Earthbound Recreational Vehicles has shut down operations and its assets will be auctioned off to repay a loan backed by the city of Marion.
A billboard advertising the Jan. 15 auction is posted in front of the travel trailer company’s former factory within 1001 E. 38 St.
The city of Marion acquired the assets when Earthbound failed to meet the obligations of an economic development deal.
Earthbound President and CEO Charles Hoefer could not be reached for comment.
In 2010, the city backed a $2 million loan to help Earthbound’s startup and recently footed the bill when the company failed to make a $155,000 loan payment.
Mayor Wayne Seybold said the city was exercising its right to sell the company’s assets to pay off the loan before economic development income tax (EDIT) money is used to repay the remaining debt, which is the bulk of the $2 million.
“We’re auctioning off everything they have,” he said. “There are a lot of assets to auction off. We’ll get as much money out of it as we can.”
Key Auctioneers out of Indianapolis is handling the auction. As advertised, items include the factory’s equipment, tools and inventory, which can be inspected at a preview on Jan. 14 within the factory.
City Corporate Counsel Don Gallaway said the city acquired the bulk of the assets in November, but the auction will not dispose of additional assets such as an “unconditional guaranty” on two homes in Middlebury and Syracuse owned by company founder David Hoefer Sr. and Vice President Mary Hoefer.
He said the city was in talks with “real estate experts” to collect as much as it could on the houses.
“The city will do everything in its power to get as much out of the existing assets,” he said.
Earthbound paid down $100,000 of the balance on the $2 million loan from STAR Financial Bank. After the auctions and sales, the city has pledged EDIT money to pay the rest.
The city’s decision to back the loan was criticized from the beginning, especially after it came to light that David Hoefer Sr. was involved in a personal bankruptcy. However, city officials have said banks at the time were unwilling to loan money in the shaky economy without additional backstops.
Marion had high expectations for Earthbound. The company occupied a unique niche in the recreational vehicle market with its high-end, towable travel trailers made from eco-friendly materials.
It produced about 150 coaches and hired about 50 employees until layoffs in July 2011. For more than a year, the company retooled its production strategy and promised to restart operations.
In the end, it failed to do so.
Gallaway said the Earthbound limited liability company still exists, but the operations in Marion “do not.” The company is family-owned by the Hoefers.
Seybold said the Hoefer family tried their best to make the company succeed.
“They took everything they could to make it work and they lost everything they own,” he said.