Sale of PVI to Patriarch approved

LaFrance parent aims to restart idled local operations

Caroline Fossi
The Post and Courier

Workers at Protected Vehicles in North Charleston install a fender in 2006 on a Bulldog truck. U.S. Bankruptcy Court Judge David Duncan said he would approve the sale of PVI to Patriarch Partners because it was in the best interest of PVI’s creditors.

The owner of American LaFrance got the nod Thursday to buy bankrupt armored-truck maker Protected Vehicles Inc. for $6 million Thursday, thwarting a bid by Force Protection Inc. of Ladson.

Patriarch Partners LLC plans to invest "at least" another $5 million into the idled PVI and resume its local operations, said Lynn Tilton, founder and chief executive of the New York investment firm.

She also said "a few hundred" employees could be on the payroll within six months.

"Dust to diamonds is our theory," Tilton said.

U.S. Bankruptcy Court Judge David Duncan said at a hearing in Charleston that he would approve the sale because it was in the best interest of PVI's creditors.

The deal is expected to close by Sept. 3.

Aside from the $6 million upfront payment, Patriarch waived its rights to any cash the manufacturer has on hand the day the sale is finalized, making that money available to repay debts. As of Thursday, the vehicle maker had about $300,000 on its balance sheet, attorney Bill McCarthy said.

Also, Patriarch agreed to set aside 20 percent of any monetary damages PVI is awarded if PVI wins a lawsuit naming crosstown rival Force Protection. The two companies make heavy-duty life-saving combat vehicles that can withstand blasts from land mines and other deadly explosives.

In a case that has not yet been tried, Force Protection has accused PVI officials of stealing some of its trade secrets. PVI, which was founded by a former Force Protection executive, has filed a countersuit.

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Lynn Tilton is founder and CEO of Patriarch Partners, the company expected to close on a deal to buy Protected Vehicles Inc. by Sept. 3.

In July, Patriarch offered $5 million for PVI, setting the minimum bid for yesterday's court-supervised auction. Just one other would-be buyer stepped forward: Force Protection offered to pay $5.2 million for its wounded competitor, just as the deadline expired late Monday afternoon.

The last-minute offer was rejected because it did not comply with the auction rules, PVI attorneys said. As lawyers prepared to argue the point Thursday, Tilton padded her company's offer by $1 million.

Force Protection declined to follow suit.

The sale gives Patriarch its second automotive manufacturing business in the Charleston region. In 2005, the firm bought emergency vehicle maker American LaFrance, which like PVI ran into serious financial difficulties and was forced to seek bankruptcy protection earlier this year.

At its peak PVI's payroll exceeded 600 employees.

In January, after the once-fast-growing startup had all but ceased operations, creditors sought to force it into an involuntary liquidation. The company filed its own bankruptcy petition to control its destiny the following month, estimating assets of $24 million and debts of about $54 million.

But the precise sum that PVI owes is undetermined because all claims against the business have not yet been verified, said attorney Michael Beal, who represents a committee of PVI creditors.

Beal said the court will decide later how the $6 million will be distributed. He noted that the case is far from closed and that assets not included in the Patriarch deal still need to be sold.

But he predicted that a large chunk of the money raised Thursday would go toward legal fees, taxes, unpaid pre-bankruptcy wages for former PVI workers, and other "priority" expenses. Beal does not expect a large payout for creditors.