The court-appointed receiver handling Christensen Shipyards, the financially troubled builder of yachts in Vancouver, wants to sell all or “substantially all” of the company’s assets to Henry Luken, the deep-pocketed Tennessee businessman who owns 50 percent of the company.
Court documents indicate the deal between the receiver, Miles Stover, founder and president of Turnaround Inc., and Luken may enable Christensen to avoid liquidation and to continue operations for the foreseeable future. Stover has restored operations at the company and re-hired more than 70 employees, according to documents filed with Clark County Superior Court.
Meanwhile, Ocean Alexander, a customer of Christensen’s, has won a court ruling that two unfinished hulls are not receivership property and that Ocean Alexander may remove them from Christensen’s site at 4400 S.E. Columbia Way.
This week, in an unrelated action, a 164-foot yacht was moved out of the shipyard for placement on a barge and shipment to a Seattle shipyard for completion of construction.
As Stover moves to sell assets to Luken for $5.5 million, court documents filed by the receiver indicate he found a financial mess after being appointed to take responsibility for Christensen. An investigation “revealed books of records that indicate a history of very weak internal controls, a general lack of segregation of duties, and non-adherence to generally accepted accounting principles,” Stover wrote in a court filing this month that outlines Christensen’s known creditors and property. “The Receiver has taken actions, including the termination of the previous accounting staff, and continues to take aggressive actions focused on bringing the confidence factor attached to future financial reports to a proper level.”
These and other details are part of the ongoing fallout from Christensen’s March 20 entry into a court-ordered receivership process. The process, involving a company that once sold a yacht to Tiger Woods and that once boasted of a turnaround after the Great Recession, began more than two months after details emerged of multiple creditors circling the company in December and January.
In February, one employee told The Columbian that Christensen’s workforce had steadily declined, through furloughs and layoffs, from a range of 400 to 450 down to a range of 100 to 110. Other employees, who wished to remain anonymous, have cited similar numbers to the newspaper.
Since February, several companies filed lawsuits against Christensen, including suppliers to the company. In March, Luken sued Christensen, asking a judge to appoint a receiver to assume control of the company’s assets. As to Stover’s proposal to sell assets to Luken, Superior Court Judge Gregory Gonzalez is expected to decide the matter June 19. The deal could close no later than June 30, court documents show.
‘In good faith’
In proposing the deal with Luken, Stover said in recent legal filings that a “prompt sale of all or substantially all of the assets to a buyer that will continue to operate Christensen as a going concern will provide the highest and best return for creditors under the circumstances, without need for, or expense associated with, bidding or auction procedures and/or a delay in closing a sale of the assets.”
Under Stover’s proposal — filed on May 20 in Superior Court and outlined in a letter of intent between Stover and Luken — Luken would buy all or most of Christensen’s assets for $5.5 million. Luken, or an entity owned or formed by him, would get control of contracts for the completion of hulls 36, 38 and 40. A fourth ship, hull 42, may be excluded from the deal. Luken also would get control of Christensen’s land lease and a sublease.
“This letter of intent is not a binding agreement, but rather is an expression of the intent of Buyer and Seller regarding the proposed transaction,” Luken wrote on May 19 to Stover’s attorney, Albert Kennedy of the Tonkon Torp law firm in Portland.
Stover said in legal filings that since being appointed receiver he’s been in discussions with various potential purchasers, not just Luken. Although these discussions with other potential buyers have occurred, Stover said, “no other party has submitted an offer or letter of intent acceptable to the Receiver for the purchase of Christensen’s assets.”
The letter of intent to which Stover and Luken agreed “was negotiated and entered into by the parties without collusion, in good faith, and from arms-length bargaining positions,” Stover said in court filings.
Meanwhile, Judge Gonzalez decided on May 22 to allow Ocean Alexander to remove from Christensen’s site two unfinished hulls, A-202 and A-203, because they’re not assets belonging to Christensen or to the receivership estate.
Under a construction contract signed in August 2009, Christensen had agreed to build three 120-foot yachts — A-201, A-202 and A-203 — for Ocean Alexander, according to court documents.
Christensen delivered A-201 to Ocean Alexander in August 2012. Christensen stopped working on Ocean Alexander’s hulls in December 2013. Currently, hull A-202 “is approximately 21 percent complete,” court documents show. “Hull A-203 is less than 1 percent complete and consists of a mold only and supplied by OA (Ocean Alexander).”
Ocean Alexander has “advanced more than $6 million to (Christensen) for construction of these hulls, which is over 46 percent of the contract price and well in excess of the progress on the construction of the yachts,” according to court documents.
The first sign of Christensen’s financial problems emerged in December 2014, when the company announced it was “currently working on a multipart ownership restructure.” In February, workers arrived one morning to start their day at the company only to find the gates locked. Later that month, employees showed up to get paychecks, days after learning the company had again halted production.