Another Pool Operator Goes Bankrupt With Client Deposits
We’re been following the ongoing issue of pool building companies filing for bankruptcy. The pool business is struggling with higher labor and material costs, a higher interest rate environment and a slow housing market. While this is part of the cyclical Florida economy, some pool companies don’t have any financial cushion and customer deposits become the capital that they run their business on. When business troubles hit, there are a lot of unfinished holes in the ground and very angry clients.
Aquanautics Pools files Chapter 7
The pool company, Aquanautics Pools, based in Polk County, Florida, has announced its Chapter 7 Bankruptcy filing, resulting in the closure of its operations. This development has left numerous homeowners in distress, with approximately 60 pools left unfinished. Homeowners are now grappling with potential property liens from subcontractors who claim the pool company failed to compensate them for completed work. We’ve been watching the ongoing legal issues around the Olympus Pools bankruptcy.
Better Call Behnken
WFLA Channel 8’s investigative team coverage and WFTS Channel 28 Action News’s coverage do a good job of covering the aftermath of the filing. In the aftermath of a bankruptcy filing, it is pretty easy to trace the path of financial tragedy: The owner runs a business with new cash coming in from customer deposits and final payments for completed pools. The owner pays out expenses in the normal course of business but is working in an unprofitable environment. Somewhere along the line, the owner either corruptly co-mingles these funds or simply starts to try to stem losses and keep the business going.
Customer dissatisfaction and concerns are rising, with some questioning the company’s decision to sign contracts for new projects shortly before seeking bankruptcy protection. In the instance of Aquanautics Pools Chapter 7, its closure has prompted panic among homeowners who may face financial repercussions with no guarantee of a completed pool. In the media interviews, Aquanautics Pools’ owner, Eddie Scarberry, says he is actively working on agreements with other contractors to complete the remaining pools and assures customers that he never intended to abandon projects without finishing them.
When a pool or other construction company files bankruptcy, there are a few legal remedies that can be utilized. A group of clients can form a creditor pool to seek the most advantageous financial remedy if there are assets that can be recovered – equipment, real estate, etc. The Courts have to weigh all the creditors’ claims and decide what is fair. Many of these businesses also have bank loans and other financial obligations that must be sorted out as well. There is also the possibility that criminal behavior led to the bankruptcy filing, which means personal assets of the owner/manager of the company can be seized. This is what is alleged in the Olympus Pool case cited above.
If you are a business owner that is starting to see the business fail, our best advice is to come see us early to talk through the best options. A company that is unable to pay key debts but still has a great reputation in the market that can be preserved is in a much better position than one that one with a trail of angry clients seeking to recover their deposits.
Let us know if Jennis Morse can help in any way; we specialize in Chapter 11 business bankruptcy reorganizations, complex business transactions within debtor and creditor disputes, and commercial litigation.