Fountain Powerboat Industries' reorganization plan divides the claims against the company into nine classes and calls for the "allowed unsecured claims" to receive a share of $1 million in full satisfaction of the claims.
The aggregate amount of the claims is an estimated $3.39 million, according to court documents, so a cash distribution of $1 million among all unsecured claims would provide a payment to claim holders within a range of 5 to 18 percent, Fountain estimates in its plan.
This stipulation, however, depends on whether FB Investments and Baja will have unsecured claims allowed by the court. The potential unsecured claims for these entities are $11.67 million for FB and $4.35 million for Baja. The plan, however, allows for scenarios under which FB and Baja's potential unsecured claims could be avoided.
FB is listed in its own class of claims, as is the corporation formed by the principals of Oxford Investment Group for the purpose of acquiring the Regions Bank note on Fountain.
"While the proposed plan offers unsecured creditors less than full payment, the debtors firmly believe that such a distribution will be substantially greater than could be obtained through an orderly or forced liquidation of the debtors and represents the most that can be reasonably expected as the debtors exit Chapter 11," Fountain said in its disclosure statement of the reorganization plan.
"The plan contemplates that the best opportunities for creditors lies in (i) continued operation of the business, (ii) modification and restructuring of the existing secured debt, and (iii) satisfaction of the unsecured claims by means of one cash payment from a capital advance funded by the party acquiring the new equity interests in the reorganized debtors," the disclosure statement reads.
The reorganized Fountain would continue to operate as a boatbuilder, with funding from Liberty Associates used as the primary means to put the plan in place and provide payment to the holders of allowed claims.
"The debtors have instituted a number of measures so as to improve profitability and reduce or eliminate, to the greatest extent possible, any recurrence of the financial crisis experienced during the recent economic downturn," Fountain said.
The plan also calls for Fountain founder Reggie Fountain to be president of the reorganized company, Irving Smith to serve as chief financial officers and Carol Price to serve as secretary-treasurer. William Gates would be the sole director.
Fountain would initially be paid $260,000 annually; Smith would receive $150,000 annually and Price would receive $104,000 annually. No compensation would be provided for directors.
For more on this plan and a full update on Fountain, see the January issue of Soundings Trade Only.
— Beth Rosenberg