Country Coach, the financially ailing Junction City, Ore., RV maker, has yet to file a reorganization plan to get itself out of bankruptcy. And now a judge is demanding that company officials explain why he shouldn’t order that its assets be liquidated, according to The Register-Guard, Eugene, Ore.
A hearing on Country Coach’s Chapter 11 bankruptcy case is set for Oct. 22, at which time company officials will have to convince U.S. Bankruptcy Judge Albert Radcliffe that it has a viable plan for returning to profitability. If not, Radcliffe could order the case converted to a Chapter 7 case, which means its assets would be sold off to satisfy creditors, or he could dismiss the case outright, which would allow creditors to sue to seize the company’s assets.
The hearing could mark a turning point for Country Coach, which filed for bankruptcy protection in March so it could reorganize its finances while getting breathing room from creditors, chief among them California-based Wells Fargo Bank.
Country Coach, a privately held maker of luxury motorcoaches, closed its Junction City plant in November, putting about 500 employees out of work. It resumed production in April, although on a much smaller scale. Company officials have said between 100 and 120 employees have been working at the plant, turning out about one coach per week.
Company spokesman Matt Howard said Wednesday (Sept. 23) the plant has been shut the past two weeks, but the company is planning to reopen Monday. He declined to comment on legal issues.
Since it resumed production in April, Country Coach has posted losses of $6.8 million, according to a financial statement it filed with the court Sept. 15.
Judge Radcliffe initially set an Aug. 31 deadline for Country Coach to file a reorganization plan. That was extended, at the company’s request, to Sept. 15. Radcliffe said he wouldn’t consider further extensions unless Country Coach’s main creditor, Wells Fargo, agreed to extend its financing past Dec. 31. Country Coach lawyer Brandy Sargent said in a motion that Wells Fargo had agreed to extend the financing through Feb. 15 and asked that the deadline for filing a plan be extended to Oct. 15.
Sargent said the company recognizes that “there remains a material risk that it will not be able to proceed to confirmation of its plan,” and she outlined a series of hurdles Country Coach must clear to get its plan confirmed by the court. Those include coming to terms with its landlord, Lee Joint Ventures, with Wells Fargo, and with its would-be partner, Recreation Live LLC.
The U.S. Trustee’s office, meanwhile, objected to the company’s request for another extension. The company has not filed documents supporting its assertion that Wells Fargo has agreed to extend its financing, nor has Wells Fargo filed any documentation indicating that it agreed to an extension, according to a brief filed by Rebecca Kamitsuka, attorney for the U.S. Trustee.
Further, Kamitsuka said, when she asked a Country Coach lawyer for a copy of the loan modification agreement, he faxed her a single-page document, marked as Page 6 of 6, with just a signature page, but without the text of the agreement.
Country Coach, Kamitsuka wrote, “cannot hide the ball on these matters in its fiduciary capacity.”