Monaco Coach files Chapter 11 bankruptcy

By Caroline Salls

Pittsburgh, March 6 - Monaco Coach Corp. filed Chapter 11 bankruptcy Thursday in the U.S. Bankruptcy Court for the District of Delaware.

As previously reported, the company announced in early January that it would evaluate its strategic alternatives, including joint ventures, mergers or other strategic transactions, with the assistance of Imperial Capital LLC.

On March 2 it said it was terminating the majority of its workforce and continuing to seek additional financing or capital, or a corporate transaction.

"We have taken intensive measures to overcome our weakened liquidity position. The decision to restructure the business through a Chapter 11 filing should provide us with the opportunity to strengthen our balance sheet, create a more efficient expense structure and move expeditiously toward a sale of parts or all of the company," said Kay Toolson, chairman and chief executive officer, in a news release.

On Jan. 13, Monaco Coach received a waiver of term loan defaults stemming from non-compliance with the minimum amount of cash and availability required for December and the contemplated disposition of property.

In addition, the company entered into forbearance agreements with its flooring lenders in February.

The company said last month that repurchase demands by the flooring lenders had increased substantially above historical levels because of the deterioration in the market for recreational vehicles and resulting defaults by the dealers under their credit lines.

Monaco Coach said the increase in repurchase demands had also affected borrowing availability under the company's loan and security agreement with Bank of America NA and GE Commercial Distribution Finance Corp. because the increasing repurchase demands by the flooring lenders increased borrowing base reserves.

Monaco had $442.12 million in total assets and $208.82 million in total debt as of Sept. 27, according to its bankruptcy petition.

The company's largest unsecured creditors include:

• Custom Chassis Products LLC, Elkhart, Ind., with a $6.84 million trade claim;

• Quality Enterprises USA Inc., Naples, Fla., with a $2.68 million trade claim;

• Lazydays RV Center Inc., Seffner, Fla., with a $1.11 million trade claim; and

• Onan Corp., Fridley, Minn., with a $1.05 million trade claim.

According to court documents, the company ordered a mass layoff and plant closings on March 2.

A group of the laid off employees is suing the company for 60-day's back pay and benefits because Motor Coach allegedly terminated them without the written notice required by the Worker Adjustment and Retraining Notification Act.

Monaco Coach is a Coburg, Ore.-based designer, manufacturer and seller of motor coaches and towable recreational vehicles. Its Chapter 11 case number is 09-10750.

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