Fountain details its reorganization plan

Posted on 25 November 2009

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Fountain Powerboat Industries' reorganization plan divides the claims against the company into nine classes and calls for the "allowed unsecured claims" to receive a share of $1 million in full satisfaction of the claims.

The aggregate amount of the claims is an estimated $3.39 million, according to court documents, so a cash distribution of $1 million among all unsecured claims would provide a payment to claim holders within a range of 5 to 18 percent, Fountain estimates in its plan.

This stipulation, however, depends on whether FB Investments and Baja will have unsecured claims allowed by the court. The potential unsecured claims for these entities are $11.67 million for FB and $4.35 million for Baja. The plan, however, allows for scenarios under which FB and Baja's potential unsecured claims could be avoided.

FB is listed in its own class of claims, as is the corporation formed by the principals of Oxford Investment Group for the purpose of acquiring the Regions Bank note on Fountain.

"While the proposed plan offers unsecured creditors less than full payment, the debtors firmly believe that such a distribution will be substantially greater than could be obtained through an orderly or forced liquidation of the debtors and represents the most that can be reasonably expected as the debtors exit Chapter 11," Fountain said in its disclosure statement of the reorganization plan.

"The plan contemplates that the best opportunities for creditors lies in (i) continued operation of the business, (ii) modification and restructuring of the existing secured debt, and (iii) satisfaction of the unsecured claims by means of one cash payment from a capital advance funded by the party acquiring the new equity interests in the reorganized debtors," the disclosure statement reads.

The reorganized Fountain would continue to operate as a boatbuilder, with funding from Liberty Associates used as the primary means to put the plan in place and provide payment to the holders of allowed claims.

"The debtors have instituted a number of measures so as to improve profitability and reduce or eliminate, to the greatest extent possible, any recurrence of the financial crisis experienced during the recent economic downturn," Fountain said.

The plan also calls for Fountain founder Reggie Fountain to be president of the reorganized company, Irving Smith to serve as chief financial officers and Carol Price to serve as secretary-treasurer. William Gates would be the sole director.

Fountain would initially be paid $260,000 annually; Smith would receive $150,000 annually and Price would receive $104,000 annually. No compensation would be provided for directors.

For more on this plan and a full update on Fountain, see the January issue of Soundings Trade Only.

— Beth Rosenberg

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Comments

9 Friday, 04 December 2009 02:47

He needs to make $260K a year to make the mortgage payment on his new mansion!

8 Monday, 30 November 2009 23:36

Reggie has been the fault of all of the companies problems, from day one to present. He hired a great president to run the company about 20 years ago and he was run off becasue he couldn't get along with the ego maniac.

Take a look at the past NY Boat Shows and see how he presents the company. That says it all.

7 Saturday, 28 November 2009 12:41

the really short sighted folks will be the ones who continue to extend credit to this guy...The olde "Marine industry two step" keeps everyone down by lowering the bar of professionalism for everyone.

6 Saturday, 28 November 2009 04:01

Reggie is the greatest boat builder of our time. God speed.

5 Thursday, 26 November 2009 02:40

260k divided by 12 months is $21,600.00 a month or roughly $5400.00 a week...I'd bet anyone on the assymbly line would take that anyday...did you know that Brunswick BBG average hourly pay is about $ 13.00hr times 40hrs is $540.00 a week....thats a long way away from $5400.00 a week...wow

4 Wednesday, 25 November 2009 19:36

I don't care what Reggie's salary is, you get what you get in the open market.  I just don't understand why you would hire someone to be President who has failed horribly at running a boat company.

Also, doesn't another company own the note against Fountain, how can they not be in charge of who runs the company?

And speaking of entitlment, since when does being the founder give you lifetime rights at being the President. You took on debt, owe companies money and failed at running the company.  Sounds like a good reason to be kicked out to me.

 

3 Wednesday, 25 November 2009 18:44

Its amazing when things go bad how short people's memories are.  Yes, Reggie Fountain was in charge when the company went bankrupt, he was also the one that started the company to begin with.  Had it not been for Reggie sticking his neck out to start Fountain boats, there would not have been a company to go bankrupt.  A company that has employed many for many years.  As for his salary?  When are we going to get off the entitlement band wagon?  Just because one doesn't earn $260,000 per year doesn't mean Reggie should not.  Why don't these people who are complaining go out and start or buy a boat company?

2 Wednesday, 25 November 2009 16:08

agree till the last line...over 1/2 million in salaries...could make whole a few more people who have lost their $$ on this...Why put the fox back in charge of the henhouse??

Anymore the courts just have NO common sense or business sense, whether it is GM or Fountain... pay back 5-18 cents on the dollar, get a clean slate to keep doing the same thing for a few more years - just makes no sense?

1 Wednesday, 25 November 2009 14:17

Looks good until the last paragraph. Fountain to receive $260K SALARY??  Didn't he get them in this mess to start with?  If he cannot live on $100K a year (a lot more than I make!) he has no business trying to reorganize this company.  get someone in that can manage money.

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