Genmar auction concludes, unsecured creditors object

MINNEAPOLIS — The assets of Genmar Holdings Inc. have been sold in an auction process that concluded Friday, according to a release from Mark W. Sheffert, Genmar’s chief restructuring officer. A sale approval hearing is scheduled for Wednesday, and the sale closing is scheduled for a week later on Jan. 20.

In the auction, conducted by Houlihan, Lokey, Howard and Zukin Capital Inc., J&D Acquisitions LLC acquired yacht builders Carver and Marquis for $6.05 million, MCBC Hydra Boats LLC acquired Hydra-Sport for $1 million, and stalking horse bidder Platinum Equity acquired essentially all other Genmar assets for $70 million.

“We are pleased with the results of the auction process and look forward to bringing closure to this transaction so that the businesses can refocus their energies and resources on sales and service, without the inherent distractions of being in bankruptcy,” Sheffert said in the release.

The auction results, however, have drawn objections from Genmar’s Official Committee of the Unsecured Creditors, which opposes all of the sales on the grounds that “the Genmar estates will be left insolvent, and unable to pay chapter 11 administrative claims, including litigation to recover dollars that its financial investigation revealed should be a part of the estate.” The committee said it will argue its motion at Wednesday’s hearing.

“If the sales are approved without amendment, over $140,000,000 of claims filed by over 4,000 unsecured creditors will be left behind by Genmar,” the committee said in a release.

The group said Wells Fargo and Fifth Third (as the first and primary secured creditors) will likely receive most or all of their secured debt, GE Commercial Distribution Finance Corp. would likely receive some, and the remaining creditors would not receive any repayment.

During the course of the auction, the opening Platinum Equity bid was raised twice by private equity group The Gores Group; however, Gores failed to match the winning Platinum bid of $66,250,000 in cash, plus assumed liabilities, according to an account from the creditors committee.

MCBC Hydra-Boats LLC, represented by John Dorton of MasterCraft Boat Co., was unopposed in its first and final bid, obtaining Hydra-Sports at its pre-bankruptcy valuation of $1 million, including $500,000 for post-bankruptcy obligations to dealers.

In the bidding for Genmar Yacht Group, Irwin Jacobs represented J&D Acquisitions, an acquisition group formed for purposes of the auction, and Lynn Tilton represented Patriarch Partners LLC. J&D was declared the “prevailing bid,” but not the “winning bid” at the auction, and Tilton announced her intent to continue negotiations to present the winning bid and prevail at the court hearing on Wednesday.

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