Gunboat International filed for Chapter 11 banktruptcy protection on Wednesday after a series of challenges in the past two years, but owner Peter Johnstone says the company is operationally poised to rebound.
“It’s unfortunate we have to go through this process, but we see our path through,” Johnstone told Trade Only Today. “And we’re really touched by the support that’s been expressed from all corners. That really adds to our motivation.”
As of this morning, there were more than 150 responses in support of Gunboat on a Facebook post Johnstone made Wednesday announcing the news, as well as several additional independent posts encouraging the boatbuilder, who has spent 30 years in the industry and comes from a storied boatbuilding family.
Johnstone’s original post detailed the reasons for making the choice.
“In a period of non-stop accolades and introduction of several terrific new models, Gunboat has been quietly struggling behind the scenes for nearly two years,” Johnstone wrote on Facebook. “It has been a perfect storm of adverse business circumstances, mistakes and disputes.”
Leading the list of challenges was the legal dispute between Gunboat and Hudson Yacht and Marine Industries, a Chinese builder Gunboat contracted to build the 60 and subsequently sued.
Court documents allege that HYM never did some work and that the yard refused to pay warranty claims on other poorly constructed yachts. It also accuses HYM of breach of contract, fraudulent inducement, interference with contractual relations, unjust enrichment, breach of a non-compete agreement and misappropriation of trade secrets. Court documents accuse the company and its owner of launching a “knockoff brand” of carbon fiber catamarans despite signing a non-compete contract.
The issues prompted Gunboat to spend thousands out of pocket to fix the problems, according to the complaint.
HYM has denied the allegations, filed a countersuit and blames Gunboat for the problems.
Also on the list was the G4 capsize in April and a recent photo boat collision on a magazine boat test in Annapolis, which Johnstone says has “thwarted sales of the series to date.”
“The investment was made,” Johnstone said. “The return is in the future.”
The third item that led to the Chapter 11 protection filing was the abandonment of Rainmaker by her owner and crew, which was “certainly not helpful to the new series,” Johnstone wrote. That boat remains afloat in the ocean, he said.
“The boat’s tending to itself, even though the crew jumped off, through one of the worst winters on record in the North Atlantic,” Johnstone said. One composite expert commented that he couldn’t think of any other structure that would have survived intact and afloat for 10 months.
Lastly, the ramp-up of production in North Carolina after the falling out with HYM took longer and cost more than expected, Johnstone said.
“Operationally we already have [turned things around]. It’s just going to take me sorting through the mess of things that have happened,” Johnstone told Trade Only this morning.
In the Facebook post, Johnstone said he was sure the situation would “be dissected” and that the company could have overcome one or two of the challenges, but not all four in a short period of time.
“They thought they could bury us, in my opinion,” he said. “And they’re going to find out we’re actually a bunch of seeds. We will come growing back with more motivation and conviction in our approach.”
Johnstone remained positive today about the company’s future, saying that a number of investors are interested in seeing it succeed. Boats are being built and the company is meeting its plan for operating the business and recovering, he said.
“Chapter 11 is a heck of a tool the U.S. government provides to preserve jobs and preserve companies that should be preserved,” Johnstone said. “We’re going to use the law to see things through.”
“The thing that keeps me up at night are vendors and customers that will be affected, but I think that getting these boats out and getting great products out is the single best way to recover,” he added. “I’ve been doing this 15 years, and I’ve been in this industry for 30. If you look at the economic impact of what has been created over the years, it’s a pretty small fraction of a percent, so I’m going to ask for forgiveness as best I can, and make good on it, and live another day to create more economic activity.”