Since Fleetwood Enterprises Inc. filed for Chapter 11 bankruptcy on March 10, the Riverside, Calif.-based RV maker indicated that securing financing was vital to its survival.
On Wednesday (April 29), three hours before Fleetwood was scheduled to ask the judge in its Chapter 11 bankruptcy case to sign off on a final $80 million debtor-in-possession financing plan with Bank of America, the company told the court it didn’t need it, according to The Press-Enterprise, Riverside.
Instead, Fleetwood officials say they’ll be better off using cash collateral they had access to originally, allowing them to focus on operations while trying to find a buyer for the entire company, or its RV or manufactured housing divisions.
Company officials wouldn’t say how long they expect the cash collateral to fund their operations. In the court filing, they estimated they have at least $156 million worth of raw materials, finished but unsold goods, real estate and current work that can either be sold or used to get loans.
In court filings, Fleetwood said the financing plan with Bank of America, which took weeks to craft before the judge approved it temporarily, included “unrealistic” financial and time constraints and cost too much to implement. The filing mentioned a $2.4 million fee that it has already paid Bank of America for crafting the plan.
Fleetwood has cut costs, and sales have been slightly better than they expected, leaving the company with more cash than anticipated, according to Fleetwood’s Wednesday court filings.
The company continues to close plants, like its manufactured housing operation in Glendale, Ariz., which will be shuttered and consolidated with its Riverside plant. The company hopes to sell its La Grande, Ore., travel trailer plant for $1.8 million.
At the Wednesday afternoon hearing held at the U.S. Bankruptcy Court in Riverside, Bank of America lawyer Gregory Lunt bristled at the indication that the $2.4 million fee could be refunded and told the judge the first he had heard of Fleetwood’s proposal was that morning. An assistant had read the new proposal to him over the phone while he drove from Los Angeles to Riverside, he said.
“We have not had a chance to really look through these things,” he said.
To give Bank of America more time to respond, Judge Meredith Jury continued the hearing until May 13 at 1:30 p.m.
Lawyers representing unsecured creditors and Deutsche Bank, the trustee for bonds that were issued by Fleetwood in December, were pleased with Fleetwood’s decision to rely on cash collateral instead.