Genmar bankruptcy trustee moves to recover funds
November 30, 2011
Filed under News
MINNEAPOLIS — Irwin Jacobs, former owner of bankrupt Genmar Holdings Inc., was recently listed as a defendant on a complaint filed in U.S. Bankruptcy Court, which moves to recover $2.74 million Genmar paid to Jacobs in what the trustee believes is a preferential transaction.
Charles Reis, trustee for Genmar’s bankruptcy case, said in an interview with Boating Industry yesterday that the complaint does not accuse Jacobs of any wrongdoing, instead it seeks to ensure all Genmar’s creditors are compensated properly.
“If people received a preferred payment or status, it is my obligation to try to get it back so that everyone is treated fairly. It is not necessarily anything was done dishonest or illegal. If they weren’t treated fairly as defined in the code, then I have the obligation to get that money back,” Reis said.
According to the complaint, the payments to Jacobs were preferential due to the transfer being made while the company was insolvent during the year prior to its bankruptcy filing, as well as Jacobs’ status as an insider within Genmar.
For his part, Jacobs refutes the claims made by the trustee and intends to contest the recently filed claims, along with a number of others made regarding Genmar’s creditors. He disputes that Genmar was insolvent at the time of the payments, which he says were made as part of normal business activity.
“They are throwing whatever they can against the wall and see if it sticks,” Jacobs said in an interview yesterday.
According to a complaint filed against Jacobs on Nov. 19, Genmar transferred Jacobs nearly $775,000 to cover the interest on a buyout agreement made by Jacobs and other investors who purchased Genmar stock from a prior investor. In another transaction, the complaint said Genmar issued Jacobs more than $1.8 million for a yacht payment that was recorded in its ledger as a “92’ Windsorcraft.” However, according to the complaint, Genmar either never received the yacht or the value of the yacht was less than the payment.
Phillip Bohl, counsel to the bankruptcy trustee for Genmar and most of its subsidiaries, issued a statement on the complaints filed against Jacobs and other insiders and affiliates of the companies in bankruptcy:
“Payments were made to Genmar Holdings’ insiders and affiliates that, under bankruptcy law, may be recovered by the trustee, and we are rightfully seeking to recover these payments for parties owed money.”
Reis said he believes he has now identified all payments made by Genmar that go against the bankruptcy code, which ensures no creditors are unfairly paid before others.
Since Genmar’s bankruptcy, Jacobs said Reis and his counsel have gone after anyone who received a check from Genmar in the year prior to their bankruptcy, including every employee at Genmar.
“Anything that was spent out, was spent out for the right reasons,” Jacobs said.
Jacobs plans to vigorously defend against the complaint, which he does not believe will be settled in favor of the trustee.
“It is going to be a long, cold, gray day before they are going to collect on this thing,” Jacobs said.