After several months embroiled in legal battles with creditors and two Chapter 11 filings in three years, a temporary receivership of Fountain Powerboats and its affiliates was dissolved by a North Carolina judge, effective Thursday.
A sealed mediation settlement between Fountain and lender First Capital, to which Fountain owes more than $53 million, according to court documents, was filed in the Superior Court division of North Carolina Business Court on Wednesday.
Receiver Ronald Glass was ordered to transfer custody and control of Fountain’s assets to First Capital.
Fountain and 12 other defendants agreed to provide a good faith commitment by Aug. 15 from a financial institution or lender to make an undisclosed cash payment required under the sealed agreement, according to court documents.The good faith commitment was to be made to Liberty Marine Holdings LLC, the investor that bought Fountain out of its first Chapter 11 restructuring in 2009.
The cash payment is to be made on or before Oct. 14, and sales proceeds from the sale of Palmetto Boats or WIP Boats were also to be remitted to First Capital.
Fountain also agreed not to interfere with First Capital’s rights with respect to the “BP claim,” which is not defined in public court papers but is included in the sealed settlement.
First Capital had sought $61.04 million in damages from Fountain and other entities for the “borrower defendants’ ” breach of loan agreements, according to documents filed in the North Carolina court. The “borrower defendants” include American Marine Holdings LLC, Donzi Marine LLC, AMH Government Services LLC, Pro-Line Boats LLC, Fountain Powerboats LLC, Fountain Powerboat Industries LLC, Fountain Powerboats Inc., Fountain Dealers’ Factory Super Store Inc., Baja Marine Inc., Palmetto Park Financial LLC, 50509 Marine LLC, Liberty Acquisition FPB LLC, and Joseph G. Wortley.
After Fountain Powerboats filed for bankruptcy protection in 2009, Liberty Associates and Fountain filed a joint reorganization plan, and Liberty acquired the company. Reggie Fountain was initially retained as CEO, but he parted ways with the new owners at the end of 2010.
Fountain subsequently sued his former company for money he said he was owed and alleged improper business dealings by Liberty CEO Bill Gates and other company executives, court documents showed.
Fountain Powerboats filed counterclaims against Reggie Fountain, alleging that he took company property, as well as trade secrets, when he left the company. Fountain has repeatedly denied those allegations and says there are no trade secrets at Fountain.
Fountain Powerboats, along with numerous other affiliated parties, filed Chapter 11 papers Jan. 18 for the second time in less than three years. The filing was recorded with the bankruptcy court in the Southern District of Florida in West Palm Beach, but a Florida judge threw it out and sent it back to the North Carolina courts.
In the second Chapter 11 filing, Fountain listed more than $53 million in liabilities and less than $50,000 in assets, according to court documents. A total of $53,605,987.16 was owed to lender First Capital, according to the filing.
— Reagan Haynes