Fleetwood Enterprises Liquidates, Products Live On

By Eric Miller

Is the MH Industry giant totally gone?

Fleetwood is liquidating. That comes as sad news to many manufactured home owners and retailers. With a history extending back to 1950, Fleetwood Enterprises, manufacturer of manufactured homes, recreational vehicles and travel trailers, once employed thousands and seemed a permanent part on the American landscape.

The demise spent some time in coming. Fleetwood Enterprises had a loss every year since 2001. According to Chapter 11 papers filed March 10, in U.S. Bankruptcy Court in Riverside, California, at that time the company had assets of $558.3 million and debt of $518 million.

This month a U.S. bankruptcy court approved a plan to liquidate the rest of the company's assets in order to pay creditors. In name and products, however, the company lives on. The manufactured homes division was sold to Phoenix-based Cavco industries, and a buyer for the recreational division was found in a New York-based equity firm that moved operations to Decatur, Indiana. Military housing operations were sold to Clayton.

"We've done a lot over the last year," Craig Millet, Fleetwood's attorney to U.S. Bankruptcy Court Judge Meredith A. Jury told MHMSM.com, explaining the sale of significant portions of the company. "In that sense, those assets are still operating and producing products. The rest of the business as it was structured is being liquidated. Most of the liquidation has already occurred."

The assets purchased by Cavco include seven operating manufactured housing plants, one office building, one idled plant, all related equipment, accounts receivable, inventory, certain trademarks and trade names, intellectual property, and specified contracts and leases.

Cavco President Joe Stegmayer told MHMSM.com that Fleetwood Homes today is very much alive and actually stronger than it has been in decades.

"Fleetwood Homes became part of Cavco, and we continue to operate the factories with many of the same capable and highly experienced people who helped build the company," Stegmayer says, adding that at the operating level there were no significant problems in Fleetwood Homes that brought on the demise of Fleetwood Enterprises, Inc.; rather, its problems were the result of high-level corporate strategic decisions in which current operating management were not involved.

"We are doing quite well in this difficult economic environment and expect to be here for many years to come, building high-quality, affordable homes," Stegmayer adds.

Stegmayer says the Fleetwood brand was an important part of the purchase and the use of that brand will continue. In addition to the brand value, Stegmayer says that the sixty-year history of building homes and the great system of dealers and distributors they have representing them around the country were also attractive to Cavco.

The corporate cultures of Fleetwood and Cavco have come together very well, Stegmayer says. "I've done a lot of acquisitions over the years and this has been the smoothest I've ever seen."

Trendsetter Modular

To CMH Manufacturing, a division of Clayton Homes and Berkshire-Hathaway Company, went Fleetwood Enterprises' Trendsetter military housing assets for a purchase price of $4.5 million in cash, according to Modular Home Builder. Trendsetter manufactures modular barracks for the U.S. military in two adjacent facilities located in Belton, Texas, south of Waco.

Work at Trendsetter includes one of the largest residential modular projects ever—on an army base in San Antonio.

According to a press release, Trendsetter, the Army found it could create housing for 1,200 military medical trainees faster and more cost-effectively by turning to modular construction. At Fort Sam Houston, the 250,000 square feet of barracks were transported and assembled, keeping the construction time involved to an absolute minimum. Eventually there will be five such buildings, supplying housing for 3,000 members of the armed forces.

Trendsetter manufactured the modular units in their Belton, Texas facility and then transported each module to the site in San Antonio. The building, which stands four stories tall, features 600 hotel-style apartments. Along with Trendsetter, other companies involved in the project included Hensel Phelps Construction Co. and the Warrior Group.

RV and Travel Trailer Divisions

In July, Fleetwood sold its RV division to a New York-based equity firm that moved operations to Decatur, Indiana. The recreational division now operates as Fleetwood RV, Inc.

A buyer could not be found for a division of Fleetwood Enterprises, Inc. that made travel trailers. It was shut down and just liquidated.

Millet says the rest of the liquidation of Fleetwood Enterprises could take as long as three years.

"The majority of work will be done in a year and then there will be the languishing ten percent," Millet says. "In the meantime, proceeds will be distributed to those with allowed claims."

In all, Millet says there are some 300,000-400,000 Fleetwood Enterprises, Inc. creditors and $3 billion in claims, a number he says could be inflated by 6-10 because people filed duplicate claims, or filed more than they were entitled to.

"In terms of the number who have filed claims, it's six figures," Millet says.

"You have people who don't really have a claim, but filed one anyway," Millet says, explaining the remaining process of completing the liquidation. "That's what has to be done with a liquidating trust: process all those claims, figure out which are the legitimate claims, get rid of the duplicates and figure out the appropriate amount. To the extent they can't reach an agreement with the claimant, the trustee will bring claims litigation before the bankruptcy court to resolve those. That's rare; most are done through negotiation."

Millet says secured creditors will be paid in full, unsecured creditors are will receive between 9-15 percent on their claim depending on the amount the court is able to liquidate and the number of claims that are ultimately allowed.

According to news reports, Fleetwood Enterprises' biggest unsecured creditor is Bank of America Corp., which may be owed $62.2 million. Caspian Capital Management LLC and Angelo, Gordon & Co. have unsecured claims of $32.4 million and $20 million, respectively.

For the most part, the essential components of Fleetwood Enterprises, Inc. are alive and well, continuing to produce the products the company was known for, in some cases under the Fleetwood name.

As for the broader market for manufacture homes, Stegmayer says things are now improving somewhat, but there are still obstacles that need to be overcome. The first is lack of financing for buyers and the second is consumer concern about the economy that may be keeping buyers from making important purchasing decisions.

For the once-parent company, Fleetwood Enterprises, Inc., Stegmayer says perhaps "rest in peace" is an appropriate journalistic comment.

More information: http://www.kccllc.net/Fleetwood