A sale approval hearing for the assets of Genmar Holdings was scheduled to begin at 10:30 a.m. this morning in U.S. bankruptcy court in Minneapolis.
Last week, after an auction lasting two days, it was announced that California-based Platinum Equity had purchased the majority of Genmar Holdings' assets for $70 million. Carver and Marquis were purchased for $6.05 million by J&D Acquisitions. MCBC Hydra Boats, a subsidiary of Wayzata Investment Partners, purchased Hydra-Sports for $1 million.
J&D Acquisitions is a company founded by Genmar founder Irwin Jacobs and billionaire businessman John Paul DeJoria. Wayzata Investment Partners also owns MasterCraft Boat Co.
"Based on the debtors' evaluation of the bids submitted and the results of the auction, the debtors have determined that the bids submitted by the following 'prevailing bidders' are the highest and best bids submitted and respectfully request that the court approve them as the prevailing bidders," Genmar said in a report on the auction filed with the court.
However, the Official Committee of Unsecured Creditors is asking the judge to set aside the results of last week's auction or, alternatively, deny approval of Jacobs' bid for the Carver and Marquis lines.
The committee says it appears the aggregate amount of the prevailing bids will not satisfy the secured claims, the Chapter 11 administrative expense claims and will provide nothing for the pre-petition unsecured creditors as a group.
There are an estimated 4,000 unsecured creditors that are owed more than $100 million, according to court documents.
The committee also objects to the decision to award J&D Acquisitions the winning bid for the yacht group brands and the facilities in Pulaski, Wis., over an identical bid made by Genmar Yacht Acquisition, which the committee said is an affiliate of Patriarch Partners LLC.
If the J&D bid is approved, it would divert Jacobs' assets to the secured creditors, making those assets unavailable to satisfy the avoidance causes of action that will benefit the unsecured creditors, the committee said.
GYA also filed its own objection in the case and offered an enhancement to its bid saying that if any of the five GE-financed Marquis yachts residing in dealer field inventory are repossessed in the future, it will purchase those yachts for the full amount of the applicable financing.
J&D filed a response the objections, saying, "The auction should be approved if it produced a fair and reasonable price, even if it does not generate enough cash to pay all creditors," adding there is no legal basis for the unsecured creditors committee's objection to the approval of J&D's bid.
"The committee's objection is nothing more than anger directed at an individual owner of a bankrupt debtor who is not legally responsible to pay the debtors' debts to unsecured creditors, who may unfortunately go unpaid," J&D said in court papers.
"Genmar went bankrupt because of economic conditions," the document continued. "Mr. Jacobs and other entrepreneurs cannot change that, but they can attempt to rebuild the businesses that have been lost."
- Beth Rosenberg