9:26 PM Tue 25 Aug 2009 GMT
North Carolina's Reggie Fountain, CEO of the legendary 'muscle boat' builder, Fountain Powerboats, has filed for Chapter 11 bankruptcy protection and will attempt to sell off the company's assets.
Reports from the United States suggest the assets would attract US$6 million to US$8 million.
The flamboyant Reggie Fountain, a former three-time World champion for Mercury Marine, has previously struck financial hurdles operating his business, but has always survived.
Court documents reveal the company owes its largest creditor, the US Regions Bank, nearly US$20 million. The debt includes floor-plan loans and term loans.
Fountain Powerboat built speed boats used by law enforcement agencies and at least one former U.S. president, has filed for Chapter 11 bankruptcy and hopes to sell the business as the recession slams demand for expensive speed boats, according to the company founder on Tuesday.
The Washington, North Carolina, maker of high-performance boats for sport fishing and cruising is seeking a buyer for all inventory, according to documents filed Monday in the Eastern District of North Carolina. The proposal is subject to court approval.
'Business has been very, very weak,' said company founder, Chairman and Chief Executive Reggie Fountain, who said that former President George H.W. Bush has bought three Fountain boats. 'Chapter 11 makes it a lot easier to bring in an investor.'
The company is speaking with nine possible buyers, said Fountain. The boats, which travel at as much as 80 to 100 miles per hour, sell for about a quarter of a million dollars. The bankruptcy petition listed only $3 in personal property, and $19.6 million in liabilities.
The bankruptcy court will schedule a hearing to approve sale procedures
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Powerboat-World editor Bob Wonders (left) with Fountain Powerboats CEO Reggie Fountain at a recent Miami International Boat Show. - Fountain Powerboats - Bob Wonders
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International Boat Industry magazine (IBI) has pointed out that Fountain's current operations would not be sufficient enough to support a traditional re-organisation of the company. It said creditors would benefit from the sale of assets to a third party who would then be in a position to infuse working capital and maintain operations for existing and prospective customers, suppliers and
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Fountain's legendary speed -
Powerboat P1
World Championship ©
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employees.
Debtors apparently believe that a forced liquidation by any authority, including the Regions Bank, would result in no payment at all to unsecured creditors.
by Bob Wonders
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Double Is Pt, QLD
