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Join Date: Aug 2009
Location: Richmond, Virginia
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Re: Hauled Out & Marina Closes, What Happens?
You certainly have valid concerns. Sailnet member jaronson would have valuable information to contribute as a fellow Virginia-licensed attorney who has actually foreclosed on a marina.
If the owner files chapter 11, the owner is usually allowed to continue operations as the debtor in possession. If mismanagement is suspected, a trustee may be appointed to manage operations. You may be a creditor of the chapter 11 debtor who should participate in the process by filing a proof of claim and tracking the procedure. A larger debtor with numerous creditors may have a creditors committee consisting of the largest creditors with a greater say in the direction of the bankruptcy. Chapter 11s sometime end up converting to chapter 7 liquidations, in which the assets may be sold off piecemeal to pay the claims.
If the noteholder exercises its rights against collateral, which may include real and personal property, it would likely continue to operate the marina as a going concern provided it can generate cash flow, while it shops the property for a new owner. As business valuations are often based on multiples of gross revenue, the bank may have an interest in demonstrating the revenue potential of the marina when properly managed.
The travelift may have financing separate from the mortgage/deed of trust against the real property, in which case that lender may repossess the property and sell it. Given the relatively high costs of moving the travelift and its value in relaunching the boats currently on the hard, it seems unlikely, although not impossible, that someone may remove it from the marina.
Capt. Randall's experience would likely be the worst possible case. You and the other owners may have to rent equipment to remove your property. While statutory and contractual liens exist, they give the storage company/marina/bailee rights only in the event of a default in payment. Although a popular saying, in reality "possession is [not] 9/10s of the law". Legal title and rights matters more. If you decide to keep your boat on the hard, I would keep the marina/lender updated with your contact information so you can arrange for continued payment to the appropriate party.
Obviously, the safest course is to not store your boat there.
This is general information and not legal advice. I am not licensed in N.J. and am not giving any information specific to the laws of that state.
Last edited by jameswilson29; 10-26-2012 at 06:53 AM.