Malibu Boats responds to lawsuit filed by former dealer

American boatbuilder Malibu Boats has issued a statement in response to a lawsuit filed by boat dealership Tommy’s Boats on 10 April 2024.

Grand Rapids-based boat dealer Tommy’s Boats, which has locations across the US, is reportedly accusing Malibu of an “intentional and fraudulent scheme on the part of its CEO, Jack Springer.”

The lawsuit argues that Malibu oversupplied hard-to-sell inventory to several dealerships to artificially inflate its sales, market share and stock values.

Tommy’s accuses Malibu of engaging “in an elaborate scheme to overmanufacture and pump nearly $100 million of its highest-priced, highest margin, slow moving inventory into 15 Tommy’s dealerships in order to artificially inflate Malibu’s sales performance, artificially claim increased market share in the industry, and artificially inflate its stock value during an obvious downturn in the recreational powerboat industry.”

Tommy’s Boats is facing its own lawsuit, alleging the company has defaulted on more than $115m in loans.

Malibu Boats has now issued a statement, saying it “intends to vigorously defend itself against the claims made by Tommy’s.”

The statement continues: “Tommy’s was formerly a long-time dealer partner of ours, and we ended our relationship due to concerns about Tommy’s own conduct and its financial soundness. Indeed, Tommy’s lender is also suing it for violating the agreements Tommy’s used to finance the purchase of our boats. We will always act to protect our business, our customers and our shareholders.

“Any and all boats that Malibu sold to Tommy’s were ordered by Tommy’s. Malibu only sold boats to Tommy’s that Tommy’s ordered, and Malibu fulfilled its obligations under its agreements with Tommy’s. We value our relationships with our dealer partners, and we live up to our agreements.

“Malibu took action in light of Tommy’s sales of boats out of trust. In the fall of 2023, Malibu first became aware that Tommy’s was selling boats out of trust (selling boats that were bank collateral and not reporting the sales to the bank or repaying the bank). Upon learning that Tommy’s was selling out of trust, Malibu engaged with Tommy’s and M&T Bank, on numerous occasions, regarding Tommy’s financial position and potential paths forward. Those discussions did not result in a resolution that we believed was in the best interest of our shareholders, dealer partners and end-customers, and we therefore ended our relationship with Tommy’s. We do not currently have any dealership agreements in effect with Tommy’s.

“Tommy’s is already mired in litigation over its default on its lending agreements. Earlier this month and in response to, among other things, Tommy’s conduct in selling boats out of trust, M&T Bank sued Tommy’s for breach of its lending agreement. M&T has filed a motion to appoint a receiver over the assets of Tommy’s.

“Malibu is working to mitigate any disruption for our partners and customers — as well as our business. We have been working with our dealership network and are in discussions with strong dealer partners to limit any service gaps in markets previously served by Tommy’s. We remain committed to serving Malibu’s end-users in all our markets.”

Tennessee-based Malibu Boats produces boats under brands including Axis, Cobalt, Cobia, Hewes, Malibu, Maverick, Pathfinder and Pursuit.

In February, Malibu CEO Jack Springer confirmed he is stepping down. Springer will be departing as chief executive officer on or before 17 May 2024.

In separate news, a lawsuit filed in the US last month alleges that the world’s largest yacht sales agency, and other brokers, are charging ‘inflated’ sales commissions that fleece boat sellers.

The plaintiff in the proposed class action lawsuit, which was filed in March 2024 in the US District Court in Miami, Florida, is Wyoming-based boat seller Ya Mon Expeditions LLC. The firm is controlled by Pennsylvania real estate executive Davin Lamm.

The case has been filed against several companies and major industry players, including the International Yacht Brokers Association; Boats Group LLC, operator of Boat Trader, Yacht World and Boats.com; Denison Yacht Sales; Allied Marine; United Yacht Sales; MarineMax; and Northrop & Johnson Yacht Ships. The majority of defendants are headquartered in Florida.