Unsecured creditors want Genmar auction results thrown out

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The Official Committee of Unsecured Creditors in the Genmar bankruptcy case is asking a judge to set aside the results of last week’s auction or, alternatively, deny approval of Irwin Jacobs’ bid for the Carver and Marquis lines.

The committee says it appears the aggregate amount of the prevailing bids will not satisfy the secured claims, the Chapter 11 administrative expense claims and will provide nothing for the prepetition unsecured creditors as a group.

There are an estimated 4,000 unsecured creditors that are owed more than $100 million, according to court documents.

On Friday it was announced that California-based Platinum Equity had purchased the majority of Genmar Holdings’ assets for $70 million. Carver and Marquis were purchased for $6.05 million by J&D Acquisitions, and MCBC Hydra Boats, a subsidiary of Wayzata Investment Partners, purchased Hydra-Sports for $1 million.

A court hearing to approve the sale is set for Wednesday, with the closing set for Jan. 20.

The committee also objects to the decision to award J&D Acquisitions the winning bid for the yacht group brands and the facilities in Pulaski, Wis., over an identical bid made by Genmar Yacht Acquisition, which the committee said is an affiliate of Patriarch Partners LLC.

J&D Acquisitions is a company founded by Jacobs and billionaire businessman John Paul DeJoria.

If the J&D bid is approved, it would divert Jacobs’ assets to the secured creditors, making those assets unavailable to satisfy the avoidance causes of action that will benefit the unsecured creditors, the committee said.

“The committee objects to Jacobs, an insider, or his non-debtor affiliates using any of their assets to reacquire portions of the debtor’s businesses while leaving over 4,000 unsecured creditors, owed over $100 million, unpaid,” the committee said in court documents.

“The debtors’ selection of the J&D bid rather than the GYA bid, solely on the basis that the GYA bid matched, rather than exceeded, the J&D bid, is an insufficient reason to approve the J&D prevailing bid in the face of other considerations,” the committee said. “Both the interest of the unsecured creditors and the goal of maximizing the value of the debtors’ estate dictate that the J&D prevailing bid should not be approved.”

The committee also said it appears GYA is likely to be better capitalized and a more reliable customer for the unsecured creditors to do business with than Jacobs or his affiliates.

On its Web site, the committee says a representative of GYA “will continue negotiations to present the winning bid” at Wednesday’s court hearing.

Jacobs could not immediately be reached for comment.

- Beth Rosenberg

Comments

17 comments on “Unsecured creditors want Genmar auction results thrown out

  1. DJ in NC

    The outcome of all of this will be interesting, to say the least!  Looks like Hydra went for bargain price.

  2. Ex- Genmar Employee

    Committee of Unsecured creditors…….good for you……go after what is rightly yours.  Whatever that amounts to in the end.  This sounds like a good strategy to present to the court that Jacobs is literally utilizing moneys owed to creditors in order to re-purchase a piece of the company that is on the block.  That just isn’t right………..period.  I would think that a fair judge would agree.
    I can’t wait to see Irwins response to this petition.  Should be interesting going foward. 

  3. G B James

    Teddy K..Things are really looking up under Obama aren’t they..Life is good…Printing money fast and furious..Lots of floor plan from GE and easy retail loans for boats????
    WOW…I diid not realize how good things are….

  4. boater4life

    Remember, one of the largest unsecured creditors is Irwin himself.  Rather than letting the industry get the best of him, he is puting his efforts back into it, bringing with it much needed energy and passion. I doubt that many people would risk what they had financially, at Irwin’s age, to try to revitalize an Industry that is broken.  If you are one of those, you are to be commended.
    It surprises me that people are quick to change brands, when the brands aren’t the issue.
    The banking industry, lack of education, inudstry loss of market share, and poor customer service, from the builder to the customer is to blame here. Three years ago, when money was flowing…praises were made, expansion was common, and the entre industry grew arrogant.  If we want to fix the industry going forward, we need to develop individual business models that work in EVERY environment…and adapt success stories in technology and growth from the industries that are taking away our market share!
    Blaming Irwin or Genmar, for not having a business model that survives in downturn markets is simple and maybe justified for segments of your balance sheet.  However, the fact is, our industry-regardless of builder or brand- is equally suffering.
    We need to step back, and get this industry “front running” again, so that next time when the customer asks us to change and listen….(as they have time and time again), maybe this time we will as an industry.

  5. Komrade Karl

    Boater4life- I think the 4000 unsecured creditors have taken that step back as you recommend
    unfortunately it was right off a cliff on to the rocks below…

  6. Breeze

    Irwin ran Genmar into the dirt with all his pomp greed.
     Creditor claims need to be satisfied … prior to pacifing Irwin’s' pocket !!
     Force Irwin cash out all his hidden assets to satisfy what he borrowed,
    and now owes his creditors.

  7. Boat store owner

    In my opinion lots of people got caught with their pants down. Most thought it would bounce back in the spring of 2008 and 2009. When it did not they were hammered by GE as GE is the only source of flooring.  GE excerbated the already bad situation and forced Genmar to file as they were charging him huge fees for the repurchase of all the boats under flooring.  GE could have not been so greedy and gave up some time for the dealers to let them sell the boats then all would have worked out better.  Remember it was the Commercial Distrubution Finance that took GE off the steller 40 plus years earnings.  I will not even buy a GE light bulb or anything associated with them.  Were you taught not to put all your retirement eggs in one basket.  I am still in business.  But its been interesting.  This BK levels the field.  and Jacobs will start rebuilding it again.
    I could write forever.  But whats the point.

  8. gordy mckelvey

    The key pharse in all this mess is “unsecured creditors”. In most bankruptcy work outs the unsecured crditors are just like ants at a picnic, most of them get squashed. Good luck ya’ll!

  9. Grand Man

    The remarks by ” Boat Store Owner ” correctly points out the fact the Genmar didn’t create the industry problems. Tightening credit, cutting floorplans, and raising interest rates helped contribute and downsize the industry.
    However, Genmar  elected to file Bankruptcy creating even more problems for Vendors, dealers, and employees etc. Now, Jacobs is using the system to repurchase the preferred enities and rebuild with no creditor debt.
    Genmar could have followed the example of  others such as Brunswick, and MasterCraft  who took a different path to negotiate with everyone. Yes, factory layoff’s occurred, but vendors  are to getting paid.  Rehires have started and production schedules are getting better.  This is not happening at Genmar !

  10. If thrown out

    What happens if the the court DOES throw out the bids. Does the auction process start all over again?

  11. Former Carver employee

    As a laid off (and now terminated)employee of carver,I also want to no what happens if its thrown out.Yesterday it was looking pretty good for Carver and now it looks like it will never end  I JUST WANT MY JOB BACK!!!!!!!

  12. Another Ex Genmar Employee

    I aggree with ex employee.
    I hope Irwin does not get genmar yacht back. I think change is good and
    and look forward to seeing what GYA can do with this company.
    To boater 4 life.
    You dont understand the whole situation. This is not just about the bankruptcy.
    This is about a man who has betrayed his dealers and his vendors.
    Go Lynn Tilton

  13. Jim

    I hope that some kind of deal can be arranged to finish up this auction that is fair for all. As far as Jacobs supporting Obama I really doubt that, we were always encuraged to vote Rebublican they rembered the 15% tax on yachts by the Dems 17 years ago that almost killed all yacht manufactures. As far a a restart I hope they get back Jim G. the guy who designed the K-2 and the F & M moldes that were on the K-2 dseign. When you can sell over 700 40+ footers in about 4 years at a mil + a pop you are doing good.

  14. Baxter

    To me all of this is a big mess. I used to work for Genmar of Mn. until I got laid off; they told me that I would get called back and then I was told in June of 2009 that I was not to claim holiday pay. that I was officially laid off. I was not going to wait to see what the company was going to do with their life. I went out and got a job within two weeks of getting laid off. Then they call me back and tell me I can come back to work, for what one to two weeks and then get laid off when I have a job that is full time. Unfortunately, in all of this my husband is still laid off and still looking for work. The sad part of all of this is that employees had to take a cut in pay each time and hours cut. Now, who is to say what the hourly pay will be and the benefits, and how many people are actually going to get called back to work. I feel the company could of been more open and honest with their employees, but unforunately this company is noted for telling you one thing and then doing the complete opposite. As far as Irwin Jacobs goes he does not need to come back in to the company, it is time for a change now and this is what all of the employees have to understand now.

  15. Another former Carver worker

    I think it’s total BS that jacobs gets control of the company again after leaving so many in the dust. I had 3 weeks vac coming and it looks as though I won’t get that, but he can come right back in and start fresh.

  16. whatshaludo

    I am one of the people owed vac money.I see now after he goes and buys more so he doesnt have to pay people.Sneeky little sucker

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