More details on Genmar’s Chapter 11 filing

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Announcing that his company had filed for bankruptcy, Genmar Holdings chairman and CEO Irwin Jacobs noted that previous economic downturns “do not even remotely resemble” anything close to what has taken place in the industry during the last year.

Genmar, the country’s second-largest boatbuilder, yesterday filed for Chapter 11 reorganization protection in U.S. bankruptcy court in Minnesota. The filings were made by Genmar Holdings and its subsidiaries.

The debtors intend to file a motion for joint administration of their Chapter 11 cases.

According to court documents, Genmar’s board of directors decided May 29 that it was in the best interest of the company to file for Chapter 11.

“If someone would have said to me as recently as even one month ago that Genmar would someday be filing for Chapter 11, I would have said it was not even a remote possibility,” Jacobs said in a statement.

“I’ve always looked for ways to enhance Genmar’s balance sheet and felt that, even though business conditions were incredibly difficult, there were alternatives available,” he added. “Unfortunately, I didn’t have the necessary time to complete any of the alternative financing acceptable to the banks.”

Jacobs did not immediately return a call for comment this morning.

In his statement, Jacobs said Genmar has access to sufficient cash and has current assets available to support its ongoing business and pay its vendor suppliers on future purchases.

The company has received a commitment for a Debtor-in-Possession financing proposal from Wells Fargo and Fifth Third banks that will be submitted to the court for approval, Jacobs said.

“Additionally, in the first court hearing, Genmar will be asking the bankruptcy court for approval to allow Genmar to pay appropriate dealer warranty and rebate claims,” he added.

Genmar has more than $100 million in current assets, as well as additional fixed assets and intangible assets that will allow the company to come through this, Jacobs said in his statement.

According to court documents, Genmar Holdings has between 100 and 199 creditors. the company has listed assets of $237.5 million and liabilities of $216.5 million. Jacobs said these figures do not include more than $400 million in intngible assets.

In the list of creditors holding the 20 largest unsecured claims, Minneapolis law firm Maslon, Edelman, Borman, Brand is listed as the largest, with a claim of $186,690. Other creditors include additional law firms, Deloitte Tax, PricewaterhouseCoopers, Statistical Surveys and Google.

Jacobs said he plans to reorganize and come out of Chapter 11 “as a stronger and better company.” The company will submit its overall reorganization plan for approval to the court as soon as possible.

Genmar has until Sept. 29 to file its Chapter 11 plan with the court, documents show.

Minneapolis-based Genmar Holdings has approximately 1,500 employees in five manufacturing centers. The company builds 15 boat brands, including the recently introduced FinCraft, which are sold worldwide through its approximately 1,100 dealers.

Click here to read Jacobs’ complete statement.

Click here for a story in today’s Star Tribune.

— Beth Rosenberg

b.rosenberg@tradeonlytoday.com

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Comments

13 comments on “More details on Genmar’s Chapter 11 filing

  1. compact45

    This is only the beginning for the manufactures filing Chapter 11 or even 7. Dealers need to be very concerned as my take is there are alot more manufactures ready to do the same thing real soon.

  2. Joe Nestor

    So much for the rumor that Jacob’s was funding the “New Bentley” fiasco.  Genmar will resurafce again after leaving dealers holding the bag just like Bentley did.

  3. Douglas W. Reimel

    Mr. Irwin Jacobs, The master of deception has struck again. My guess is He is just nullifying his repurchase agreement with GE capital and anyone else with his dealer network that is just jammed full of inventory. The master has struck again.

  4. JP

    Mr. Reimel is correct.  This is a maneuver to get out of his obligations to GE, Textron, Engine companies, and a host of other suppliers.  Many will be harmed and the marine industry recovery slowed by these actions.  I have spoken to many colleagues today who are owed substatial amounts by Genmar and they will likely receive nothing and their businesses are in jeopardy.
    I hope the court refuses the Debtor In Possession funding plan on Thursday and Mr. Jacobs has to reach into his own wallet like the rest of us hard working Americans.

  5. JB

    So Genmar has between 100-199 creditors.  The largest is owed $186K.  Even if all 199 creditors were owed $186K that comes to $37 million owed to creditors.  Yet total liablities is $216 million.  Fuzzy math?  Who’s owed the other $179 million?

  6. Ken Zimmerman

    HAS EVERYONE FORGOTTEN WHAT THIS MAN, IRWIN JACOBS HAS DONE!
    Mr. Jacobs has rescued more failed boat companies than anyone in the history of the marine industry; no else is even close! This man has spent over 30 years building boat companies and dealers all over the country. And, some of you have the opinion that this is a planned and calculated manuver.Well, the facts speak for themselves; I didn’t see anyone perdicting the current chain of events that this terrible economy has created.
    My advice is to wish Irwin Jacobs and his companies full and complete recovery as fast as possible. If Genmar doesn’t recover, I can assure you  many more will fall much harder…. and remember the “bigger they are the harder they fall” 
    Best of luck to Irwin Jacobs and all of the companies and dealers that are struggling through these most difficult times.

  7. waterdogdad

    He did it in 1992.  He is doing it again.  The employees, vendors and dealers get scr…..  MR JACOBS DOESN’T.  Con artisat at it’s best.

  8. was in the boat Buisness

    I have been in the boating industry for 28 years, I have never seen anything like this before. Irregardless of you opinion of Irwin, his filing further confirms how far the boat buisness has fallen. What it does not foretell is how much further it WILL fall. There are many manufactures that, for all intents, are bankrupt now. They are just zombie companies that the bank, nor the creditors, have dared to pull the plug.
    This industry is in for a very long, very hard, fundamental further restructuring. Anyone that does not see this is blind to the stark reality facing us. Take your worst forecast and cut it by 40% and maybe it is conservative enough, just maybe. If you don’t have a plan B and C your in big trouble. Interest rates have to rise in the next 12 months, As demand increases, so will fuel prices. Our current administration is setting us up for a huge fall killing the  expansion of oil exploration and it’s added supply. This is intentional, they want $5 gas to “change our habits”. Wake up, look around; prepare.Become active, tell you legislators how you feel and what this is doing to your buisness, get involved now or someone like me may be writing about your company next week..

  9. Jess

    Reminds me of the movie WALL STREET.  Gobble it up, take the icing off the cake, when it doesn’t look pretty anymore, move on to the next.

  10. JP

    In response to JB, you should notice that the list of creditors in the filing is a list  of unsecured claims, not all creditors.  The list only includes lawyers and other service providers.   The  main creditors , if listed, would start with the engine companies, composites distributors, resin & glass suppliers, then cascade down to other main suppliers. These are the people and businesses that Mr. Jacobs is harming and they will not get their money, even though they have shipped product.
    Despite the letters and statements from Genmar, they have no intention of paying these suppliers, and the suppliers know this.    I only hope when this is all over  the press treats this with honesty instead of the praise bestowd upon Genmar in the past.

  11. Curtis

    I guess VEC was not as profitable as Erwin thought.
    It is to bad that he will screw over the companies that made him rich. I bet they do not make that mistake again. Cash up front or no engines or cleats.
     
     

  12. G B James

    This is my 35th year as a rep and I have seen many tough times in the marine industry with lots of dealers going under.. He may put more dealers out of  business than  OMC did in the late 80’s.
     

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