Fountain Powerboats yesterday filed for Chapter 11 bankruptcy protection in the US Bankruptcy Court in the Eastern District of North Carolina. According to court documents, Fountain will attempt to sell its assets, including the facilities and tooling in North Carolina, as well as brand names and unsold inventory for the Fountain and Baja brands. It expects the assets to sell for between US$6m and US$8m.
Fountain said it owes its largest creditor, Regions Bank, US$19.6m. About US$4.3m of the total is for floor-plan loans, while the other US$15.3m was for term loans and a revolver loan. The company reported a loss of US$2.2m in fiscal 2008, and US$8.1m in fiscal 2009.
The company's two biggest shareholders are Cede and Company which owns about 2.2m common shares, and Chairman and CEO Reggie Fountain, who owns about 2.1m common shares.
The company intends to continue operations, according to the court documents. Reggie Fountain told local news sources that only about 10 to 12 workers will remain on the site in the coming weeks. He also expects the backing of new private investors to be in place by the end of the month.
The court documents said Fountain's current operations would not be sufficient enough to support a traditional reorganization. Fountain's filings sai d "creditors would benefit from the sale of the Sale Assets to a third party, who would then be in a position to infuse working capital, make the necessary capital expenditures and maintain operations for existing and prospective customers, vendors and employees. The Debtors also believe that a forced liquidation of the Sale Assets by a Chapter 7 trustee or by Regions Bank exercising its state law remedies would result in no payment to unsecured creditors."
NJ Performance Powerboat Club
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