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Judge Orders Liquidation of Country Coach Inc.
Posted By RV Business On November 27, 2009 @ 8:16 am In Breaking News | 5 Comments
Country Coach Inc. CEO Jay Howard went to court Wednesday (Nov. 25) hoping to negotiate survival of his company. He ended up bargaining for access to his own office at the Junction City, Ore., plant.
It was a negotiation he lost.
Wells Fargo — seeking the return of $8.2 million in loans it made to the now-bankrupt company — has posted a security guard at the plant, although Howard may later be allowed a supervised visit to pick up his personal items, according to The Register-Guard, Eugene, Ore.
“After 37 years of Country Coach, I find it difficult to believe that it’s done,” Howard said after the hearing. “But we’ll see. We will see.”
U.S. Bankruptcy Judge Albert Radcliffe ordered immediate conversion of the RV maker’s Chapter 11 reorganization bankruptcy — begun in March — into a Chapter 7 liquidation, although a trustee may not be on the job until Monday because of the Thanksgiving holiday.
The company had 1,600 employees two years ago. In November 2008, it shut down and put 500 remaining employees out of work.
After gaining the protection of the bankruptcy court, the company missed repeated deadlines for submitting a reorganization plan — in August, in September and again in October.
The company’s assets include 10 luxury coaches completed and ready for sale, with a total value ranging from $5 million to $9 million, depending on whether they’re sold at auction or sold retail, Howard said recently. There are an additional 15 partially built coaches.
As late as Monday, Howard was hoping to bring in an investor to buy out Wells Fargo’s debt and to allow the company to resume production.
The judge gave the investor, a Washington state businessman named Roger McCombs, until Tuesday to prove he was seriously interested in a purchase by depositing $1 million in a Wells Fargo account. Howard said Tuesday that another investment group that included Bryant Riley, who is both an owner and creditor of Country Coach, had put up $1 million in earnest money by the deadline.
Country Coach attorney David Levant told the judge Wednesday that an investor made a deposit at Wells Fargo, although it wasn’t in a specified account. “Wells Fargo should be able to verify the funds,” Levant said.
Radcliffe left it up to Wells Fargo whether to continue to seek a deal with potential investors: “The ball is pretty much in Wells Fargo’s court,” he said.
But the bank was done with the game, attorney Wilson Muhlheim said. “We’re not interested.”
County Coach’s descent into Chapter 7 liquidation wasn’t surprising to Junction City residents. When the company tried to crank up production after the bankruptcy filing, it managed only a skeleton crew.
“Pretty much everybody’s been assuming that’s what’s going to happen, and (they’ve) been trying to move on with their lives,” Jim Krowka, an employee at B&I True Value Hardware said. “(Company purchases) haven’t been a big part of our business for a couple of years now.”
City Administrator David Clyne said Wednesday night, “I’m hoping that there will be a surviving venture … and that someone will put something back together out of that. Most of the jobs have been long gone, and that’s a shame. But hopefully something will rise out of the ashes.”
“They had a good long run here but, unfortunately, the RV industry was hit very hard by the recession,” Clyne said.
The city has been moving in a different direction economically for some time, he said.
“We’ve been focusing on the prison and the hospital that are shortly to be constructed. … I think there was a realization that the RV industry has kind of come and gone. We’re looking to move forward and succeed in a different direction. Nonetheless, we’d hoped (Country Coach) would be part of it. Now, it doesn’t look good for them.”The city will still receive some property taxes for the land and buildings, he said, although this would be significantly less than the taxes Country Coach was paying at its peak. “I don’t know what the revenue shortfall will be. It will have an impact on our direct services and budget.”
“I feel bad for the local business creditors as well,” Clyne said. “They’ve extended credit, done what they could to keep the company afloat. I’m sure most of their assets are gone.”
As for the people who worked at Country Coach, he said, “They were friends, family, members of the community. I certainly feel for them.”
The company stopped building coaches in September and just recently laid off its remaining employees. Only Howard and Chief Financial Officer CFO Mark Anderson remained on the job.
Levant petitioned the judge to allow Howard and Andersen to stay in their offices and use company computers over the Thanksgiving weekend, continuing to look for investors to rescue the company.
Howard said Wednesday that he doesn’t want to give up. Most managers in the flailing industry are long since gone, he said, “We’ve fought a relatively valiant fight with a lot of people helping.”
But Wells Fargo objected to Howard and Andersen staying on at the plant. “It’s problematic,” Muhlheim said. “We don’t know what might or might not happen.”
David Wade, attorney for Lee Joint Ventures, which owns the land where Country Coach is located, said the company no longer had a lease as of Monday. “Technically there is no right of possession for (Country Coach),” he said.
Radcliffe ruled that Howard and Andersen would be barred from the property, at least until next week when a trustee takes control of the property.
The pair “can take a few days off for want of a better way of putting it,” the judge said.
Afterward, Howard admitted that the fate of Country Coach was no longer in his hands, although he added that he’s still optimistic that something positive for “jobs and the community” will happen.
In the meantime, Howard said he would spend a lot of time over the holiday with his 81-year-old mother, who’s recuperating from knee replacement surgery.
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