May 16, 2012
By: John Clark
Silverton Marine Corp., a yacht manufacturer based in New Jersey, filed for Chapter 11 bankruptcy this week, according to a report from the Chicago Tribune.
The company reportedly stopped building boats in February, and is hoping that bankruptcy’s bankruptcy's automatic stay gives it some breathing room as it attempts to restructure its finances.
Sources indicate that Silverton is an internationally famous company and that it sold its luxury boats at 90 exclusive dealerships in the United States, as well as 80 dealerships in 40 other countries.
Not surprisingly, the recent recession took a large chunk out of its usual patrons’ deep wallets, and demand for Silverton’s yachts took a steep dive. According to the company’s bankruptcy lawyer, sales have been severely lagging for the last three years.
The company is not sure whether it will retain its current owners after the bankruptcy is completed. In the words of the company’s attorney, Silverton is "looking at various options right now, a stand-alone restructuring plan or alternative restructuring including a sale."
Silverton’s bankruptcy is part of a larger bankruptcy filing by its parent company, Morgan Industries Corp., a Florida-based group that sells powerboats and sailboats through nine different companies, all of which entered bankruptcy court this week.
Before its bankruptcy filing, Silverton was operating with what one local development director calls a "skeleton" crew, and the company had already fired several hundred employees.
In March 2010, an Atlantic City development group approved a $2 million loan to Silverton to help it begin to construct a more diverse range of boats. The company, however, eventually declined the loan because it determined that its biggest problem was a lack of sales, not diversity of products.
Local developers lament that the global recession crippled the luxury yacht market, as creditors grew much tighter with financing for such massive purchases. Silverton’s management team was, ultimately, powerless in the face of global financial realities.
The team hopes that the company will be able to restructure its debts in bankruptcy court and emerge as a stronger company. This task will not be easy, as the company reportedly owes between $10 million and $50 million to several different creditors.
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