North Carolina-based Gunboat International Ltd. will be sold at auction as a single lot to bidders, according to an amended motion filed in bankruptcy court on Tuesday.
The company also announced this week that founder and president Peter Johnstone stepped down. Barry Carroll, who was serving as COO, was named the new president. Papers filed today in U.S. Bankruptcy Court in the Eastern District of North Carolina requested compensation throughout the process for Carroll in his new role.
A company spokesman cited “ongoing corporate restructuring” as the reason for the change.
“Mr. Johnstone felt the change would facilitate a successful restructuring and help ensure the continuation of the iconic brand and its team of skilled boatbuilders,” Gunboat said in a statement.
“The Gunboat family owes a debt of gratitude to Peter,” Carroll said. “Without his creative flair, knowledge, and energy, Gunboat would not exist.”
The company confirmed to Trade Only Today that Gunboat continues to employ 60 people and is currently constructing six boats. A custom Gunboat 78 is nearing completion and five carbon fiber Gunboat 55 sailing cats are in the process.
“Work continues and no reduction to the boatbuilding team is anticipated,” the company said in a statement.
Meanwhile, an amended sale motion filed on Tuesday sought authority, among other things, to establish a maximum breakup fee that would be paid to any stalking horse bidder designated. Stalking horse is the term for a viable bidder that is designated to prevent absurdly low offers.
The motion also proposed that the breakup fee the company is allowed to pay be kept confidential to allow flexibility to attempt to negotiate a lower breakup fee with potential bidders. All bid packages need to be received by the bidder and court by March 29.
Gunboat filed for Chapter 11 restructuring in November, with Johnstone citing a “perfect storm of adverse business circumstances, mistakes and disputes.” Johnstone was later upbeat about the situation, telling Trade Only at the time that the company was poised to rebound.
A list of the largest 20 creditors amounted to roughly $6,025,845 million in claims, though there were more than 100 claims in total. Assets were listed at $1.1 million, and total liabilities were about $15.6 million, according to court documents.
Leading to the bankruptcy filing were several challenges, including a 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. It also said the company launched a knock-off brand. HYM has denied the allegations, filed a countersuit and blamed Gunboat for the problems.
Court documents also showed there had been cost overruns with the 55-foot series that 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.
On his Facebook page Monday, Johnstone posted the Trade Only Today story announcing the pending auction with the message: “Spread the word. Gunboat's assets to be sold. Would love to see the brand get into the right hands for the next chapter.”