Hearing Delaying In Battle Over Beaufort County Boatbuilding Business

A temporary receiver remains in place while the hearing for a Beaufort County boatbuilding business has been delayed.

An official at the business court in Greensboro told WITN News the hearing scheduled for November 2 has been continued. The official reports it will most likely be rescheduled during the week of November 14.

The court action centers around mulitple companies and individuals involved in the Fountain plant in Beaufort County, where Donzi, Pro-Line and Fountain boats were made. First Capital, a lender, filed a complaint trying to secure more than $61 million.

WITN will keep you posted on the new date and any court action.

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A judge has appointed a temporary receiver in the case of a Beaufort County boatbuilding operation.

The plant in Chocowinity manufactured Fountain, Donzi and Pro-Line boats.

First Capital, a lender, filed a $61.04 million complaint in part asking for a temporary receiver to protect its collateral.

Special Superior Court Judge James Gale of Greensboro, who handles complex business cases, found Thursday that First Capital is entitled to "relief on an emergency basis." The court went on to say in its ruling that "the appointment of an interim receiver is in the public interest, particularly to the extent that it may allow for the resumption of business operations and the recall of employees."

The court named Ronald L. Glass and the firm of GlassRatner Advisory and Capital Group as a temporary receiver for all the borrower defendants, all assets of those defendants and all equity, capital stock and/or membership interests in all borrower defendants.

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.

The order means that GlassRatner, the receiver, is authorized "to take immediate possession of, hold and secure all capital stock and membership interests in the Borrower Defendants, together with all assests of the Borrower Defendants, including, without limitation, all real property, personal property and business records. Borrower Defendants, each of their respective officers, directors and representatives, and all other affiliates of Borrower Defendants, are hereby ordered immediately to surrender to the Receiver the possession, use, occupancy and control of the collateral."

The order calls for all keys, combinations of locks and passwords to be turned over to the receiver.

The court reports it considered less intrusive remedies than a receivership and invited the parties at the hearing to suggest alternatives but reports the parties did not have a viable alternative.

The judge then set a hearing on First Capital's motion for a continuing receiver. That is scheduled to begin at 2:00 p.m. on November 2.

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One of several clients named in a $61.04 million complaint over a Beaufort County boatbuilding operation is demanding a jury trial and has filed its answer to the complaint as well as cross claims.

Fountain Powerboats Inc. is one of more than a dozen defendants being sued by First Capital, a lending company that filed a complaint last week in an effort to collect $61.04 million and have the court appoint a receiver to the case.

Fountain Powerboats is denying nearly all the claims of First Capital. A judge in Greensboro who handles complex business cases is in charge of the case.

Fountain Powerboats also claims that another defendant, American Marine Holdings, is in default of the lease at the plant in Beaufort County, on Whichards Beach Road in Chocowinity. Fountain Powerboats alleges that American Marine Holdings owes Fountain Powerboats $6.4 million under the lease. That includes any past due as well as the $74,000 per month AMH agreed to pay in the lease agreement. Fountain Powerboats is also asking a judge to kick American Marine Holdings out of the plant because of a lease default.

Online records show Joseph Wortley of Florida, who is also named in First Capital’s complaint, as a principal in American Marine Holdings. Online records show Bill Gates of Florida as a principal in Fountain Powerboats. Both are listed online as principals in Liberty Associates, the company which reported recently it was no longer handling management duties for American Marine Holdings and that a Liberty affiliate had transferred its ownership interest to First Capital.

First Capital’s complaint alleged that substantially all the business operations of Fountain Powerboats and the rest of the borrower defendants and majority of their assets are located at the plant. In its court response, Fountain Powerboats denies that overall assertion but does agree that the defendant’s equipment and operations are located there.

In its answer filed with the court, Fountain Powerboats denies it is in default to First Capital, denies it has ceased operations at the Beaufort County plant and denies it pledged property and other assets to serve as collateral on the debt. Fountain Powerboats denies the management at the plant resigned and the employees were sent home on October 7.

To First Capital’s request that the court should appoint a receiver to assume control over the businesses and equity interest to preserve First Capital’s collateral, the Fountain Powerboats response simply said “denied.”

The judge has not yet ruled on the request for a receiver, which was discussed at an emergency hearing Thursday. WITN spoke with the court Tuesday afternoon. We’re told a ruling may be made by Friday.

The Fountain Powerboats response all stated that some of the complaints made by First Capital do not concern Fountain Powerboats, so they require no response.

Fountain Powerboats did respond that it is in agreement with one point: that Fountain Powerboats is a corporation organized under the laws of the State of North Carolina, and that the principal place of business and the majority of its assets are based at the Chocowinity plant.

The Fountain Powerboats response denies the court “is a court of general jurisdiction, and, as such, has jurisdiction over the subject matter of this action” and that the court has jurisdiction to appoint a receiver.

First Capital stated in its complaint that it and the borrower defendants (which includes Fountain Powerboats) are “engaged in a lending relationship that began in 2007.” Fountain Powerboats denies that claim.

The Fountain Powerboats response also denied First Capital’s claim that a “true and correct copy of the Fountain Loan Agreement is attached hereto as exhibit 4.” Fountain Powerboats also denies the claim that First Capital has a “security interest in the tangible assets” and the “outstanding capital stock and membership interests” of the borrower defendants.

Fountain Powerboats continued to deny it is in default throughout its response, as well as denying claims about the amount of money involved and that the entire facility has been shut down. It denies claims that a receiver is needed.

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A Beaufort County boatbuilder 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 boatbuilding 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 boatbuilder 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.

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