named CEO and president of the powerboat company, replacing Fountain founder Reggie Fountain.
With a good tail wind, the company was able to increase staffing from 30 employees at the end of 2010 to 165 by mid-June, according to Walker.
“We’ve brought back 135 people since Thanksgiving (2010),” Walker said at the time, adding, “Our intention is by this time in June to be over 200 people.”
Total payroll rose to around $160,000 a week, Walker said.
Additionally, North Carolina Commerce Secretary Keith Crisco announced that Fountain had been awarded a $150,000 grant from the One North Carolina Fund, an economic incentive fund set aside by the N.C. General Assembly. The grant depended on a local match of at least $150,000 and was to be paid in installments, contingent upon the company meeting certain performance targets, Crisco said.
The tide began to turn in October when a news release announced that Liberty Associates would no longer provide management services for American Marine Holdings, transferring its nominee ownership interest in AMH to First Capital, a Boca Raton, Fla. portfolio company of HIG Capital.
“Liberty has enjoyed its part in steering the company through the very difficult times that the boat manufacturing industry has experienced recently and wishes FCC (First Capital) continued success with AMH in the future,” the company said in the release.
Days later, FCC, Limited Liability Corp., doing business as First Capital, filed a complaint in court seeking approximately $61.04 million in damages from 13 defendants, including American Marine Holdings.
Among other things, the complaint alleged that “Borrower Defendants ceased operations” on Oct. 7, sending employees home with instructions not to return to work until further notice.
“Such actions will have an adverse effect on the value of the Collateral,” the complaint read.
Initially filed in Beaufort County Superior Court, the matter was moved to North Carolina Business Court and will be heard by John R. Jolly Jr., chief special Superior Court judge for complex business cases.
“Obviously, there’s been a significant dispute between my client and a lender, and the dispute has disrupted the business,” said Randolph James, a Winston-Salem attorney representing defendants Fountain Powerboats Inc., Joseph Wortley, Fountain Powerboats Industries, LLC, Fountain Dealers Factory Super Store Inc., Baja by Fountain and Liberty Acquisitions.
Jonathan Clayborne contributed to this report.
Reader’s No. 9 Choice:
Three-way tie between the jail issue, Paul Spruill’s resignation and the police standoff in Washington.