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Bankruptcy Partner Steven S. Newburgh Successfully Challenges Filing of 10 Voluntary Chapter 11 Petitions

Wed 21 March 2012 Press Releases

Bankruptcy Partner, Steven S. Newburgh successfully challenged the filing of 10 “Voluntary” Chapter 11 Petitions in the U.S. Bankruptcy Court, Southern District of Florida, by Ronald L. Glass and his company, GlassRatner Advisory & Capital Group, LLC, collectively acting as “Temporary Receiver” from business court litigation pending in the State of North Carolina. Mr. Newburgh represented the ultimate owner of the 10 entities, Joseph G. Wortley. The debtors were alleged by the Temporary Receiver to be American Marine Holdings, LLC, Donzi Marine, Inc., AMH Government Services, LLC, Baja Marine, Inc., f/k/a Baja by Fountain, Inc., Fountain Dealers’ Factory Super Store, Inc., Fountain Powerboat Industries, Inc., Fountain Powerboats, Inc., Fountain Powerboats, LLC, Palmetto Park Financial, LLC and Pro-Line Boats, LLC. In a hotly contested battle between the entities’ largest secured creditor, FCC, LLC, d/b/a First Capital and Mr. Newburgh’s client, the burden of proof required to grant the client’s Motion to Dismiss the 10 Chapter 11 Bankruptcy Petitions was met. The Motion to Dismiss alleged, inter alia, that Ronald L. Glass and GlassRatner Advisory & Capital Group lacked legal authority to file the 10 Chapter 11 filings in the State of Florida. Mr. Newburgh argued that determination of authority, or lack thereof, of a Temporary Receiver who was appointed by a court in another jurisdiction (NC), must be by reference to State law. The Court, Honorable Erik P. Kimball presiding, agreed with Mr. Newburgh’s arguments on behalf of his client and dismissed the Chapter 11 proceedings which were being jointly-administered. The bankruptcy proceedings were commenced on January 18, 2012 by Mr. Glass’ filing of the 10 Chapter 11 Petitions. Judge Kimball ruled that Mr. Glass did not have the requisite authority to file the Chapter 11 Petitions, referencing the voluminous transcripts from the hearings held before the North Carolina Business Court and the orders that followed. From the date of the filing of the 10 offending Chapter 11 Petitions, January 18, 2012, to the date of the evidentiary hearing of March 16, 2012, the Bankruptcy Court Docket in the case (12-11354-EPK) shows over 150 Docket entries as the parties engaged in heavy uploading to the Court’s electronic filing system leading up to the final evidentiary hearing. We congratulate Mr. Newburgh for saving Fountain Powerboats, Donzi Marine and the rest of his client’s boat manufacturing entities and facilities from the grip of bankruptcy in this important case concerning the extent of authority of a state court Temporary Receiver in the bankruptcy arena.

Mr. Newburgh can be reached at the West Palm Beach, Florida office of McLaughlin & Stern, LLP, Tel: 561-659-4020.