Friday, February 06, 2009
THE LATEST NEWS ON COUNTRY COACH
Friday, February 6, 2009
Oregon law clearly gives Wells Fargo Bank the right to repossess collateral to make good on a loan that Country Coach can’t repay, the bank’s lawyers argued in a legal brief filed Thursday (Feb. 5).
Further, reports the Register-Guard, case law holds that a judge has no choice but to order Country Coach to relinquish its assets to the bank, the lawyers said.
Wells Fargo and Country Coach both agree that the privately held Junction City RV maker is in default on an $8 million loan balance.
Wells Fargo sued Country Coach to enforce the terms of its loan agreement, which the bank claims gives it the right to repossess and liquidate Country Coach’s personal property assets. Those assets include almost everything that is not real property — including cash, completed motor coaches, works in progress, raw materials, contract rights, accounts receivable and factory machinery. Wells Fargo lawyers said they estimate the value of the collateral at $8.5 million.
After a two-hour hearing Wednesday in U.S. District Court in Eugene, Magistrate Thomas Coffin told Wells Fargo lawyers to file a brief on their arguments by the close of business Thursday. Country Coach and other creditors have until the end of business Friday to respond. Coffin said he’ll call another hearing or render a decision early next week.
The Register-Guard reported that in its brief, Wells Fargo lawyers said a secured creditor’s right to repossess its collateral when a debtor defaults “is long-standing and widely recognized in Oregon.”
They cited a 1981 case, Aetna Business Credit vs. Davis, in which the Oregon Supreme Court ruled that when a secured creditor has established default on a contract providing for immediate possession of collateral upon default, the trial court has “no discretion, but in accordance with the security agreement … must order the creditor to be put in immediate possession.”
If Wells Fargo is not allowed to take possession of its collateral, “it would disrupt the reliability of commercial transactions that has been a cornerstone of American business,” the bank’s lawyers said.
Thursday, February 05, 2009
IS COUNTRY COACH ABOUT TO BECOME PART OF RV HISTORY?
Thursday, February 5, 2009
Lawyers for Wells Fargo Bank told a federal magistrate Wednesday (Feb. 4) that the lender no longer trusts Country Coach, which is so broke that it is unable even to keep its lights on. As reported by the Register-Guard, power and heat at the company’s Junction City, Ore., plant were to be shut off today unless the landlord is paid $58,000.
Meanwhile, Prevost also filed suit Wednesday, seeking to recover four bus shells from the company worth about $2 million.
Wells Fargo lawyers asked Magistrate Thomas Coffin to give the bank authority to begin seizing collateral immediately from the motorhome maker, so it can sell the assets and start to recover some of the $8 million Country Coach owes on a loan balance.
“We are in immediate peril of our collateral being damaged,” David Kurzwell, an Atlanta attorney representing Wells Fargo, told Coffin during a two-hour hearing in U.S. District Court in Eugene. “We’ve lost trust in Country Coach.”
“The deterioration of Country Coach is alarming at this point,” said Wilson Muhlheim, a Eugene attorney for Wells Fargo.
Lawyers for Country Coach, as well as for other creditors, objected, asking the judge to appoint and supervise a receiver who would take possession of the company’s assets while the company continued to operate.
“A receiver is appropriate to protect the bank’s interest and other constituencies in the case,” said David Levant, attorney for Country Coach.
“Country Coach would ask that the court refuse to allow the bank to liquidate a company that itself believes can still survive,” he said.
Coffin, saying he wouldn’t “shoot from the hip,” told Wells Fargo’s lawyers to file a brief by the end of business today that spells out their arguments and specifies exactly what collateral they want to collect. Lawyers for Country Coach and other creditors have until Friday to respond, and Coffin said he may hold another hearing early next week.
The Register-Guard reported that Wells Fargo said Country Coach owes nearly $8 million on a $25 million revolving loan fund. Both sides agreed the RV manufacturer is in default on the loan.
Prevost, a Canadian manufacturer of bus chassis, said it provided Country Coach with four of its bus shells over the past year, valued at $500,000 each, but has never been paid. Under its business agreement with Prevost, Country Coach would normally convert the shells into luxury motor coaches and pay Prevost when it sold the coaches.
Country Coach’s plant has been idle since early December, leaving about 500 workers out of work.
On New Year’s Eve, the company notified employees the company would shut down for good by the end of February unless it was able to obtain additional financing.
Company officials are still holding out hope for survival. They’ve hired a Los Angeles investment bank to seek out investors, who have until Friday to submit nonbinding proposals to provide financing, invest in or acquire the assets of Country Coach.
Wednesday’s hearing began with Wells Fargo’s request that Coffin appoint a receiver to take possession and sell off collateral pledged to Wells Fargo.
But after Coffin indicated he was not comfortable appointing a receiver without judicial oversight of how the collateral would be liquidated, Wells Fargo lawyers said they no longer wanted a judge to appoint a receiver.
Instead, Muhlheim said the bank simply wanted the judge to enforce the terms of its loan agreement with Country Coach, which gives Wells Fargo the right to take possession of and liquidate the company’s personal property assets.
Those assets include almost everything that isn’t real property, such as completed motor coaches, works in progress, raw materials, contract rights, accounts receivable and factory machinery.
Courts have long recognized the rights of secured creditors to take possession and dispose of collateral under the Uniform Commercial Code, he said.
“There’s no reason for the court to intercept the exercise of these rights and remedies,” he said.
At one point, Coffin suggested that he appoint a receiver who would work for and be paid by Wells Fargo to take possession of Country Coach assets, with judicial oversight of any liquidation of assets. But bank lawyers declined the offer.
Country Coach’s proposal to appoint a receiver to oversee the liquidation of assets is the equivalent of a bankruptcy, and if that’s what the company wants, it should file for bankruptcy, Muhlheim said.
Coffin asked Lavant, “Why isn’t Country Coach in Chapter 11?” the section of the bankruptcy code that permits a company to reorganize under court supervision while getting some breathing room from creditors.
Filing for bankruptcy is expensive and cumbersome and the “second-worst option” after “uncontrolled liquidation,” he said.
NEW PRESIDENT, SAME OLD FEMA
HEMPSTEAD COUNTY, Ark. -- Some FEMA mobile homes near the Hope, Ark., airport gates have “scrap” painted in red on them, and that has some passing motorists—who are also taxpayers—seeing red.
“I counted 28 mobile homes lined up near the entrance. Trucks and escort vehicles were hauling them out. I stopped and the guard told me to leave,” said Pam Shelton after recently driving by the airport and seeing the scrap trailers. “The mobile homes looked like they were being wasted. It looked like hundreds and thousands of dollars being wasted. They looked like perfectly good mobile homes,” Armstrong said.
A portion of FEMA trailers initially intended for those who lost their homes in natural disasters are now marked for scrap. Approximately 6,300 mobile homes and 11,900 travel trailers are sitting on the property. The future is unknown for many of the units.
SOURCE: Texarkana Gazette
Wednesday, February 04, 2009
THE COUNTRY COACH/WELLS FARGO SAGA CONTINUES
Wednesday, February 4, 2009
As reported by the Register-Guard, a federal magistrate said today (Feb. 5) he needed to hear more legal arguments before allowing Wells Fargo Bank to take possession of collateral from Country Coach LLC, which can’t repay an $8 million loan balance — even though the bank said power and heat at the Junction City, Ore., plant would be shut off Wednesday unless it pays the landlord $58,000.
“We are in immediate peril of our collateral being damaged,” David Kurzwell, an Atlanta attorney representing Wells Fargo, told Magistrate Thomas Coffin during a two-hour hearing in U.S. District Court in Eugene.
Coffin, though, said he wouldn’t “shoot from the hip,” and asked Wells Fargo’s lawyers to file a brief by the end of business Thursday that spells out their arguments and specifies exactly what collateral they want to collect.
Wells Fargo said Country Coach is in default on nearly $8 million from a $25 million revolving loan fund, and lawyers for Country Coach conceded the point.
But the lawyers disagreed on how to resolve the dispute.
Meanwhile, another creditor filed suit Wednesday morning against Country Coach in an effort to recovers assets. Prevost, a Canadian manufacturer of bus chassis, said Country Coach has four of its bus shells, valued at $500,000 each, and Prevost wants them back.
Tuesday, February 03, 2009
THOR INDUSTRIES LOANS MORE MONEY TO FREEDOMROADS AND CAMPINGWORLD
JACKSON CENTER, Ohio -- Thor Industries today announced that it had made the second of two $10 million loans to Steven Adams, the majority owner of FreedomRoads Holding Company, one of Thor's leading customers, and Camping World.
"This arrangement with FreedomRoads does not affect in any way the commitment we have with our existing dealer partners. Since our founding, we have been committed to doing business with the utmost integrity and fairness. For sure, there is no favoritism here. We will continue to treat all our dealers fairly. That will not change," said Wade F.B. Thompson, Thor chairman.
"All dealers can rely on us to not only provide the most competitive products but, importantly, the assurance that we will remain in business in these unprecedented times to support them, pay warranty claims, and stand behind our products," Thompson added.
Thor provided notice of the loan to the Securities Exchange Commission. To view a copy of the filing, click here.
SOURCE: Thor Industries press release
IS THIS WHAT HAS BEEN GOING ON LATELY AT COUNTRY COACH?
Tuesday, February 3, 2009
Responding to the lawsuit filed Jan. 28 by Wells Fargo Bank, lawyers for Junction City, Ore.-based motorhome builder Country Coach Inc. filed documents Monday (Feb. 2) stating the company would not oppose the appointment of a receiver to protect company assets provided the receiver was acting as an officer of the court and not as a “unilateral agent” for Wells Fargo, and provided the receiver was not given authority to dispose of company assets.
The Register-Guard, Eugene, reported that the company also said it has hired a Los Angeles investment bank, FocalPoint Partners, to help it find financing.
“Country Coach has done nothing wrong, other than being financially stressed,” the company’s lawyers said.
FocalPoint’s managing director, Alexander Stevenson, said in a court filing that 21 potential investors have signed nondisclosure agreements and received information describing Country Coach’s business and strategies. Those parties have until Friday to submit nonbinding proposals to providing financing, invest in, or acquire the assets of Country Coach, he said.
The company also said it has contacted two national liquidation firms to assess the value of its collateral.
According to Wells Fargo’s suit, the bank gave Country Coach a $25 million revolving loan fund on May 18, 2007, which was three months after a group of investors led by Los Angeles investment banker Bryant Riley bought the company from National RV Holdings Inc. and took it private.
As part of that agreement, Country Coach granted Wells Fargo a security interest in all its patents and trademarks, and Wells Fargo obtained a first-priority security status in most of Country Coach’s personal property assets. Muhlheim said that means everything that isn’t real property, and includes completed motorcoaches, works in progress, raw materials, contract rights, accounts receivable and factory machinery.
The Register-Guard reported that on Nov. 3, Wells Fargo notified Country Coach that it was in default on its loan, the suit states. Wells Fargo said it then gave Country Coach “ample time” to find alternative funding sources, but none were found.
Wells Fargo said it wants a federal judge to appoint a receiver to take possession of Country Coach’s collateral because of numerous events during the past month and a half:
On Dec. 18, Country Coach settled a lawsuit it filed against fiberglass manufacturer Owens Corning Fabwel and received about $760,000. But the company did not disclose the settlement to Wells Fargo, and instead spent more than $500,000 without the bank’s knowledge and consent. When Wells Fargo learned of the settlement and demanded immediate payment, Country Coach finally paid what was left of the money: $7,000.
Country Coach said it used the proceeds from the Owens Corning lawsuit for various business expenses, including payroll and related taxes, health insurance and other benefits for December, workers’ compensation insurance, catching up on its lease payments and paying FocalPoint.
On Dec. 19, a judge in Tarrant County, Texas, garnisheed Country Coach’s operating bank account in the amount of $497,611 for the collection of a judgment sought by Southern Holdings LLC.
Country Coach said it reported the garnishment in a timely manner to Wells Fargo. It should have no effect on Wells Fargo because of the bank’s superior lien rights, the company said.
After Lee Joint Ventures — a company controlled by Country Coach founder Bob Lee, his wife, Terry, and his brother, Ronald — filed an eviction lawsuit against Country Coach on Dec. 22, Wells Fargo was forced to make a $400,000 advance to the Lee company to reinstate Country Coach’s lease. The Lees own about half the factory complex occupied by Country Coach.
The Register-Guard reported that on Jan. 23, Lee Joint Ventures notified Wells Fargo that Country Coach had failed to pay some of its utility bills and that its gas and electricity had been shut off as a result. That forced Wells Fargo to provide another $150,000 under the loan agreement to get the utilities re-instated.
Country Coach said the defaults could have been avoided had Wells Fargo permitted the company to borrow money from the revolving loan fund.
On Jan. 21, Wells Fargo learned that Country Coach had reached agreement to sell two motor coaches for a total of $795,000. Wells Fargo said it demanded Country Coach turn over the proceeds from the sales but the company has refused to do so.
Country Coach said it has set aside the proceeds from the sale of two motor coaches, and will deliver them to a court-appointed receiver, and noted that Riley Investment Management, the company’s majority owner, also is making a claim for the money.
Wells Fargo said Country Coach owes $7.07 million in outstanding principal and interest; $889,423 in letter of credit obligations; $32,000 in merchant credit card obligations; plus unspecified interest, fees, expenses and credit card charges.
Monday, February 02, 2009
MORE LAYOFFS IN INDIANA RV INDUSTRY
Monday, February 2, 2009
Jayco Inc. announced today (Feb. 2) that it would be reducing its work force at the company’s headquarters in Middlebury, Ind., by around 20%, impacting over 250 workers.
The cutback follows consolidation moves by Jayco late last year that transferred operations from its Entegra Coach and Starcraft RV Inc. subsidiaries to the Middlebury campus.
“Previously, we were able to avoid making significant changes to our Middlebury work force,” Marketing Director Sid Johnson told RVBusiness. “We were hoping things would stabilize. But it has become apparent that the industry slowdown and the economic recession will be deeper and longer that anticipated. I guess this a reflection of market reality.”
Johnson reported that the cuts would be implemented over the next two weeks, leaving the family-owned company’s work force at around 1,200. Over 200 of the lost jobs will be in production.
“Long term, we have faith this market will return and hopefully we can bring some of these people back,” Johnson said. “But we do not see any increase in production in the near future. This has been an extremely painful process and certainly one that we tried to avoid.”
Johnson said that despite reports from promoters and retailers that the early show circuit was helping move product, credit conditions continued to stifle dealers’ buying.
“The credit market is so seized up,” Johnson said. “Dealers are unable to get inventory financing, and then when they do sell at retail they have to be creative to get it approved.
“Right now our dealers’ inventories are around 14% lower than last year, but because of the credit situation they can’t replace inventory.”
Monday, February 2, 2009
Goshen, Ind.-based Keystone RV Co. announced today (Feb. 2) that it will consolidate manufacturing facilities in order to improve efficiencies as a result of the “weakening economic conditions that have adversely affected the RV industry.”
Keystone RV said it will lay off approximately 350 workers effective throughout April, representing approximately 15% of the company’s work force.
The Thor Industries Inc. subsidiary will also close several of its plants, including the Howe, Ind., facility, and move production of its Passport Ultra Lite product line to the company’s Goshen production complex.
“These layoffs are very disappointing to all of us at Keystone,” said Ron Fenech, Keystone president and CEO. “We realize the huge impact this will have on the lives of everyone involved. We have delayed this move as long as we could. However, we can no longer ignore the economic realities of what is happening in all of North America. These changes help us become more efficient and better prepare us for the future.”
Fenech noted that the latest wholesale and retail figures show that sales of RVs continue to decline industrywide.
“As part of Thor Industries, Keystone is financially strong and can weather just about anything the economy can throw at us," he said. "Looking ahead, we expect the next six to 12 months will be very challenging for the RV industry. At the same time, I am encouraged by the level of sales activity we see at the early season RV shows. Although sales are not great, they are much better than we would have expected given all the bad news we see in the press.”
WILL COUNTRY COACH SURVIVE THIS LATEST ISSUE?
Monday, February 2, 2009
Country Coach Inc.’s main creditor has filed a federal lawsuit against the Junction City, Ore.-based RV maker, demanding immediate payment of nearly $8 million.
The Register-Guard reported that in a complaint filed in U.S. District Court in Eugene, Wells Fargo Bank also asks a judge to appoint a receiver who would take possession and sell collateral pledged to the bank and to issue a temporary restraining order to bar the company from disposing of any collateral owed to Wells Fargo.
A hearing is scheduled Wednesday (Feb. 4) morning on Wells Fargo’s complaint.
Country Coach’s Junction City factory has been shut down since early December. The privately-held company’s CEO, Jay Howard, notified employees on New Year’s Eve that the company would close for good by the end of February unless it was able to obtain additional financing.
MONACO EXTENDING IT'S HOLIDAY CLOSING
Monday, February 2, 2009
Monaco Coach Corp. officials have notified furloughed employees that the company’s Coburg, Ore., factory will remain idled for at least another two weeks.
The Register-Guard reported that the plant was shut down for a holiday furlough Dec. 15, with production originally scheduled to resume Jan. 12. In early January, the company extended the furlough for another three weeks to Feb 2.
But now the tentative return date is Feb. 16, company spokesman Craig Wanichek said Friday. That means the plant will have been idle for at least nine consecutive weeks.
Challenging market conditions forced the company to extend the layoff, he said.
Monaco, a publicly traded company, employs about 2,200 people in Oregon, mostly in Coburg and Harrisburg.
Like other RV manufacturers, Monaco has been struggling through a down market. With the U.S. economy in recession, the industry has been hurt by poor consumer confidence and tight credit.