Gunboat International, a manufacturer of luxury carbon fiber sailing catamarans, is headed to auction.
The motion in bankruptcy court comes after owner and founder Peter Johnstone, who is from a family of sailboat builders, filed for Chapter 11 restructuring in November.
Gunboat can entertain what is called a “stalking horse bidder,” according to court documents — a viable initial bid on the business that would seek to avoid low bids by other interested parties.
“The debtor seeks to sell the assets free and clear of all liens, claims, encumbrances, interests and any other rights,” said court documents filed in U.S. Bankruptcy Court in the Eastern District of North Carolina, where Gunboat is based.
Last month Johnstone told Trade Only that the company was poised to rebound.
Court documents said Gunboat had between 100 and 199 creditors and assets of $1 million to $10 million.
A list of the largest 20 creditors amounted to roughly $6,025,845 million in claims, and documents filed in December showed that unsecured claims against the company totaled $10,133,947.32.
Johnstone said in announcing the Chapter 11 restructuring that it had 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. Gunboat alleges in court documents that HYM never did some work and that the yard refused to pay warranty claims on other poorly constructed yachts.
Gunboat 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.
Court documents also said there had been cost overruns.
“The debtor began to experience financial problems as a result of cost overruns in the manufacture of its 55-foot series, with the costs for design and manufacture of the first yachts produced in this series exceeding the sale price for some of the yachts under construction,” documents said.
“While later yachts in the 55-foot series were profitable, the debtor was unable to recoup sufficient proceeds from the later 55-foot yachts to offset the earlier 55-foot models. This led to the termination of several contracts that were in various stages of production.”
Also on Johnstone’s list of troubles was a G4 capsize in April and a recent photo boat collision during a magazine boat test in Annapolis, which Johnstone said has “thwarted” sales of the series.
The third problem that he said led to the Chapter 11 filing was the abandonment of Rainmaker by her owner and crew, which was “certainly not helpful to the new series,” Johnstone said.