Boat and water sports retailer Tommy’s Boats has filed for Chapter 11 protection in a Texas bankruptcy court.
Tommy’s Boats has listed up to $500 million debts and has allegedly breached an agreement with the retailer’s lender.
Chapter 11 involves the court-supervised reorganisation of a debtor’s assets and liabilities.
The move follows on from most of the companies doing business as Tommy’s Boats put into receivership by the Circuit Court for Kent County, Michigan and a receiver appointed for those companies’ assets.
A letter sent to customers with outstanding deposits or other monetary claims by the receiver, Beane and Associates, stated the receivership order was entered due to Tommy’s’ failure to honor its obligations owed to M&T Bank.
Rent is also said to be owed to many of the landlords who have changed the locks (or threatened to do so) on some of the facilities, making access by the Receiver problematic, said the letter.
Millions of dollars owed
Customers who have paid deposits are waiting to hear if they will receive their monies back.
“All or substantially all the assets of the various Tommy’s Boats entities are encumbered by security interests in favor of M&T Bank, the lender which sought the receivership in the first place,” said the letter. “It appears that the Bank, which is owed well over $100 million, is likely to be under-secured, meaning that after disposition of all the assets subject to its liens, and payment of the net proceeds to the Bank, there would still be millions of dollars owed to it.
“Therefore, at this time it is not possible for the Receiver to provide any assurance to Tommy’s Boats’ creditors, including those with outstanding deposits or other claims, that they will recover any money from the Receiver’s efforts to monetize the value of Tommy’s Boats’ assets.”
In a separate case, Tommy’s is suing one of its primary boat manufacturers, Malibu Boats, blaming the company for pumping an unreasonable amount of inventory into Tommy’s stores to artificially inflate Malibu’s stock value.
Malibu Boats says it is going to rigorously defend the case.
In a statement, Tommy’s said it is still selling boats in Colorado.
The statement said: “We remain committed to working with our customers, employees, creditors and others to navigate this process efficiently and effectively. One of Tommy’s priorities will be to work with our customers and (Original Equipment Manufacturers) on fulfilling custom-ordered boats.”
