This Really Sad For Cc' Future!
Country Coach officer describes deals made
The RV maker’s chief financial officer answers questions about buying land for its CEO and trading motor homes for payments
By Tim Christie
The Register-Guard
Posted to Web: Tuesday, Apr 21, 2009 10:56PM
Appeared in print: Wednesday, Apr 22, 2009, page A5
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Kevin Clark/The Register-Guard
Country Coach resumed production earlier this month after idling its plant for more than four months. The company is reorganizing its financing under Chapter 11 bankruptcy protection from its creditors.
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Country Coach bought a half-*million-dollar piece of property for its CEO in 2007, gave creditors and landlords RVs in lieu of payment and operated without liability insurance for its directors and officers for about a month last winter, the company’s chief financial officer said Tuesday.
Chief Financial Officer Mark Andersen spent the day at the U.S. Courthouse in Eugene answering a battery of questions under oath from Rebecca Kamitsuka, attorney for the U.S. Trustee’s Office in Eugene, and from creditors.
Country Coach is in Chapter 11 bankruptcy seeking protection from creditors while it reorganizes its finances, and Tuesday’s meeting was part of that process. Kamitsuka, representing the public interest, questioned Andersen in detail about the company’s operations, finances and plans for emerging from bankruptcy, and invited creditors to do the same.
The company’s Junction City RV factory closed in mid-November, putting 500 employees out of work.
The company entered Chapter 11 bankruptcy in February after creditor Wells Fargo moved to seize the company’s assets.
Earlier this month, a bankruptcy judge approved a complex financing plan in which Wells Fargo will give the company access to a $3.2 million revolving loan fund to allow it to carry out a plan to sell its coaches directly from the factory, rather than through a dealer network.
Production has resumed with a work force of 100, who are turning out one coach per week — a far cry from the company’s peak in 2006, when it employed 1,800 people and cranked out 16 coaches per week.
Under questioning by Ed Morgan, CFO of Guaranty RV, a Junction City RV dealer, and by Douglas Schultz, an attorney for the unsecured creditors’ committee, Andersen said the company spent $500,000 on a piece of rural property on Clearingside Drive, off Territorial Highway about 5 miles west of Junction City, and gave it to CEO Jay Howard.
The property deal was part of Howard’s compensation plan negotiated after new owners bought Country Coach early in 2007, he said. As part of the agreement, Howard signed a noncompete agreement in which he promised to stay at Country Coach for at least two years, said Thomas Hunts*berger, a bankruptcy attorney representing Country Coach. The company agreed to buy the Clearingside property with Howard and, if he stayed with the company for two years, Country Coach would give him the property, he said.
County property records show that Howard and Country Coach jointly bought the 39-acre piece of property, including a 1,200-square-foot farmhouse built in 1928, for $500,000 in June 2007, four months after new owners bought Country Coach. The Lane County Assessor’s Office assessed the property last year at $48,277 and estimated its real market value to be $164,549.
Andersen said that, while Howard’s name is on the deed, he did not contribute money toward the deal. Country Coach paid cash for the land, he said.
Huntsberger said when the two years was up in February, Bryant Riley, the company’s majority owner, executed a deed to grant the property to Howard, but he said the deed has not yet been recorded. It’s not clear if the deed was effectively transferred from Riley to Howard, he said. “It’s undetermined if the company still has ownership,” he said.
County property records, however, indicate that Country Coach transferred the deed to Howard several months ago. A quitclaim deed, dated Dec. 8 and effective Jan. 1, granting the property to Howard was recorded with Lane County on Jan. 5. The deed was signed by Howard, acting as president and CEO.
Huntsberger said after the hearing that he was relying on a title report dated March 25, and if a deed was recorded in January, “It’s news to me.”
Country Coach may have paid some employees to work on the property, including putting in an RV pad, Andersen said.
Andersen also said Country Coach traded coaches to Bob Lee and Ron Lee, principals of Lee Joint Ventures, the landlord for much of the Country Coach factory, in lieu of “several months” rent. Bob Lee is the founder of Country Coach but no longer is connected to the company.
Similarly, Country Coach traded motor homes to two vendors, API, a Eugene paint and industrial paint and finish company, and Aqua-Hot Heating Systems of Colorado, in lieu of payment, he said.
None of the parties at Tuesday’s hearing suggested the actions taken by the company were not legal.
Under questioning by Kamitsuka, Andersen said the company’s liability insurance covering the actions of directors and officers lapsed in February. Such insurance is common in the corporate world and provides protection to company officials in case they get sued in connection with their corporate duties.
In response, company officers “chose not to take authoritative action” on behalf of the company, he said.
“There was a general understanding people wouldn’t make decisions,” he said.
CEO Jay Howard remained in charge of the company, he said.
The insurance was not reinstated because bankruptcy law provides liability protection, he said.
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Comments
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Harrr L
04/22/2009 09:05AM
Why would You even retian Jay Howard ...let alone rob a cash poor company of $500,000 for a bonus.
J.RETIRED
04/22/2009 09:44AM
With all that has gone on with the Howards , I wonder how much of the "BENEFITS" that are listed in the above reporting has been looked into for State and Federal taxes or has even been declared?
Wondering
04/22/2009 11:19AM
The question I am wondering is why does a company so small need so many executives? If you look at their website they have 8 vice presidents and Jay as a CEO. So almost 10 percent of the company is made up of executives that seems a little on the high side to me. I can't imagine any of them making less the 50 to 60 k/yr. In fact when it was a public company I think the CFO Mark Anderson's salary was listed around 180k. Do you really think he took a 50 percent pay cut? That would still have him making around 90/k yr.
Once again it looks like the executives of the company are protected at the expense of the workers and vendors.
Jen-JC
04/22/2009 12:42PM
CC is not going to suceed until they can the Howards. They can build coachs all they want but who is going to buy them with the Howards Reputation around town? And will they honor the Warranty work? Not likely.
Word of mouth is the key in the RV business and they done blew it years ago! Jay can't even manage a Marriage and his Family, let alone a Company!
LLPOF
04/22/2009 12:52PM
Did you notice that three of those executives are named Howard? Do you suppose they are related? How much interest does the CEO have in helping CC to survive now that he has fufilled his contract and received his piece of property? Hmmmm
If Mr. Anderson was making 180K, does anyone really think that the CEO or his family was making less?
Most of these executives were at CC while all the workers were layed off. I have a feeling that they were not working for the good of mankind, but rather for those large salaries and benefits.
braheem
04/22/2009 02:20PM
Howard and Country Coach jointly bought the 39-acre piece of property, yet Howard did not contribute any money?
Country Coach employees may have worked on this property...
all the while employees are getting laid off?
Something (someone) really stinks !!!
OregonWoods
04/22/2009 03:17PM
<quote>I wonder how much of the "BENEFITS" that are listed in the above reporting has been looked into for State and Federal taxes or has even been declared?</quote>
I would be willing to bet this is exactly WHY the bonus was given in the form of property rather than cash. The financial "hit" would be much lower with this arrangement.
Also, real estate law protects land owners, especially if that land has a home on it, and the owner happens to make that home their primary residence.
smells fishy
04/22/2009 06:00PM
Hmmm...... I used to work at CC till 12/07. I don't remember the employees getting any kind of bonus in 07.