A hearing is set for Monday morning on Fountain Powerboats' motion asking to postpone the scheduled sale of its assets, though a California-based investment group is opposing that motion.
An auction had been scheduled to take place next week.
Fountain filed Aug. 24 for Chapter 11 bankruptcy protection. In its filing the company asked the court for permission to sell "substantially all" of its tangible and intangible assets.
However, in court documents filed this week in U.S. Bankruptcy Court in the Eastern District of North Carolina, Fountain says that on Sept. 17, creditor Regions Bank sold its note to FB Investments LLC. FB Investments is a corporation formed by the principals of The Oxford Investment Group for the purpose of acquiring the Regions Bank note, according to Selwyn Isakow, chairman of The Oxford Investment Group.
FB Investments is interested in acquiring Fountain's assets, according to court documents, saying FB intends to "credit bid the Region Bank indebtedness at the auction; however, one effect of the assignment of the Regions Bank indebtedness to a potential bidder has been to chill the bidding process and discourage other potential bidders."
Fountain reported in the last few days that the company received an alternative proposal from Liberty Associates in which Liberty would provide financing that would allow Fountain to continue operations and fund a proposed agreed plan of reorganization. Liberty, as part of the deal, would keep Reggie Fountain on board as president of the company.
"The debtors believe that this alternative proposal from Liberty would appear to offer other creditors in this proceeding at least some opportunity to receive a distribution on allowed claims and thus may be in the best interest of the debtors' estate as compared to the proposed sale," Fountain said in court documents.
FB Investments, however, filed papers Thursday asking the court to reject Fountain's motion to postpone the auction, calling it a last attempt of "founder Reggie Fountain to try and retain control of the company he stewarded into insolvency."
"On Sept. 28, 2009, Reggie Fountain states he did not want to work with FB Investments if it purchased the company; two days later, debtors seek to abort the sale for the 'best interests of the creditors,' " FB noted in court documents.
FB also asserts Fountain has not provided a basis for canceling the sale process and that the benefits to canceling are "highly speculative and extremely unlikely to occur; the harm to FB Investments is real and substantial."
"[The] bare bones, highly unusual ex parte motion seems to all appearances to have been triggered by Reggie Fountain's attempts to secure his own personal advancement, without a credible chance of benefitting the creditors," FB said in court papers.
In related news, a Committee of Unsecured Creditors was appointed. Representatives from Composites One, Textron Financial Corp., Speed Boats of Texas (dba Legend Marine Group), and Dr. Jon C. Fisher were named to the committee.
— Beth Rosenberg