Published 12:33 am Thursday, January 26, 2012
Boatmaker struggles to stay afloat under mounting debt
Fountain Powerboats has filed for bankruptcy under Chapter 11 of United States bankruptcy laws.
Chapter 11 allows a business to reorganize its finances under a court-approved plan. The plan could ward off creditors’ lawsuits during the reorganization.
Fountain, located at 1653 Whichard’s Beach Road, filed for bankruptcy Jan. 18.
The filing was signed by court-appointed receiver Ronald Glass of the GlassRatner Advisory & Capital Group, which has offices in Miami, Tampa, Fla., New York and other cities.
The filing was recorded by the clerk for U.S. Bankruptcy Court in the Southern District of Florida.
Court papers show Fountain and its affiliates owe more than $53.6 million to First Capital of Oklahoma City, Okla.
The estimated assets of Fountain and its affiliates were valued at $50,000, court records show.
Parties in the bankruptcy case include Donzi Marine and Pro-Line Boats, boat lines that had been consolidated on the Fountain campus from Florida operations.
Until late last year, American Marine Holdings controlled the groups that built the boat lines on the Fountain campus south of the Pamlico River in Beaufort County.
In October 2011, creditor FCC Limited Liability Corp., doing business as First Capital, filed a complaint seeking $61.04 million in damages from a cluster of companies including American Marine Holdings.
In its complaint, FCC alleged “the Borrower Defendant ceased operations” on Oct. 7, sending employees home with instructions not to return until further notice.
“Such actions will have an adverse effect on the value of the Collateral,” the complaint read.
FCC also alleged the misappropriation of funds.
The complaint was filed in Beaufort County, but the case was transferred to a Superior Court judge in North Carolina Business Court.
On Oct. 20, an order appointing a temporary receiver was issued by James L. Gale, special Superior Court judge for complex business cases.
In his order, Gale wrote the plaintiff was “entitled to relief on an emergency basis.”
“The events surrounding the cessation of the Fountain Defendant operations, the termination of the management agreement, the resignation of the management of the American Marine Defendants, and other events justify the grant of emergency relief,” the judge wrote.
Gale concluded there was “a substantial likelihood that Plaintiff will prevail on the merits of its claim that the Fountain Defendants are in default of the Fountain Loan Agreement and Plaintiff is entitled to the appointment of a receiver.”
A call seeking comment from Fountain officials wasn’t returned Wednesday.
A call seeking information from an attorney who had represented Fountain and affiliates listed in the bankruptcy filing also wasn’t returned.
It was unclear whether any workers were on hand Wednesday at the Chocowinity-area plant, where boat-building operations stopped last fall.
Pat Oswalt, manager of the N.C. Employment Security Commission’s Washington office, confirmed that, last year, he had seen an influx of Fountain employees seeking unemployment benefits.
In November 2010, officials in Gov. Beverly Perdue’s office announced Fountain would receive a $150,000 grant from the state’s One North Carolina Fund, which helps fund economic-development projects.
The company planned to create 411 jobs and invest $5.1 million over the next five years, it was announced at the time.
Now, it appears, most of those jobs are gone, the expansion plans scuttled, at least for now.
In unrelated developments, Reggie Fountain, former owner of Fountain Powerboats, has formed three new corporate entities: Fountain Custom Boats, Fountain Performance Engines and Fountain Brothers Investments.
Filings with the N.C. secretary of state’s office list Fountain’s attorney, Charles McLawhorn of Greenville, as the registered agent for these limited-liability corporations.
Fountain, who said he founded the original company that bears his name in 1979, is no longer affiliated with Fountain Powerboats.
In a brief interview on Wednesday, Fountain indicated the bankruptcy filing reflects his fears about the future of his old business.
“Everything I said came true,” he said.