For the past two months, a major nationwide boat dealer based in downtown Grand Rapids has been embroiled in three separate lawsuits between a supplier and two banks, with fraud accusations and hundreds of millions of dollars at stake.
On May 20, the financial maelstrom engulfing Tommy’s Boats LLC reached a new phase when the company filed for bankruptcy protection to hopefully find a buyer and pay back creditors at “the highest possible value.”
Company president and owner Matthew Borisch on June 4 offered his version of the events in a 21-page declaration. He blames Tommy’s Boats’ primary supplier for leaving the company with no choice but to file for bankruptcy, having intentionally “bled (Tommy’s) dry” through an elaborate inventory oversupply scheme.
Meanwhile, Tommy’s Boats’ two largest creditors have targeted the company in separate lawsuits.
Here’s a breakdown of how the company got here and what’s at stake:
What is Tommy’s Boats?
Founded in 1981 in Denver, Colo., Tommy’s Boats was later acquired by the Borisch family and now lists 15 dealerships in eight states. In late 2022, the company opened a new 16,000-square-foot dealership in Comstock Park just north of Grand Rapids, and bills itself as one of the largest pontoon dealers in North America.
Matthew Borisch serves as president and owner of Tommy’s Boats. Simplified Facilities LLC, a holding company tied to Borisch, acquired the former Peninsular Club building in downtown Grand Rapids in March 2023 from RDV Corp. for Tommy’s corporate headquarters.
Borisch is the son of Jonathan Borisch, who previously had a career in manufacturing and later owned McKay Tower in downtown Grand Rapids before selling it to tribally owned Gun Lake Investments and Waséyabek Development Co. in early 2020. Matthew Borisch also serves as the CEO of Simplified Investments, whose portfolio includes Tommy’s Boats, Gen3 Defense and Aerospace engineering firm and Gen3 Interconnect, a third-generation wire harness manufacturer.
Nearly a decade ago, the Borisch family was reportedly credited for helping to turn around Walloon Lake, a former northern Michigan resort community, into a tourist destination with restaurants, retail and lodging.
Who are the other players?
Tommy’s Boats has long been the largest national dealer for Loudon, Tenn.-based Malibu Boats Inc. in the recreational power boat space, accounting for roughly one-third of Malibu’s power boat sales. According to court filings, dealer agreements in place with Malibu accounted for more than 80% of the boats Tommy’s Boats sold in 2022-2023.
Malibu employs more than 700 people who build boats at locations in Tennessee, California and Australia, according to its website.
Tommy’s Boats’ largest creditor is Buffalo, N.Y.-based M&T Bank, which was the first to file suit against the Grand Rapids-based boat dealer, seeking a court-ordered receiver over the company’s assets.
Grand Rapids-based Mercantile Bank is Tommy’s Boats’ second-largest creditor and filed suit last month seeking to foreclose on and seize property the Borisch family owns Up North.
How did lawsuits start piling up?
April 1: M&T Bank sought a court-appointed receiver because Tommy’s Boats allegedly defaulted on loan agreements executed in May 2023 and hadn’t made sufficient repayment by the time of the bank’s April 1 suit. The motion also alleges that Tommy’s Boats sold at least $14 million in inventory out of trust, which means selling items bought with a loan and not remitting the agreed-upon share of proceeds to the lender. RELATED:Bank alleges Tommy’s Boats defaulted on $115M in loans, seeks court-appointed receiver
April 10: Tommy’s Boats sues Malibu, saying the company’s actions forced it into default with M&T. In his June 4 declaration, Borisch alleges Malibu Boats’ former CEO Jack Springer, whose employment has since been terminated by Malibu, hatched an intentional and fraudulent scheme to increase Tommy’s floor plan financing capacity and oversaturate the dealer’s inventory with high-priced, hard-to-sell boats. Borisch accuses Malibu of doing so to “artificially inflate Malibu sales and market share” amid “historic lows in retail luxury power boat demand and sales activity.” Malibu denies the accusations and says Tommy’s Boats ordered the inventory. RELATED:West Michigan boat dealer accuses manufacturer of inventory fraud scheme
April 22: Kent County Circuit Judge T.J. Ackerman appointed Thomas Beane, president of Wilmington, Del.-based Beane Associates, as the receiver over Tommy’s Boats. The action gave Beane authority to take “immediate possession and full control” of the dealer’s assets and income with the ultimate goal of paying off receivership fees, bank debts and court fees. RELATED:Tommy’s Boats lands in receivership as legal battles add up
April 24: Mercantile Bank filed suit against Borisch, a couple of his holding companies and several family members, seeking to foreclose on and seize property that the family owns in Boyne City and pledged as collateral to guarantee a commercial loan of more than $9.5 million for Tommy’s Boats locations in California, Nevada and Arizona, according to Kent County Circuit Court filings.
May 20: Tommy’s Boats files for bankruptcy protection in the U.S. Bankruptcy Court for the Northern District of Texas so it can find a buyer and pay back creditors at “the highest possible value.” Court filings indicate Tommy’s Boats has assets of $1 million to $10 million and liabilities of $100 million to $500 million. RELATED:Tommy’s Boats files for Chapter 11 bankruptcy protection, plans to seek buyer
How much money is at stake?
Hundreds of millions of dollars.
M&T Bank claims that the collateral on Tommy’s Boats dealership lots is worth approximately $85 million. Selling off the collateral would go toward paying more than $115 million in debt principal and more than $2.2 million in interest that Tommy’s Boats allegedly owes to the bank, plus attorney’s fees and other expenses.
M&T Bank discovered an alleged contract violation when an auditor visited the dealership lots in February 2024 and learned that Tommy’s Boats was selling boats meant to be reserved as collateral, then keeping them on the dealership lots in storage and failing to report the sales to the bank or to adjust the inventory log accordingly.
About 17 boats are unaccounted for, according to M&T Bank.
M&T also alleges that Tommy’s Boats owes the various states where it has dealerships more than $3.2 million in back sales taxes.
According to Tommy’s Boats’ lawsuit, Malibu beginning in late 2022 demanded that Tommy’s increase its floor plan credit facility with M&T Bank from $50 million to $160 million to make room for 25 weeks of inventory at the turn of the next model year. Malibu has denied the claims.
In its bankruptcy filing, Tommy’s Boats listed the 30 largest unsecured claims totaling nearly $123.6 million. M&T Bank is listed as the company’s largest creditor, with a total claim of more than $105 million, followed by Mercantile Bank with a $4.7 million claim. The filing also lists approximately $5 million in unpaid sales taxes in several states.
Meanwhile, a Denver-area couple say they are out $7,000 for a custom boat that Tommy’s Boats never delivered as the company’s ongoing financial and legal battles landed it in receivership.
RELATED:Customers out thousands of dollars as Tommy’s Boats lands in receivership
What happens next?
The litigation with Malibu remains ongoing. A Kent County circuit judge issued a stay in the receivership case on May 22 while Tommy’s pursued the Chapter 11 case.
Monica Blacker, chief restructuring officer for Tommy’s Boats, said in court filings that the company filed the bankruptcy case “to minimize the disruption to and adverse effects the receivership has had on the Debtors’ business operations and to maximize the value of the Debtors’ business, assets, and estates so the Debtors can sell substantially all of their assets for the highest possible value through these Cases.”
So far, the bankruptcy court has allowed Tommy’s to reopen its service and repair departments and continue operating as usual. Tommy’s Boats officials said over the Memorial Day weekend, the company also finalized the sales of 10 boats and delivered seven vessels to customers who had already made deposits.
Meanwhile, the bankruptcy court rejected Tommy’s Boats’ request for an order stopping Malibu from setting up “replacement dealers” in Tommy’s Boats’ “exclusive territories” negotiated under previous dealership agreements. Tommy’s Boats also alleged in the filing that Malibu and replacement dealers “poached” Tommy’s Boats employees. Bankruptcy Judge Edward Morris denied the request on Sunday.
The court has set a June 27 hearing to consider several emergency motions Tommy’s Boats filed to help it meet ongoing financial obligations during bankruptcy proceedings.
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