Chapter 11 bankruptcy petitions filed by a receiver on behalf of Fountain and related entities have been dismissed by Judge Erik Kimball in the bankruptcy court of the Southern District of Florida.
The order was in response to a motion by Joseph Wortley to dismiss the cases. Wortley is at least a partial owner of Fountain and other related entities. A U.S. trustee had also filed a motion to dismiss the bankruptcy case or, in the alternative, appoint a Chapter 11 trustee, but that motion was denied as moot due to this ruling.
At issue was whether the receiver, Ronald Glass, had the authority to file the bankruptcy petitions. The filing was made Jan. 18 and marked the second time in less than three years that Fountain had filed for bankruptcy protection. At the time of the January filing the company listed more than $53 million in liabilities and less than $50,000 in assets, according to court documents.
In his order, dated March 23, Kimball wrote, “… the court finds that Ronald Glass was not duly authorized to file the petitions commencing these cases.”
Glass told Trade Only Today that he had no comment on the judge’s order.
Entities involved in the dismissal include: American Marine Holdings LLC; Donzi Marine Inc.; AMH Government Services Inc.; Baja Marine Inc.; Fountain Dealers’ Factory Super Store Inc.; Fountain
Powerboat Industries Inc.; Fountain Powerboats Inc.; Fountain Powerboats LLC; Palmetto Park Financial LLC; and Pro-Line Boats LLC.
Following this order, an attorney for Fountain Powerboats Inc. and Baja Marine Inc. filed a motion in North Carolina to dissolve the temporary receivership.
A North Carolina Business Court judge appointed Glass a temporary receiver last October in First Capital's case against Fountain Powerboats and other defendants. First Capital is seeking $61.04 million in damages from Fountain Powerboats and other entities for the "borrower defendants' " breach of loan agreements, according to documents filed in the North Carolina court.
Attorney Randolph James noted in his recent motion that Glass said in depositions that he filed the Chapter 11 petitions because “FCC informed Glass verbally that they (FCC) would not continue to fund the entities unless they were in Chapter 11. Ronald Glass further testified he knew at the time he filed bankruptcy petitions that all of the parties were waiting for Judge Gale to rule on a number of issues.
“When asked if Ronald Glass knew the filing of the petitions would prevent a written decision by Judge Gale, Ronald Glass stated, ‘I didn’t know that, but I’m not surprised by it.’,” James continued.
“Undersigned counsel has consistently maintained before this court that Ronald Glass has an inherent conflict of interest in acting as a receiver for the manufacturing, parts and service companies which occupy the building owned by the movant Fountain Powerboats Inc. and financed by an FCC mortgage,” he added. “Ronald Glass, while acknowledging his fiduciary duties, has failed to discharge those duties fairly, evenly and uniformly.”
The motion adds that Fountain Powerboats Inc. is prepared to immediately resume building Baja boats and employ 25 to 30 people in Washington, N.C., through its parts and service division as soon as the court discharges Glass as the temporary receiver for Fountain Powerboats and Baja Marine.
James also said FCC “intended to liquidate the defendants since the begining of this action” despite its statements in prior hearings that it intended to start production and take finished boats to the Fort Lauderdale International Boat Show.
“The intention to liquidate these companies was confirmed by Ronald Glass in his deposition testimony,” James said in his motion.
The entities asking for the dissolution of the receiver’s authority include: Fountain Powerboat Industries Inc.; Fountain Powerboats Inc.; Fountain Dealers’ Factory Super Store Inc.; and Baja Marine Inc.
No mention was made of Donzi or Pro-Line, and James did not immediately return a request for comment.
According to previous bankruptcy court filings, the ownership of Fountain, and its related entities, breaks down like this:
• Debtor American Marine Holdings LLC is the parent corporation, owning 100 percent of Donzi Marine LLC; AMH Government Services LLC; Pro-Line Boats LLC; and Fountain Powerboats LLC. AMH is owned by 50509 Marine LLC. The Wortley American Marine Trust is a 20 percent owner and 50509 Marine Corp. is an 80 percent owner of 50509 Marine LLC. In turn, The Wortley 50509 Marine Corp. Trust owns all of the interests of 50509 Marine Corp.
• Liberty Acquisitions FPB LLC, a non-debtor entity, is the parent company, owning 100 percent of the following debtor entities: Fountain Powerboat Industries Inc.; Fountain Powerboats Inc.; Fountain Dealers Factory Super Store Inc.; and Baja By Fountain Inc. Liberty Associates LC owns all of the interests of Liberty Acquisitions FPB LLC. Joseph Wortley owns 99 percent and Bill Gates owns 1 percent of Liberty Associates LC.
• Wortley owns 100 percent of Palmetto Park Financial LLC.
- Beth Rosenberg