The contentious lawsuit between First Capital (FCC) and Fountain Powerboats and a dozen related defendants could finally be over, according to court documents released yesterday.
All parties have agreed to a Mediation Settlement Agreement that was submitted to a special business court in North Carolina. Fountain Receiver Ronald Glass, who will be dismissed today, was ordered to return control of the company back to the defendants.
The agreement should settle the lawsuit, which was filed last autumn by First Capital against Fountain and Liberty Associates. Other named defendants included American Marine Holdings, Donzi Marine, Baja Marine, Fountain Dealers’ Factory Super Store, Fountain Powerboats Industries Inc, and Pro-Line Boats, and Joseph G Wortley, chairman of Liberty Associates.
The lawsuit sought US$61m in damages, alleging a breach in loan agreements and misappropriation of funds by Fountain. Shortly after the lawsuit was filed, the North Carolina court appointed Glass as receiver for the four Fountain brands and production facility.
The case took another turn in January when Glass filed for Chapter 11 bankruptcy protection, but a Florida judge dismissed that filing in early April.
While the financial terms of the mediation agreement remained sealed by court order, several other court documents released yesterday stipulate that control of Fountain and its affiliated brands will be returned to the defendants. In exchange, the defendants have agreed to a structured repayment plan to First Capital.
First Capital also has “no further duty, express or implied, to loan, pay or otherwise advance monies to the Defendants for any reason,” wrote Judge James L Gale, who is overseeing the case.
Under the terms, the defendants have to provide a letter by August 15, 2012 to the court, stating that they have found a lender to make cash payments to First Capital. The first payment is due by October 14, 2012. Sales proceeds from Palmetto Boats or WIP Boats will also be handed to the former lender. The order also mentioned a “BP Clause” that the defendants must honour, or risk default, but the terms of the clause were not specified.
If the terms are not met, First Capital could request a default of the deed of trust for the Fountain facility in North Carolina and other “FCC collateral.”
Gale also ordered that Glass “transfer custody and control of the assets” by 8:00 EDT this morning, saying ownership “shall re-vest in the Defendants.” The agreement also specified that the defendants and receiver would “execute mutual general releases of any and all claims against each other.”
A Fountain spokesman did not return a request for comment by presstime. Gale also ordered a “status conference” on May 31.