Unsecured creditors want Genmar auction results thrown out - Trade Only Today

Unsecured creditors want Genmar auction results thrown out

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The Official Committee of Unsecured Creditors in the Genmar bankruptcy case is asking a judge to set aside the results of last week's auction or, alternatively, deny approval of Irwin 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 prepetition unsecured creditors as a group.

There are an estimated 4,000 unsecured creditors that are owed more than $100 million, according to court documents.

On Friday 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, and MCBC Hydra Boats, a subsidiary of Wayzata Investment Partners, purchased Hydra-Sports for $1 million.

A court hearing to approve the sale is set for Wednesday, with the closing set for Jan. 20.

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.

J&D Acquisitions is a company founded by Jacobs and billionaire businessman John Paul DeJoria.

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.

"The committee objects to Jacobs, an insider, or his non-debtor affiliates using any of their assets to reacquire portions of the debtor's businesses while leaving over 4,000 unsecured creditors, owed over $100 million, unpaid," the committee said in court documents.

"The debtors' selection of the J&D bid rather than the GYA bid, solely on the basis that the GYA bid matched, rather than exceeded, the J&D bid, is an insufficient reason to approve the J&D prevailing bid in the face of other considerations," the committee said. "Both the interest of the unsecured creditors and the goal of maximizing the value of the debtors' estate dictate that the J&D prevailing bid should not be approved."

The committee also said it appears GYA is likely to be better capitalized and a more reliable customer for the unsecured creditors to do business with than Jacobs or his affiliates.

On its Web site, the committee says a representative of GYA "will continue negotiations to present the winning bid" at Wednesday's court hearing.

Jacobs could not immediately be reached for comment.

- Beth Rosenberg

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