Boat dealer with Tempe location in bankruptcy

An Arizona boat dealership founded in Tucson with locations in Tempe and Phoenix is in bankruptcy after losing access to financing from a financial services arm of General Electric Co.

Arizona Discount Marine filed for Chapter 11 bankruptcy reorganization on Sunday, alleging that GE Commercial Distribution Finance Corp. hurt the company by cutting its credit line in July.

The financing agreement allowed Arizona Discount Marine to borrow money from GE to finance the purchase of new boats and other vehicles and to reduce those debts by turning over trade-ins to GE, bankruptcy court filings said.

Without the ability to sell the trade-ins to GE, Arizona Discount Marine suffered a "huge cash flow shortage," said Eric Slocum Sparks, a Tucson bankruptcy attorney representing Arizona Discount Marine.

Scott Buchanan, co-owner of the dealership, said the move by GE "almost cripples me."

"It strips our ability to take in trade-ins, and that's a big part of our business," he said.

GE spokesman Stephen White declined to comment on the matter. But in a court document, GE said Arizona Discount Marine was falling behind in paying off its debts.

Arizona Discount Marine has about $11 million in assets and $10.2 million in debts, including $9.5 million owed to boat financiers. In addition to GE, the dealership also uses financing from Chicago-based Textron Financial - which is still doing business with Arizona Discount Marine, Buchanan said.

Under a Chapter 11 bankruptcy, a debtor company works out a plan to repay creditors, usually while it continues to operate.

In order to continue doing business, Arizona Discount Marine sought permission from the court on Wednesday to use its cash for operating purposes. GE objected to that in a court filing Wednesday, arguing that Arizona Discount Marine was selling some boats without using the proceeds to pay off financing.

But at a hastily-arranged hearing on Wednesday, Arizona Discount Marine was permitted to use the cash, Buchanan said.