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“We had a good
week up here,” Mike Kelsey, Jr. says, with an evident smile in his
voice. It’s mid-January, and Kelsey is sitting in the Sturgeon Bay,
Wisconsin, office of the chairman of Palmer Johnson—the same office
previously occupied by his late father, Mike Kelsey, Sr., who took the
yard to world prominence. It’s surely an emotional moment for that
reason, but it’s also emotional because the younger Kelsey and the
man he works for, the former professional cricket player and present owner
of Palmer Johnson, Timur (Tim) Mohammed, have been meeting with craftsmen
of the yard and setting up a transition team to return the famed Sturgeon
Bay facility to solvency.
Nearly ten months after
the shipyard filed for Chapter 11 protection when creditors forced it
into Chapter 7—a period in which rumors flew about the yard ceasing
operations and about what Mohammed and other suitors would do with it
upon acquisition—Palmer Johnson seems headed toward solid ground.
“There were a lot
of people who believed in the company, but no one believed as much as
Tim,” Kelsey says. He explains that since Mohammed acquired Palmer
Johnson Savannah (formerly Intermarine Savannah) in Savannah, Georgia,
last year, it was natural to also want to acquire the Sturgeon Bay yard,
given the quality of the yachts that had been turned out of there for
decades.
Under the terms of the
deal, Mohammed will pay $850,000 to unsecured creditors, meaning companies
to which Palmer Johnson owes money. (At presstime, in keeping with the
bankruptcy process, a judge was to decide which creditors are most important
to pay off. The full debt totals $5 million, according to court documents.)
Equally important is
the fact that Mohammed also retains the rights to the Palmer Johnson name
and trademark, which he’d acquired in February 2003 from Andrew McKelvey,
the yard’s previous owner. (Mohammed had essentially gotten them
in exchange for forgiving a $1-million loan he’d made to the yard
in January 2003 while it was building him the 120-foot Cover Drive.) In
the weeks following the bankruptcy filing, when some of the companies
that Palmer Johnson owed money to learned of the transfer of the name
and trademark, they questioned the timing of it. The bankruptcy examiner
determined late last year that the deal between McKelvey and Mohammed
was “voidable” because it favored Mohammed at other creditors’
expenses, and both McKelvey and the yard filed lawsuits against Mohammed
to get it back. Mohammed, in turn, filed suit against McKelvey, saying
McKelvey had declared he had the right to sell the name and trademark.
All suits have since been dropped.
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