Friday, February 13, 2009

 

WELLS FARGO BANK TOLD NO FOR NOW

RV Business
Friday, February 13, 2009

A federal court has denied Wells Fargo Bank's request to seize assets of Country Coach LLC, according to a report in the Register-Guard.

A U.S. bankruptcy judge decided Thursday (Feb. 12) that it's too early in the process to allow the financially troubled RV maker to be liquidated.

For now, the ruling allows Junction City, Ore.-based Country Coach to survive and try to reach a deal with a Los Angeles private equity firm interested in buying the company.

Wells Fargo sued Country Coach last month in U.S. District Court, seeking payment on $8.5 million overdue from the Junction City RV manufacturer.

The plant has been idle since December, leaving about 500 workers jobless.

 

RECALL: 2009 TIFFFIN/ALLEGRO BUS: AXLE HUBS

Vehicle Make / Model: Model Year(s):
TIFFIN / ALLEGRO BUS 2009
Manufacturer: TIFFIN MOTORHOMES, INC. Mfr's Report Date: JAN 21, 2009
NHTSA CAMPAIGN ID Number: 09V045000 NHTSA Action Number: EQ08013
Component: POWER TRAIN:AXLE HUBS
Potential Number of Units Affected: 23
Summary:
TIFFIN IS RECALLING 23 MY 2009 ALLEGRO BUSES EQUIPPED WITH ARVINMERITOR AXLE ASSEMBLIES. THE WHEEL END STUDS MAY HAVE BEEN IMPROPERLY TEMPERED RENDERING THEM BRITTLE AND SUSCEPTIBLE TO FRACTURE. IF ONE WHEEL STUD FRACTURES, THE REMAINING WHEEL STUDS ARE REQUIRED TO CARRY MORE LOAD. IF LEFT IN THIS CONDITION, THE REMAINING WHEEL STUDS MAY ALSO FRACTURE EVEN IF THEY ARE PROPERLY MANUFACTURED.
Consequence:
FRACTURED WHEEL STUDS COULD RESULT IN A VEHICLE CRASH.
Remedy:
TIFFIN IS WORKING WITH ARVINMERITOR WHO WILL REPLACE ANY AFTERMARKET REPLACEMENT STUD FREE OF CHARGE (PLEASE SEE 08E038). OWNERS MAY CONTACT ARVINMERITOR AT 1-248-435-8793 OR TIFFIN AT 256-356-8661.
Notes:
CUSTOMERS MAY ALSO CONTACT THE NATIONAL HIGHWAY TRAFFIC SAFETY ADMINISTRATION'S VEHICLE SAFETY HOTLINE AT 1-888-327-4236 (TTY 1-800-424-9153), OR GO TO HTTP://WWW.SAFERCAR.GOV .

Thursday, February 12, 2009

 

AND NOW IT STARTS! (the formaldehyde trials)

from Greg Gerber of RVINews

NEW ORLEANS — A federal judge has scheduled the first four trials for a batch of lawsuits filed on behalf of hurricane victims who claim they were exposed to potentially toxic fumes while living in government-issued trailers.
An order issued Tuesday by U.S. District Judge Kurt Engelhardt says cases against Gulf Stream, Fleetwood, Forest River and Keystone RV will be the first to be tried. The federal government also is expected be a defendant in each case.
The first of four trials is tentatively scheduled to start Sept. 14. The next three are scheduled to start in October, December and January.
Hundreds of residents of Louisiana, Mississippi, Texas and Alabama who were displaced by hurricanes Katrina and Rita in 2005 have sued the government and the companies that furnished the Federal Emergency Management Agency with tens of thousands of trailers after the storms.
Government tests found elevated levels of formaldehyde in many FEMA trailers. Formaldehyde, a preservative commonly found in construction materials, can cause breathing problems and is classified as a carcinogen.
In December, Engelhardt refused to grant class-action status to trailer dwellers' lawsuits, saying each person's claim is unique and must be examined individually. The judge also has ruled that the federal government isn't entitled to immunity from the suits.
Plaintiffs for the first four trials haven't been named yet. Engelhardt directed lawyers on both sides of the case to pick four plaintiffs from a pool of at least 50.
The plaintiffs from the first four cases will most likely be limited to residents of southeastern Louisiana.
Gerald Meunier, a lead lawyer for the plaintiffs, said the four "bellweather" trials should show both sides' strengths and weaknesses of the cases. Meunier also suggested that the outcome of the trials could stimulate a "global resolution," such as a settlement, of all cases.
"We're satisfied that the court is proceeding in the right way," he said.

 

A KNIGHT IN SHINING ARMOUR FOR COUNTRY COACH?

RV Business
Thursday, February 12, 2009

A possible buyer of Junction City, Ore.-based Country Coach LLC emerged Thursday (Feb. 12) in U.S. Bankruptcy Court as creditors argued over whether one of the RV makers’ biggest creditors, Wells Fargo, should be permitted to immediately seize and liquidate the company’s assets.

The Register-Guard, Eugene, reported that the start of Thursday’s hearing was delayed for 45 minutes as lawyers for Wells Fargo and for Riley Investment Management, the company’s majority owner, met together and separately in an effort to strike some sort of deal, but no agreement was forthcoming.

In court, Wells Fargo attorney Wilson Muhlheim told U.S. Bankruptcy Judge Albert Radcliffe that the bank no longer trusted Country Coach and that it wants to seize the company’s assets to make good on a loan balance of $8.5 million.

Carter Mann, attorney for Riley Investment Management, told the judge that if he granted Wells Fargo’s motion, “There will be no more Country Coach,” and after the bank liquidated the company’s assets, nothing would be left for the company’s other creditors. Country Coach owes Riley Investment Management about $15 million, he said.

Mann said a Los Angeles private equity firm called Balmoral Advisors has expressed serious interest in buying Country Coach and continuing to operate it.

“Country Coach should have an opportunity to have that happen,” he said, instead of letting Wells Fargo “drive a stake through its heart on two days notice.”

The Register-Guard reported that Radcliffe also heard from lawyers for Prevost, a Canadian company that says Country Coach is in possession of four bus shells worth about $2 million that Prevost holds the title to; and from Giant RV of Montclair, Calif., the nation’s largest RV dealer.

The judge also heard from Rob Dickman, owner of Les Schwab Tire in Junction, who said he is owed about $195,000 by Country Coach. He urged the judge to give Country Coach a chance to continue operations, and took a shot at Wells Fargo.

“Quite honestly, I’m insulted by Wells Fargo,” he said. “They got $25 billion of our money (from the federal bailout) and now they want more by liquidating Country Coach and taking it all back to Atlanta and leaving us to pick up the pieces.”

Wells Fargo’s commercial banking division is based in Atlanta.

 

NOW BEAUDRY RV IS FIGHTING OFF THE BANKS TO SURVIVE

In a bid to stay intact, Beaudry RV has filed a suit in bankruptcy court to stop Bank of America, Comerica Bank and Wells Fargo Bank from seizing real estate used to secure a $42 million loan.

The Arizona Daily Star reported that saddled with about $14 million in debt from that loan, Beaudry RV and its related corporations filed for Chapter 11 in November. Despite the action, the three banks filed suit in Pima County Superior Court in December seeking full payment of the loan's balance.

Beaudry RV can't pay the balance and is unable to refinance its debt in tight credit markets, said attorney Michael McGrath, who is representing the longtime Southern Arizona RV dealer. The four properties tied to the loan, which owner Bob Beaudry guaranteed, are also crucial to Beaudry RV's ability to reorganize because of significant equity, McGrath said. Court documents show the properties are worth between $27 million and $32 million.

"They want to be paid off on the real estate loans, and any pressure they could possibly bring to bear, they are bringing it," McGrath said. "We are not able to sell (the properties), and what we have done, and are going to resume this month, is making monthly debt service."

Beaudry RV employs about 170 people between its two dealerships in Tucson and Chandler. McGrath said those jobs "hang in the balance" of the suit's outcome.

According to the Daily Star, court documents show Beaudry RV began facing financial trouble in 2007 when the RV business began to slow as fuel costs soared. As the credit market tightened, the three banks restricted the line of credit that had been available to Beaudry RV to stock its inventory.

Beaudry RV found financing with General Electric for a flooring loan — financing dealers use to buy vehicles for their lots — but that prompted the three banks to demand payment for the real estate loans.

But Beaudry RV couldn't find a new lender, so it began to address its debt through the sale of assets, reducing it by $27 million since July 2008.

Meanwhile, Beaudry has put his personal money into the company in an attempt to bring it back to solvency, addressing debt and spending $500,000 to cover payroll expenses in November 2008, the claim says.

The claim says General Electric has continued to offer financing to Beaudry in exchange for equity interests, making the prospect of reorganization possible.

Wednesday, February 11, 2009

 

WELLS FARGO BANK WANTS IT'S MONEY NOW

RV Business
Wednesday, February 11, 2009

Just because a creditor has asked a judge to put Country Coach LLC into bankruptcy doesn’t mean lawyers for Wells Fargo are giving up on their quest to get the Junction City, Ore.-based motorhome maker to surrender $8.5 million in assets pledged against a loan that’s now in default.

The Register-Guard reported that a hearing is scheduled Thursday (Feb. 11) in U.S. Bankruptcy Court in Eugene so the bank can make its case that Country Coach should have to surrender the assets, regardless of the bankruptcy filing.

But a lawyer representing the majority owner of Country Coach, who also is a creditor, has asked the court to postpone the hearing, arguing that the fate of the company and its employees hangs in the balance.

The lawsuit Wells Fargo filed last month in U.S. District Court against Country Coach to recover those assets was automatically put on hold after Country Coach’s majority owner filed to put the company into involuntary bankruptcy last Friday. That action, taken under Chapter 11 of the bankruptcy code, is intended to give Country Coach time to re­organize while getting breathing room from creditors.

But Wells Fargo said it has a first-priority interest in Country Coach’s non-real-estate assets because of a $25 million revolving loan fund the bank provided in 2007. The RV maker owes Wells Fargo about $8 million in principal and interest on the loan, plus about $500,000 that the bank said it was forced to pay to the company’s landlord to end eviction proceedings.

Country Coach also owes other junior creditors an estimated $15 million, the bank said.

Wilson Muhlheim, a Eugene lawyer representing Wells Fargo, made clear the bank does not believe Country Coach stands a chance of surviving.

“Country Coach is not operating its business and has no source of funding to repay these amounts nor can it make any material repayment to unsecured creditors under any proposed plan of reorganization,” he wrote.

The Register-Guard reported that the bankruptcy case was filed solely for the benefit of the investors who own Country Coach, “who are seeking to hinder and delay Wells Fargo from (exerting) its rights under the loan document for the sole purpose of … placing all of the risk of the case on Wells Fargo with little or no benefit to unsecured creditors,” Muhlheim wrote.

But Carter Mann, a lawyer for Riley Investment Management, objected to an expedited hearing on Wells Fargo’s motion.

Riley Investment Management is controlled by Los Angeles investment banker Bryant Riley, Country Coach’s majority owner, and is also one of the creditors that is trying to force the company into involuntary bankruptcy.

“If Wells Fargo’s motion for relief is granted, Country Coach will cease to exist,” Mann wrote. “Its assets will be parceled out and sold off. There will be nothing left for any creditor other than Wells Fargo, and there certainly will be no hope for the company’s employees.”

He added that the issues in the case are “complicated and important” and deserve a full and fair hearing. He noted that Country Coach has not yet retained a bankruptcy lawyer.

Mann said he did not object to a hearing Thursday on Wells Fargo’s motion to block Country Coach from spending the $795,000 it received from selling two coaches last month — funds Country Coach deposited in a bank other than Wells Fargo.

Country Coach, a privately held company, closed its factory in early December, idling about 500 workers. It notified employees on New Year’s Eve that the company would close for good by the end of this month unless it is able to obtain new financing. A company official said Sunday that three prospective investors have expressed interest in buying the company or its assets.

 

RECALL: 2004 SHOWTIME SHOWHAULER MOTOR HOME: DOMETIC REFRIGERATOR

Vehicle Make / Model: Model Year(s):
SHOWTIME / SHOWHAULER 2004
Manufacturer: SHOWTIME CONVERSIONS Mfr's Report Date: FEB 02, 2009
NHTSA CAMPAIGN ID Number: 09V051000 NHTSA Action Number: EQ08010
Component: EQUIPMENT:RECREATIONAL VEHICLE
Potential Number of Units Affected: 3
Summary:
SHOWTIME IS RECALLING 3 MY 2004 SHOWHAULER AND MOTORHOME BUILT ON FREIGHTLINER CHASSIS AND EQUIPPED WITH A TWO-DOOR REFRIGERATOR MANUFACTURED BY THE DOMETIC CORPORATION. THE REFRIGERATOR MAY HAVE A DEFECT IN THE BOILER TUBE. PRESSURIZED COOLANT SOLUTION COULD BE RELEASED INTO AN AREA WHERE AN IGNITION SOURCE (GAS FLAME) IS PRESENT.
Consequence:
RELEASE OF COOLANT UNDER CERTAIN CONDITIONS COULD IGNITE AND RESULT IN A FIRE.
Remedy:
SHOWTIME WILL BE WORKING WITH DOMETIC IN ORDER TO REPAIR THESE REFRIGERATORS (PLEASE SEE 08E032). DOMETIC WILL REPAIR THESE REFRIGERATORS BY INSTALLING A SECONDARY BURN HOUSING, A THERMAL FUSE, AND A MELT FUSE FREE OF CHARGE. DOMETIC HAS RETAINED STERICYCLE INC. TO MANAGE THIS CAMPAIGN. STERICYCLE WILL ASSIST THE OWNER IN LOCATING DEALERSHIPS OR SERVICE CENTERS AND WILL PROVIDE ASSISTANCE WITH SCHEDULING OF APPOINTMENTS. OWNERS MAY CONTACT DOMETIC/STERICYCLE AT 1-888-446-5157 OR SHOWTIME AT 574-825-1130.
Notes:
CUSTOMERS MAY ALSO CONTACT THE NATIONAL HIGHWAY TRAFFIC SAFETY ADMINISTRATION'S VEHICLE SAFETY HOTLINE AT 1-888-327-4236 (TTY 1-800-424-9153), OR GO TO HTTP://WWW.SAFERCAR.GOV .

Tuesday, February 10, 2009

 

MONACO MAKES A DEAL WITH IT'S LENDERS TO PRESERVE CASH

RV Business
Tuesday, February 10, 2009

Monaco Coach Corp. entered into a forbearance agreement Feb. 4 with Bank of America, N.A., and GE Commercial Distribution Finance Corp. regarding “repurchase obligations” with dealers, according to a filing with the Securities and Exchange Commission (SEC).

Monaco stated: “As is typical in the recreational vehicle industry, many of the independent retail dealers that carry the company’s products utilize wholesale floorplan financing arrangements with third party lending institutions to finance their purchases of the company’s products. Under the terms of these floorplan arrangements, lenders customarily require the recreational vehicle manufacturer to agree to repurchase unsold units if the dealer defaults on its credit facility from the lender, subject to certain inventory aging limits.

“Due to the deterioration in the market for recreational vehicles generally and resulting defaults by the dealers under their credit lines with the flooring lenders, repurchase demands on the company by the flooring lenders have increased substantially above historical levels.”

In the filing Monaco said the increase in repurchase demands has also affected borrowing availability under the company’s loan and security agreement entered into with Bank of America Nov. 6, 2008, and other revolving credit lenders, including GE Commercial.

“Under the loan agreement, the company is able to borrow amounts according to an accounts receivable and inventory borrowing base formula that is subject to the imposition of reserves in certain circumstances,” Monaco stated. “The increasing repurchase demands by the flooring lenders have had the effect of increasing the borrowing base reserves under the loan agreement and reducing the company’s borrowing availability.”

As a result, Monaco said it has entered into a forbearance agreement under which the “flooring lenders agreed, with certain material exceptions, to withdraw certain existing repurchase demands and forbear from making additional repurchase demands through April 6, 2009.”

In addition, Monaco said the flooring lenders agreed that during the forbearance period they would not exercise their “rights of set-off against amounts payable by the flooring lenders to the company.”

Monaco added that it will continue to pursue a variety of strategic and financial alternatives given “continued uncertainty in the company’s core markets and concerning the sufficiency of the company’s capital resources.”

 

MONACO TO POSSIBLY RESUME PRODUCTION MARCH 2ND

RV Business
Tuesday, February 10, 2009

Coburg, Ore.-based Monaco Coach Corp. has extended the furlough of its 2,200 employees for another two weeks, with production now tentatively scheduled to resume March 2.

As reported by the Register-Guard, the RV manufacturer’s Coburg factory and Harrisburg maintenance center originally shut down for a holiday furlough Dec. 15 that was supposed to last four weeks. But the company has now extended the furlough for the third time.

Spokesman Craig Wanichek said challenging market conditions forced the company to keep the plant, and employees, idle. If the plant resumes production March 2, the furlough will have lasted 13 weeks.

Like other RV manufacturers, Monaco has been struggling through the worst market for RVs in decades. With the U.S. economy in recession, the industry has been hurt by poor consumer confidence and tight credit.

Monday, February 09, 2009

 

COUNTRY COACH SEEKING BANKRUPTCY PROTECTION

BY TIM CHRISTIE
The Register-Guard
Published: Feb 9, 2009 02:17AM

News Updates: Story
The majority owner of Country Coach, acting as a creditor to the company, has filed a petition to force the financially ailing RV maker into involuntary bankruptcy.

The action is intended to fend off aggressive efforts by creditor Wells Fargo to seize assets from the company to pay off a loan balance of $8 million.

Wells Fargo sued Country Coach Jan. 28, saying it intends to repossess and liquidate collateral pledged by Country Coach against the loan, made in 2007 and now in default.

Bryant Riley, who led a group of investors that bought Country Coach in 2007 for $38 million, filed the petition for involuntary bankruptcy under Chapter 11 of the bankruptcy code late Friday afternoon. Under Chapter 11, a company can stay in business while it reorganizes its debts.

“What ended up happening is that Wells Fargo decided they were ready to move on,” Riley, a Los Angeles investment banker, said Sunday. “They were the senior lender so they wanted to get the collateral back.

“Our thought was this was a better resolution if we were in Chapter 11. This will hopefully enable us to figure out a better way for all creditors, and not just Wells Fargo, and hopefully keep Country Coach alive.”

The reason Riley filed for involuntary bankruptcy is that the company wasn’t yet prepared to file for a conventional Chapter 11 bankruptcy, he said.

“You need your lender to work with you a little bit,” he said, but Wells Fargo wasn’t interested and “forced our hand.”

He also said his investor group has put about $14 million into the company since 1997.

“We are a big creditor,” he said.

In the filing, he said Country Coach owes two of his companies, Riley Investment Management and B. Riley & Co., a total of $780,225.

A third company listed in the petition, Fluid Connector Products Inc., of Portland, is owed $187,118. Fluid Connector Products supplies hydraulic and pneumatic parts and apparently is a supplier to Country Coach. A company official could not be reached for comment Sunday night.

Under bankruptcy law, if a company has more than 12 creditors, at least three creditors are needed to file for involuntary bankruptcy.

Jay Howard, Country Coach’s CEO, said in an interview Sunday that Riley’s action is intended “to get time to salvage the company as an ongoing operation and stop the bank’s activities, and to buy the time to get the investors together to allow us to continue.”

Riley’s action was forced by Wells Fargo’s bid to seize Country Coach’s collateral, Howard said. That collateral includes almost everything that isn’t real estate, including cash, motor coaches, machinery and contract rights.

“We’re still amazed by the bank’s actions at this point,” Howard said.

According to Los Angeles bankruptcy lawyer Wesley Avery, creditors file involuntary bankruptcy against a company for several reasons.

“It forces a debtor to confront all his creditors at once, instead of forking over money only to those who press the hardest,” Avery wrote in an article posted at Lawyers.com. “It also keeps a debtor from draining all his assets before finally giving up and filing for bankruptcy.”

Country Coach now has 20 days to file an objection to Riley’s filing. If no objection is filed, the bankruptcy proceeds.

Wells Fargo could contest the filing. A lawyer for Wells Fargo could not be reached for comment Sunday night.

During a court hearing last Wednesday in U.S. District Court in Eugene, lawyers for Country Coach asked a judge to appoint and supervise a receiver who would take possession of the company’s assets while the company continued to operate.

Lawyers for Wells Fargo countered that if Country Coach wanted a court to appoint a receiver, it should file for bankruptcy.

U.S. Magistrate Thomas Coffin asked David Levant, attorney for Country Coach, why the company hadn’t filed for Chapter 11.

Filing for bankruptcy is expensive and cumbersome and the “second-worst option” after “uncontrolled liquidation,” he said. “Chapter 11 is very strong medicine.”

Country Coach’s factory has been shut down since early December, putting about 500 employees out of work. On New Year’s Eve, Howard notified employees the company would close for good by the end of February unless it was able to obtain new financing.

Like other RV makers, Country Coach has been battered by the recession, tight credit and poor consumer confidence.

Howard and Riley said they’re still working to keep Country Coach alive and save jobs.

“The business, the brand, the group of owners they have is a valuable commodity to a buyer or to us,” Riley said.

The bankruptcy filing gives Country Coach “a bit of time to react and try to get themselves in a spot where they will be able to get some capital,” he said.

Howard said Sunday that three different companies interested in investing or buying the company filed proposals by Friday’s deadline, but he said it would “take time” to sort through them. “They all take due diligence,” he said.

As for the company’s fate, Howard said, “It’s not over. It’s an ongoing battle.”

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