An urgent plan by Country Coach and its bank to restart RV manufacturing operations in Junction City, Ore., was detoured Monday (March 23) in U.S. Bankruptcy Court.
Judge Albert Radcliffe, responding to concerns from the trustee in the case, delayed a decision on a proposed settlement agreement until all parties can work out unresolved issues, according to The Register-Guard, Eugene.
Lawyers for Country Coach, Wells Fargo Bank, the U.S. Trustee Program and unsecured creditors of the RV maker told Radcliffe at the end of a stop-and-go day of hearings that they hope to settle those differences and submit what is called a stipulated order to the court by Thursday afternoon.
That order would take effect immediately, and would lay out an interim plan for renewed operations. Based on negotiations that were conducted between hearings on Monday, the plan is likely to include a $3.2 million revolving loan from Wells Fargo that would allow Country Coach to operate for three to four weeks.
“There is a strong sense that Country Coach needs to restart quickly if it wants to restart successfully,” the company’s attorney, David Levant of the Portland firm Stoel Rives, told the judge on Monday.
After the interim period, a permanent restructuring plan would take effect. Based on a document filed in bankruptcy court last week, that longer-term business plan would be financed by expanding the revolving loan to $11.5 million – including $8.5 million that Country Coach already owes to Wells Fargo.
Radcliffe set a hearing for April 13 for a final decision on the restructuring plan.
Rebecca Kamitsuka, an attorney with the U.S. Trustee Program in Eugene, maintained at Monday’s hearing began that a financing agreement between Country Coach and Wells Fargo that was filed late last week was “overreaching and onerous.”
She told the judge that neither she nor Eugene lawyer Doug Schultz – who was hired Monday morning to represent a committee of unsecured creditors – had been given adequate time to read and respond to the 158-page document.
“We need to slow down and allow the parties to review (the agreement),” Kamitsuka said.
Schultz agreed with the trustee’s suggestion.
“I think there’s a lot of work to be done yet on this order before it can pass muster,” he said.
Radcliffe eventually ordered a 1½-hour recess in the hearing, during which the attorneys negotiated over terms of the settlement agreement.
When the hearing resumed, Levant – the Country Coach attorney – said there had been “considerable progress” in the negotiations, but asked to be allowed to continue the talks over the next few days.
Radcliffe then scheduled a hearing for next Monday to decide how the case will proceed if the parties do not come to an agreement this week. If a stipulated order is filed, as expected, next week’s hearing will be canceled.
Because Country Coach is in Chapter 11 bankruptcy, it must have its restructured operating plan and financing agreements authorized by the judge.
The company has no significant operating funds, and had to work with Wells Fargo to restructure debt and borrow additional money. The bank could push to liquidate Country Coach’s assets if the deal is not approved.
According to Country Coach CEO Jay Howard, the company has 15 unfinished coaches on the production line and another 15 chassis ready to be built.
A proposed budget filed with the court indicates the company plans to start selling coaches within a week of restarting operations, at a rate of one to two per week.
The company would switch to factory-direct sales, collecting a total of $23.5 million for 43 coaches by early next January and spending a total of $20.3 million – including $2.3 million for bankruptcy expenses.
The company is expected to bring back as many as 100 workers for the limited restart of operations.
Country Coach and its 500 employees have been idle since early December.