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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.