Sides continue Fountain battle in court

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A flurry of documents were filed Monday regarding Fountain Powerboat Industries' Chapter 11 bankruptcy case, including those confirming the company filed a reorganization plan with the court.

The reorganization plan was not immediately available, however, and Fountain's attorneys did not immediately respond to a request for comment.

Among the filings were objections by Fountain and Liberty Associates, which is working with Fountain on a reorganization of the company, to FB Investments' motion to terminate the period during which Fountain has the exclusive rights to file a reorganization plan.

Fountain, which said in court papers it filed its plan Nov. 20, noted it had until Dec. 22 to file the documents.

Fountain noted that FB Investments, "threatens to block confirmation of the debtors' proposed plan through extensive litigation which will deplete any funds which might go to unsecured creditors, although the proposed plan in fact provides for a guaranteed payment for the benefit of all unsecured creditors."

FB Investments is the corporation formed by the principals of Oxford Investment Group for the purpose of acquiring the Regions Bank note on Fountain.

Liberty, in its objection, noted that Congress intended for a Chapter 11 case to give a debtor the "unqualified opportunity to negotiate a settlement and propose a plan of reorganization without interference from creditors and other interests."

FB Investments, which filed its motion earlier this month, said if the court grants its request, "FB could file a competing plan, allowing the creditors of this case to choose whether the debtor's plan, FB's plan or any other interested party's plan represents the best hope for the future of this enterprise ... FB believes that it will prevail in an environment where the interested parties compete on a level playing field."

Fountain, Liberty and the Committee of Unsecured Creditors also filed objections to FB Investment's motion for a relief of stay, which it filed earlier this month.

In its objection, Fountain said FB Investments asserts that Fountain will operate at a loss and anticipated losses will impair the "collateral of FB Investments," but Fountain is "not aware of any basis for this assertion."

"To the extent, if any, that the debtors suffer operational losses during the pendency of this proceeding, the post-petition financing provided by Liberty will fund such losses without detrimental effect on FB Investments or its collateral," Fountain said in court papers.

The Committee of Unsecured Creditors noted, "Clearly FB has filed the stay motion and the motion to terminate exclusivity in order to further its goal of purchasing the debtors for a value that may be to the detriment of other creditors in the cases."

In other news:

* The court approved FB Investment's request to shorten the notice required of its motion and request for a separate hearing to approve disclosure statements in advance of any hearing on confirmation of plans of reorganization with responses due on or before Nov. 30 and a hearing on the motion set for Dec. 1.

* The court approved an order allowing a "2004 examination" by FB regarding Liberty's presentation to Fountain's employees and any other communications between Liberty and Fountain's employees. That examination is set for Dec. 4.

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