WATERDOG
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Posted: Oct. 14 2011,3:30 pm |
Post # 1 |
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COMPLAINT: Fountain Abandoned, Financial Mismanagement
A Beaufort County boat building plant has been abandoned, according to a complaint filed in court. The $61.04 million complaint alleges financial mismanagement, loan defaults, insider dealings and more against the current owners and corporate managers of the Fountain plant.
Posted: 9:49 AM Oct 14, 2011
A Beaufort County boat builder is closed, according to a complaint filed in court.
According to the complaint, filed by a lender this week, the plant in Chocowinity that is the home to Fountain powerboats, Donzi Marine and Pro-Line boats has been abandoned.
The complaint reports that the employees were sent home October 7 with instructions not to return until further notice, and that no one is managing operations.
WITN called the plant Friday morning and was told there was no one available today to speak with us. We were told to call back tomorrow.
The complaint was filed by First Capital. An emergency hearing was held Thursday.
First Capital's complaint is asking the court to enforce its rights as a secured lender of some of the defendants, to the tune of $61.04 million. First Capital also asked the judge to appoint a receiver to preserve the value of its collateral.
The case is being handled by Judge James Gale in Greensboro. Gale is a Special Superior Court Judge for Complex Business Cases.
WITN talked with the court in Greensboro Friday morning. We are told no ruling has yet been made following Thursday's hearing, and that a decision may be announced at the beginning of next week.
Named in the complaint are a myriad of companies that have been involved in the boat building company based in Beaufort County.
Some of the "borrower" defendants, as they are called, include American Marine Holdings, Donzi Marine, AMH Government Services, Pro-Line boats, Fountain Powerboats and others.
Some of the other defendants, identified as "pledgor" defendants, include Liberty Acquisition FPB, Joseph Wortley and others.
We are also working to contact attorneys in the court case, as well as the defendants.
WITN spoke with attorney Randy James of Winston-Salem. James says he represents most of the Fountain defendants named in the complaint.
James said there is clearly a large disagreement with the First Capital folks.
"They are trying to take over ownership of the facility and have made serious allegations," James told WITN.
James said First Capital's actions have made the employees "the victims."
James said while they await the ruling on the Thursday's interim hearing, a full hearing with evidence is a few weeks or even a month away. James claims his clients have not been served and has filed a motion to dismiss based on that assertion.
As WITN reported last week, Liberty Associates announced October 7 that it had stopped providing management services to American Marine Holdings and had transferred its nominee ownership interest to First Capital.
First Capital's complaint alleges that same day, employees at the Chocowinity plant were sent home and that Johnny Walker, the production manager under American Marine Holdings, shut down the plant and resigned.
As of last report, in November 2010, the plant reportedly employed 75 people.
According to the American Marine Holdings website Friday morning, John E. Walker was "appointed president of American Marine Holdings which consists of Pro-Line Boats and Donzi Marine" in 2010.
According to the Liberty Associates website Friday morning, the corporate management includes Joseph Wortley, Bill Gates, Johnny Walker and others.
First Capital claims in its complaint that the defendants have abandoned their business, which is violation of their obligations to First Capital.
First Capital also alleges the defendants defaulted on loan agreements, failed to maintain loan balances within the maximum line of credit amount, violated financial convenants and failed to provide agreed financial and collateral reporting.
First Capital also claims American Marine Holdings, in the first six months of 2011, paid approximately $205,000 to Aimedia Solutions. First Capital claims Aimedia Solutions is controlled by Bill Gates, who as outlined above is involved in Liberty Associates, and that the payment was "purportedly" for management services.
First Capital claims that payment is in violation of their loan agreement with American Marine. The complaint reads "such insider dealings, if allowed to continue, will further dilute FCC's (First Capital's) collateral."
First Capital also claims funds were misappropriated, as were assets. One example given in the complaint is $150,000 from the sale of four boats in February 2011. First Capital claims the defendants never handed over the money as they were obligated to do.
First Capital also claims the borrower defendants received nearly $500,000 from service activities and more than $300,000 from parts sales, and that the borrower defendants failed to give these funds to First Capital as required.
First Capital maintains the borrower defendants are insolvent or in danger of insolvency.
We will continue to monitor the case, and we'll update you on any court ruling as soon as it becomes available.
Reggie Fountain founded Fountain Powerboats over three decades ago and gained a worldwide reputation for the fast, sleek vessels.
The rough economy in recent years took its toll on the boat builder and Fountain went into bankruptcy. It emerged under reorganization plans with Liberty Associates taking ownership in 2010. Fountain was retained as president and CEO. That relationship did not work out, and Fountain resigned in December 2010.
"There were differences from the beginning in engineering, manufacturing, the sales, the marketing and the financing of the operation too," Fountain told WITN in December 2010. "I am resigning over a difference of opinion and philosophy with the new owners."
Following Fountain's resignation, Liberty Associates CEO Bill Gates named John Walker as the new President and CEO of Fountain Powerboats.
According to the First Capital complaint filed this week, Reggie Fountain is currently involved in legal action in which he has raised issues related to the acquisition of Fountain by its corporate parents as a result of Fountain's bankruptcy.
In November 2010, Fountain Powerboats reported it would expand and create 411 jobs by adding the two Florida boat lines, Donzi and Pro-Line, to the Chocowinity plant. The company was given a $150,000 grant from the One North Carolina Fund.
Edited by WATERDOG on Oct. 14 2011,3:32 pm
"Damn you sure know how to fock things up."-GFR
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