By By GREG KATSKI
Community Editor
CHOCOWINITY — Fountain Powerboat Industries Inc., parent company of Fountain Powerboats, is trying to restructure its Chapter 11 bankruptcy protection, according to its president and chief executive officer, Reggie Fountain.
The new bankruptcy shield would allow Fountain to reorganize and retain its assets, as opposed to selling its assets at an auction set for Monday, an auction scheduled by the U.S. Bankruptcy Court in the Eastern District of North Carolina.
A deal is pending between Fountain and Liberty Investments that would make the investment group majority shareholders in the company founded by Fountain. Liberty would help finance the reorganization of the company and help the company pay off its creditors. Fountain said he would be retained as the company’s president and CEO under the pending deal.
Fountain said he is lobbying the bankruptcy court for Chapter 11 reorganization to ensure the future success of his company and its “family” of employees.
“One of the most basic and important things in this whole process is to try to save the jobs of all our employees,” he said Monday. “It’s about taking care of the family of employees that has been here for 30 years.”
The company has cut its work force from more than 400 workers to less than 100 employees over the past several years. After filing for bankruptcy protection in late August, Fountain said the work force at the company’s 65-acre plant on the south side of the Pamlico River would be reduced to 10 or 12 workers.
Fountain said he has been looking for a chief investor in the company since filing for bankruptcy protection, and he feels confident about Liberty because of the investment group’s track record in the marine industry. Earlier in the year, Liberty became majority shareholders in two fledgling powerboat companies — Donzi and Pro-Line Boats. Fountain described the group of investors as “avid boat lovers.”
Media reports surfaced last week that Hustler Speedboats was close to acquiring a bank note from Fountain’s largest creditor, Regions Bank. Fountain’s debt with Regions Bank is about $19.6 million. Shortly thereafter, Hustler issued a statement on its Facebook page that said the bank note had been purchased by the Oxford Investment Group.
Fountain said the bank note had been purchased by Oxford, which has invested in more than 70 businesses since being founded in 1985, for some $6.5 million. Oxford is based in La Jolla, Calif.
“We didn’t really want the bank to sell the note, but they did,” Fountain said.
Fountain said he is not comfortable with Oxford, which has little experience in the marine industry, taking over the company’s assets.
“Oxford was trying to circumvent the court process of a fair auction that might have put in enough money for me to take care of some unsecured creditors,” Fountain said. “The court probably won’t look in favor of that.”
Fountain said he expects the bankruptcy court to rule in favor of restructuring the company’s Chapter 11 protection now that it has a lead investor in mind.
On Monday afternoon, Fountain said the deal with Liberty was “being done as we speak.”
If Liberty becomes the company’s majority shareholder, Oxford will be treated as a secure creditor and the company’s bank note will be paid off over time, according to Fountain.
“We think Liberty is a much more reliable partner to see that we protect the jobs of all of our employees down the road, which is the primary goal for us,” Fountain said.