Just weeks after filing a Chapter 11 bankruptcy petition, Premier Marine, the maker of Premier Pontoons, says its reorganization is on track.
The need for Chapter 11 protection is attributed in court documents to the costs of a 2011 acquisition that worked out badly.
“With regard to the Chapter 11 filing we were granted the petition on June 22 to utilize the $2.5 million capital line and have been very busy buying the necessary parts to fulfill orders,” says Premier president Lori Melbostad.
On July 11 the company received an official agreement, with regard to its operating budget, from the creditor committee, the company’s lender and its primary bank to continue using those funds through the end of October, Melbostad says.
“The timing of the October approval coincides with our next steps in the reorganization,” she says.
The company expects to confirm a reorganization plan with the support of its creditors between Nov. 1 and Dec. 31.
“Having this budget approval is very positive news and I am happy to report we are improving our numbers daily and we anticipate normal production levels quickly,” Melbostad says. “We have a solid backlog and are busy planning our 2018 dealer meeting, to be held in late August.”
The company filed for Chapter 11 protection on June 19 in U.S. Bankruptcy Court in Minnesota, listing estimated liabilities of $10 million to $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 say.
The Palm Beach and Weeres brands were discontinued at the beginning of this year, the documents say.
The acquisition losses left Premier with “inadequate cash to operate efficiently and profitably, as it had for more than 20 years,” the documents say.
Premier immediately filed a motion asking that it be allowed to continue honoring warranty claims and 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 says. “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 say.
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 say.
“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 say.
Premier builds and sells about 2,000 pontoons a year, having generated $58,405,559 and $59,584,693 in net sales for the years 2016 and 2015. It has 150 full-time employees and regularly employs as many as 20 part-time and seasonal workers.
This article originally appeared in the August 2017 issue.