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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Comments are posted from viewers like you and do not always reflect the views of this station.
  • by screwed Location: screwville on Nov 1, 2011 at 08:00 AM
    I'll be shocked if fountain opens back up before the new year...who cares about christmas for the little people like us...not them.
  • by dave Location: ENC on Oct 31, 2011 at 03:49 PM
    Come on WITN......any updates??? it's been 10 days since last one.
  • by alex Location: Northern Chesapeak Bay on Oct 30, 2011 at 04:16 AM
    Hello folks, been reading all you posts. I own a 38 express cruiser. THE FINEST boat in it's class. Did alot of research and compared alot of boats. I met Reggie at the Atlantic City in water boat show a few years ago. He didn't know me from the man in the moon but spent two hours talking to me about his boats. The man IS Fountain Powerboats. Everyone loses when the "money men" take over a company believing they can consolidate a company and make it run better than the man that created it. I bought my boat because of Reggie. My 2003 38 express cruiser is quality, performance engineering at it's best. Bring Reggie back and get rid of all the money clowns! Everyone that I have spoken with at Fountain that has been there before this legal mess started had Fountain in their blood. Knowledgeable, dedicated individuals who built GREAT boats. Hang in there and hopefully you can get back to work and do what you do best!
  • by ME Location: Bath NC on Oct 29, 2011 at 04:26 AM
    Thats what you get when a company starts to cut corners....you get CRAP
  • by choco boy Location: nc on Oct 26, 2011 at 05:50 AM
    I here that the bankers and lawers have been at fountain this week,Is there any news on when we will be going back to work.
  • by Jack Location: South Carolina on Oct 24, 2011 at 04:41 PM
    Well the way my friend was treated, when he purchased a NEW fountian 35 last year they should be out of business. Boat was dirty and nasty,gelcoat cracks, paint you could see thru. Then in 24 hrs of use it cracked gelcoat eveywhere! Slider to cabin always stuck and wouldn't close or open. Junk! They got what they deserve!
  • by Co Worker Location: ENC on Oct 22, 2011 at 10:40 AM
    These companies need to be seperated again and ran as before...competetors. It was a horrible idea to ever build Fountain and Donzi together, you have die haard Fountain Fans & die hard Donzi Fans, you have people who know how to build a Donzi (the right way)in Florida and people who know how to build Fountains ib NC. Both groups are hard working people who love (loved) what they did and had a passion for doing it and it showed in the end product. Those of you who have worked recently for Fountain know that the quality of not only the Fountains, but ALL boats built here went to crap, I for one want to see things improve.
  • by Shine Location: NE NC on Oct 22, 2011 at 04:47 AM
    The "Receiver" will do nothing but charge a $1,000.0 a day if they are lucky and suck the company dry ---- The article refers to "captial stock" I just wonder who is holding the "preferred stock". There is a difference.
    • reply
      by Truth on Oct 22, 2011 at 01:00 PM in reply to Shine
      Slight misunderstanding: "Capital Stock" refers to the aggregate totals of the "Common" and "Preferred" stock, so, is simply a reference to all "shares." (as I understand it, anyway).
  • by Shine Location: NE NC on Oct 22, 2011 at 04:35 AM
    "Does anyone think 150 - 300,000 dollar boats will survive this economy?" Anonmous------- people that buy those boats don't live in your or my economy.
    • reply
      by Truth on Oct 22, 2011 at 01:01 PM in reply to Shine
      Heh... where's the "LIKE" button for that comment! lol Though not a steadfast rule, that is certainly the case more often than not.
  • by P on Oct 22, 2011 at 03:42 AM
    All the gold chains around Reggies neck could be sold for scrap and help pay the bills!
    • reply
      by Anonymous on Oct 22, 2011 at 06:07 AM in reply to P
      That is sooooo cheesy. This guy could be a cartoon character. What does that say about his worshipers and wannabes?
  • by Lubba Location: where are you on Oct 14, 2011 at 07:53 AM
    Well lets be fair......was the governor at the closing party.......Oh......No she was not, she only shows herself when a new place opens. We are closing 3-5 buisnesses to every one that opens........I know...I know....It's not her fault. I bet if they start building soloar powered boats they can get a 500 million dollar loan to reopen it......who cares if it's not gonna work. Heck, even the transpark may build a 4 lane highway all the way there.
    • reply
      by rick on Oct 14, 2011 at 10:13 AM in reply to Lubba
      Once the Republicans gain complete control of Washington in 2012, we will witness the second coming of Jesus Christ, and all suffering and sin will end.
      • reply
        by Lubba on Oct 14, 2011 at 11:19 AM in reply to rick
        As long as repub's or Democrats are in office we will suffer the results of greed and sin......go independent
  • by vote on Oct 14, 2011 at 07:51 AM
    really vote for change this timeeeeeeee
  • by Former Fountain Employee Location: Washington NC on Oct 14, 2011 at 07:48 AM
    At least Reggie cared about the factory & his employees. He NEVER just shut down the plant & walked out! Come on Reggie, Little R & Wyatt jump back in and show them how to get it right. I would sign back up to work for you guys ANYTIME!!!
    • reply
      by Do you know? on Oct 14, 2011 at 08:26 AM in reply to Former Fountain Employee
      The allegations imply that the guys from Liberty were super shady. As a former employee, can you confirm or deny this?
    • reply
      by Another Former Fountain Employee on Oct 22, 2011 at 01:01 PM in reply to Former Fountain Employee
      I really hope all the workers can get back to work or find another place of employment. I agree that Reggie cared about the employees. But Little R showing someone how to do it right? I mean, you are kidding, right? Wyatt, on the other hand, has the skills and the maturity it takes to run a business.
  • by Wondering on Oct 14, 2011 at 07:21 AM
    Wonder how much Beaufort County's economic development program, made off the jobs that never happened here?
  • by Vince Location: Washington on Oct 14, 2011 at 07:19 AM
    Now watch Reggie come behind all this and save the day somehow. Why Reggie? Because he really does love boat building, he loves the boat business, and he has a vested interest in our community. Some may scoff, but I predict Reggie will somehow get back in the picture at Fountain.
    • reply
      by but... on Oct 14, 2011 at 08:28 AM in reply to Vince
      I think that may be possible assuming the company can survive this legal process. It sounds like there are some serious charges be levied. The legal costs could break the company.
    • reply
      by Anonymous on Oct 14, 2011 at 09:28 AM in reply to Vince
      When Reggie sold, did all his patents go with the sale ? His pad keel bottom design ? Just wondering. Not sure Reggie could come back with a "Fountian" power boat any longer.
      • reply
        by Anonymous on Oct 14, 2011 at 12:53 PM in reply to
        There are no patents to Reggie's boats designs
    • reply
      by FlyGirl on Oct 14, 2011 at 03:27 PM in reply to Vince
      Amen to that Vince!!!
  • by Anonymous on Oct 14, 2011 at 07:06 AM
    Trickle down economics
    • reply
      by Anonymous on Oct 14, 2011 at 11:51 AM in reply to
      No, actually bad management is what caused this. That is why Reggie left in 2010.
    • reply
      by Carl Kolchack on Oct 14, 2011 at 12:58 PM in reply to
      Trickle down economics was the policy in the 80's, today's policy is trickle up poverty...
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