Struggling national boat dealer files for Chapter 11 bankruptcy

The Fort Worth, Texas, based boat dealer chain files for Chapter 11 bankruptcy after defaulting on a $105 million bank loan.

May 23, 2024 - 10:30

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Struggling national boat dealer files for Chapter 11 bankruptcy

Bankruptcy filings by boat manufacturers and retailers are rare.

Canadian boat manufacturer Limestone Boat Co.'s subsidiary Ebbtide Holdings, doing business as Limestone US and TN Composites, on Feb. 22, 2023, filed for Chapter 7 liquidation in the U.S. Bankruptcy Court for the Middle District of Tennessee. The filing triggered a default on debt owed to TSX Trust Co.

In Europe, Swedish boat maker Ryds Boats in November 2023 filed for bankruptcy and was purchased by Norwegian manufacturer Cormate. In January 2024, German boat builder SAY Carbon Yachts filed for insolvency.

The most recent significant boat-related bankruptcy involved ski and wake boat dealer Tommy's Fort Worth and 16 affiliates, which operate nationwide as Tommy's Boats dealerships. The debtors on March 20 filed for Chapter 11 bankruptcy to restructure their debts and obligations after defaulting on about $105 million of secured debt owed to M&T Bank.

The Fort Worth, Texas-based debtors listed $1 million to $10 million in assets and $100 million to $500 million in debts in its petition. The debtor listed over $123 million in secured and unsecured debts in its petition.

The Fort Worth, Texas, boat retailer files for Chapter 11 bankruptcy.
Image source: Shutterstock.

Tommy Boats was put into receivership

In a May 20 letter to Tommy Boats customers with outstanding deposits and other monetary claims, the debtor asserted that most of the companies doing business as Tommy's Boats were put into receivership on April 22 by the Circuit Court for Kent County, Mich., after the company failed to honor its obligations to M&T Bank. The company also owed back rent to landlords, and some of them had changed locks on certain facilities making access by the receiver difficult.

The letter said that since all of Tommy Boats' assets were encumbered by security interests of M&T Bank, and the bank was likely to be under-secured and owed millions after disposition of all the debtor's assets, no assurance could be made that creditors would recover any outstanding claims. This means any customers who had made deposits for down payments on boats that had yet to be delivered would likely not receive any reimbursement.

However, Tommy Boats' Chapter 11 bankruptcy filing places an automatic stay on all legal proceedings while the case is ongoing. This might give some hope to creditors in addition to M&T Bank.

Several customers nationwide have been unable to get Tommy's to return their deposits, including a Colorado customer whose $7,350 deposit check was cashed by the company, but no boat was delivered and the deposit has not been returned, ABC television affiliate Denver7 reported.

More bankruptcy:

Tommy Boats is also involved in other litigation as it filed a lawsuit on April 10 in the U.S. District Court for the Eastern District of Tennessee against one of its dealer partners, Loudon, Tenn.-based Malibu Boats.

“The company intends to vigorously defend itself against the claims made by Tommy’s," Malibu Boats said in an April 11 statement. "Tommy’s was formerly a longtime dealer partner of ours, and we ended our relationship due to concerns about Tommy’s own conduct and its financial soundness. Indeed, Tommy’s lender is also suing it for violating the agreements Tommy’s used to finance the purchase of our boats. We will always act to protect our business, our customers and our shareholders."

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