Bankruptcy Court Hearing Report
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Bankruptcy Court Hearing Report
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One of our readers sent us a great, on-site report of the happenings in the Feb 8th Bankruptcy Court hearing. He is an independent sports writer and we thank him for his excellent coverage of the hearing.
Once in the large courtroom it was much easier to see who had gathered for the event. Most of them were very well dressed white collar workers, many of whom were lawyers perhaps. The Judge must have moved quickly on his first case as he came up into this courtroom at about 2:20 p.m. I could sense from early on that tensions were high, and that something was brewing. His Honor quickly introduced the lead attorneys, set up a conference call wired up to several interested parties including the E.P.A., and a law firm in California.
OMC's lead attorney, Mr. David S. Kurtz of; Skadden, Arps, Slate, and Meagher immediately began to explain the mornings Dilemma. It seems that at 12:51 a.m. Chicago time, a monkey wrench had been tossed into the proverbial gears of the hearing by Brunswick Marine. That is when Mr. Kurtz lawfirm recieved a copy of a objection and request filed by Brunswick attorneys. The Judge quickly pointed out that the "Objection" filed with him, did not arrive in his office until just minutes before the hearing was scheduled to begin. I guess we all knew now, why we had a late start.
Council for OMC at that time asked for a 1 hour recess to try to determine the best way to proceed with a response to the objection filed by Brunswick. It was also stated that a offer which was "Substantially "Higher and Better" was also being requested entered into the record. We later discovered the increased bid/offer, was to the tune of $7.3 million. Brunswick wanted the entire boat group, and they were entering in to this bid with Hilco Trading Company who wanted the entire motor company. Hilco was later described to me by an attorney as "a bankruptcy liquidator more or less". The court recessed at 2:30 p.m.
At the request of the OMC attorneys, another 20 minute extension was allowed and at 3:50 Judge Katz called the hearing back to order and attorney David Kurtz went up to the stand. He told the Judge that he wanted to wait for Brunswick's council to return to the courtroom before proceeding. Judge Katz patiently waited about 5 minutes. At that time he sent someone out to notify Brunswick's law firm that the court was waiting on them. Finally, after about 5 minute of silent waiting period, council returned to a waiting court. Personally, I wouldn't think that is the way for any attorney to win the heart and mind of the court but that's just my opinion, I could be wrong. Councilor Kurtz explained that there were many issues about the Brunswick offer that they found distressful. Siting possible antitrust law violations, calls from the FTC opposing a buy out of the engine company by Brunswick, and a 30 day waiting period. He also mentioned Daily operation cost, legal fees, business loss by the merchandising and dealers network in the millions, and several other points. To make a long story short they recommended the request for reopening the bidding process, and objection from Brunswick be denied.
Brunswick's attorney argued that they had been treated unfairly in the bidding process and that therefore that bidding process should be reopened. The objection was further described and articulated by Brunswick's barrister. OMC's attorney redirected the argument explaining why that just was not so. It must me mentioned that Brunswick's objection and request was also opposed by attorneys representing the banks, the creditors, the debtors. They also asked the Judge to accept the original bid of $95 million bid offered to them by Bombardier, and Jacobs Trading Company, LLC., not allowing the bidding process to be reopened. My personal opinion was that OMC, the bankers, and the creditors lawyers won the argument, hands down.
A footnote should show that an attorney from the FTC did appeared before the court confirming the fact that a file had been opened on the acquisition of OMC's motor company by Brunswick. File # 0110091. They were concerned that these delay's proposed by Brunswick were intended to kill off OMC's remaining business and destroy the value of the motor company and were ready to move forward on the matter.
After a 15 minute recess, which seemingly brought this saga to a close, the pleas of the Debtor's Council, Mr. Kurtz, as well as the requests of all of the Banks, and creditors were ratified by Judge Katz as he denied the Objection and Motion of Brunswick Marine. Half of the gallery arose and departed at that time.
Judge Katz agreed that reopening the bids would cause undue delays, would not be in the best interest of the estate, and was not warranted by the evidence presented. He also stated that the rules and procedures had been laid out prior to the bidding, and he did not see how they were violated. The consensus of the court and the attorneys was that; Beginning 9:00 a.m. tomorrow the hearing would be reopened with the goal of working out the details of the $95 Million contract itself. They would be directly addressed and negotiated. The day should be devoted to that issue until the goal was met. Other issues and disputes including those of any additional licensees would be and creditors will be deferred to, and addressed on Monday, or Tuesday of next week. I assume that issues such as dealer rebates, etc will also be negotiated then.
Well folks it looks like there are New Owners at OMC. Bombardier will be running the motor company, and Mr. Irwin Jacobs and company will be running the boat companies. Bombardier's Lawyer said that they would still be working with Suzuki Marine for the 4 Stroke line. Ficht will come into the picture fully owned and ratified, and both sides of ownership seemed genuinely excited.
It was mentioned that the motor group would be looking to recall employees as soon as the courts gave the go ahead, and inside sources told me that Mr. Jacobs Management teams who have already been working inside most of the boat factories told the plant managers that if they can provide a plan for positive cash flow, they will be firing them up promptly as well. Those management plans are to be completed by the plant management by Friday of this week. If the courts get this all hammered out we could see production gearing up as early as mid week, next week. Judge Katz made it perfectly clear to all that he must have this done next week. It sounds like our judicial system is in tune with what the OMC network needs to get back in the game quickly. Court adjourned at 6:30p.m. CST.
So its going to be light lights on at OMC. I for one believe that this is a great day for the pleasure boating industry. Several of the Icons of the industry have just been rescued by; Irwin Jacobs and Bombardier. I am sure that a grateful industry thanks them!
Respectfully submitted,
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