Premier Marine, maker of Premier Pontoons, filed for Chapter 11 restructuring as a result of a “failed acquisition of another pontoon manufacturer in 2011,” said a motion filed Tuesday in U.S. Bankruptcy Court in Minnesota.
The company listed in a filing on Monday estimated liabilities between $10 million and $50 million owed to between 200 and 999 creditors, including more than $6.5 million owed to American Bank of the North.
“The debtor suffered substantial losses in 2014, 2015 and 2016 attributable to the purchase and manufacture of the Palm Beach and Weeres brands in New Ulm, Minn., termination of manufacturing in New Ulm and the transition to manufacturing of the brands at the debtor’s Wyoming [Minn.] facilities,” court documents obtained by Trade Only Today said.
“The Palm Beach and Weeres brands were discontinued in January 2017,” the documents said.
The acquisition losses left Premier with “inadequate cash to operate efficiently and profitably, as it had for more than 20 years,” the documents said.
Premier also filed a motion today asking that it be allowed to continue honoring warranty claims, as well as a motion requesting that it continue compensating employees.
"Preserving the 'business as usual' atmosphere and avoiding the unnecessary distractions that would inevitably be associated with any substantial disruption in the debtor’s dealer relationships will facilitate the debtor's reorganization efforts," the motion said. "Maintaining the debtor’s customers is both essential and in the best interests of the estate and creditors."
Premier Marine, formed in 1992 by Robert Menne and Eugene Hallberg, sells its pontoons through a network of 197 dealers in the United States and Canada.
The Menne family controls 72.8 percent of the debtor equity; Hallberg controls the remaining 27.2 percent and is the company’s landlord.
In response to lender and vendor pressures and a growing backlog of dealer orders, the Menne family solicited prospective buyers, equity partners and subordinate debt lenders, court documents said.
The company secured a $2.5 million lending commitment necessary and sufficient to resume normal production, but filed for Chapter 11 restructuring after an eviction by Hallberg for nonpayment of rent, documents said.
“The Chapter 11 is necessary to attract a new equity partner, reject the Hallberg leases, consolidate manufacturing under a single roof and reorganize the business for the mutual benefit of the debtor creditors, employees and dealer network,” the documents said.
Wells Fargo Commercial Distribution Finance LLC terminated Premier’s dealer floorplan financing program, effective Jan. 31, the documents said. Premier and Northpoint Commercial Finance LLC have a repurchase agreement that is still intact.
“The debtor’s dealer network regularly uses the Northpoint floorplan program to finance the purchase of debtor pontoons, particularly new model year purchases which first become available for purchase in August of each year,” the court documents said.
“Without an ongoing floorplan program dealers would be forced to pay cash on delivery or find an independent financing source,” the court documents said. “Termination of the Northpoint floorplan would likely disrupt the purchase cycle and reduce the number of pontoons sold by the debtor.”
The company says it made that point so the court would approve certain conditions that might otherwise not have been allowed.
Premier manufactures and sells about 2,000 pontoons a year, having generated $58,405,559 and $59,584,693 in net sales for the years that ended on Dec. 31, 2016, and 2015. It has 150 full-time employees and regularly employs as many as 20 part-time and seasonal employees.
On Tuesday the company requested authority for the use of cash collateral through July 11 and to grant replacement liens to keep business operating as usual. The court will hear that motion on Thursday.