Genmar Bankruptcy Leaves Yachts in Drydock

Yacht maker deep-sixed

Imagine this conversation between a wealthy industrialist and his portly butler. It comes courtesy of sportswriter Jim Baker. I’ve embellished it a bit to add some talk about what’s happening with the Genmar bankruptcy.

“Molesworth, draw a bath aboard my Carver yacht.”

“Terribly sorry, sir. You sold the pleasure craft to help cover your stock market losses. Now the parent company – Genmar Marine – has gone bankrupt.”

“Such indignity! Use the ornate claw tub off the east solarium, then.”

“As you wish, sir. Will there be anything else, sir?”

“No, Molesworth, you are free to go after that task is complete. However, I do not wish you to ‘raid’ the larder on your way out, as has been your custom of late.

“Very good, sir. Good night.”

Emergency loans come too late

Unfortunately, Molesworth and his employer have lost their piece of ocean luxury due to the Genmar bankruptcy. Genmar Holdings will have no cash til payday loan to help close the gap, as Genmar Marine is filed Chapter 11. Sam Black and Chris Newmarker report for the St. Paul Business Journal that the owner of the Brown County, Wisconsin yacht maker formerly known as Carver Yachts is in need of the bankruptcy protection. A reorganization petition was filed in U.S. Bankruptcy Court in Minneapolis along with “more than 20 related subsidiaries.”

Looking at the balance sheet, it seems that Genmar has between 100 and 199 creditors on the books. Its assets rage from $10 to $50 million. But the bad news (for both the Genmar bankruptcy and its creditors) is that the red ink is plentiful. Genmar Holdings is saddled with liabilities that range anywhere from $100 million to $500 million, this according to Minneapolis court documents. To give you an example of Genmar’s largest unsecured creditors, there is a law firm out of Minneapolis called Maslon, Edelman, Borman, Brand. Genmar Holdings owes them a hefty $186,700 sum. Merchant & Gould, another law firm out of Minneapolis, is waiting for their $155,800 to be reimbursed. Apparently yachts are a big thing with lawyers. Who would have thought?

But what about the secured creditors?

That’s where the big money comes from. The company only has two that are listed for the Genmar bankruptcy, but they’re big boys – banks. Wells Fargo & Co. and Fifth Third Bank are on record, according to the Minneapolis Star Tribune. According to a company spokesperson, Genmar will receive debtor-in-possession proposal from both banks in order to suggest financing options.

Let’s put off that expansion…

Genmar Holdings is the parent company for Genmar Yacht Group. This group includes the Pulaski manufacturer of Carver and Marquis yachts. In April of 2008, the Genmar Yacht Group had as many as 1,000 employees and trumpeted plans for a $27 million expansion of their business. Today, 90 people maximum work for the company, per the Green Bay Press-Gazette.

Irwin Jacobs, the Genmar chairman and CEO, has said that “sales of his company’s fishing boats, luxury yachts and other products started to decline in 2008, but worsened in recent months,” report Black and Newmarker. Fiscal 2009 is projected to be around $460 million, which is a 50 percent drop from the previous fiscal year.

“If someone would have said to me as recently as even one month ago that Genmar would someday be filing for Chapter 11, I would have said it was not even a remote possibility,” Jacobs said.

That’s al-u-MIN-i-mum to you, mate

In light of the oncoming Genmar bankruptcy, the company had been making a number of strategy changes over the past few months, one of these being a plan to launch an entire product line of cheaper aluminum boats. Sagging sales dictate drastic measures, but would Molesworth and master gone for such a tin can of a ship? Would aluminum be too uncivilized for their fine palates? Would they resort to a cash til payday loan or emergency loans before they’d sail the seas in a Schlitz schooner? Count me in… I currently have no ships in my armada!

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