RV manufacturer goes belly-up, leaving customers hanging

By Russ and Tiña De Maris

ST. MATTHEWS, SC — A lightweight travel trailer manufacturer, Lil Snoozy, LLC, has apparently closed its doors, leaving an undetermined number of RVers who put deposits down for new rigs in the lurch.

Lil Snoozy trailers, a diminutive 14-foot fiberglass rig, saw its origin under a company called Smoakin Concepts Composites, founded by Alan Smoak around 2009. By 2011 Smoak had plans that the company would turn out two to three units per week, with a vision of jumping production of the $15,000 rigs to five to six per week. Smoak later sold the business.

Under the Lil Snoozy LLC management, customers were asked to put down a deposit prior to the commencement of the build, then wait for delivery, said to typically require six to eight months. Perhaps it should have been a warning flag when the company later suggested order-to-delivery times were increasing to 12 months. Then, says one person with an order on file with Lil Snoozy, he was told in February that build times could stretch out to 18 months.

Then, early this month, one very unhappy customer says he went to the Lil Snoozy production plant to find the doors locked. Peeping through the windows, all he could see was an empty area – no tools, molds, equipment or trailers. We verified that phone numbers for the company were disconnected, and the company website was down. A check with the Better Business Bureau for the St. Matthews area brought this discouraging reply: “According to information in BBB files, this company is no longer in business. If you have an unresolved dispute with this company you may wish to seek legal advice.”

Evidently Lil Snoozy LLC is filing for bankruptcy under Chapter 7. As of Friday, March 15, no filing information was available from the South Carolina bankruptcy court, but we understand that the company has retained an attorney, Harrison Penn. Penn can be reached at 803-451-2270, or by email, hpenn@mccarthy-lawfirm.com. According to information posted on a fiberglass trailer users forum, more than 40 people had put down deposits on a new Lil Snoozy and had still not received their rigs. If all had put down $10,000, then the amount owed to customers alone could easily be pushing a half-million dollars.

What’s behind the Lil Snoozy demise? One person who will be joining the list of creditors after losing his deposit said he asked that same question of the bankruptcy attorney. The answer he got was that several factors had contributed to the problem. When the company was originally formed, the fiberglass boat market was in a decline, and materials and workers were easy to find. After Smoak sold the company, the boat market came roaring back, and the new owners found it hard to keep employees and to obtain supplies.

Will all those with claims against the company get much satisfaction? Under Chapter 7 liquidation law, the court will eventually appoint a trustee who will sell off any unsecured assets the company had left. Creditors with secured assets, equipment or vehicles for example, will be able to claim that secured property back, and that won’t be sold by the trustee. From whatever money comes from the sale of whatever is left, a distribution will be made, with creditors (including those who made deposits) being paid a percentage of what they are owed. However, a clause in the bankruptcy code may give a little bit of relief.

“Bankruptcy Code Section 507(a)(7) establishes a priority for unsecured claims of individuals arising from Customer Deposits towards the purchase of goods that were not delivered up to a maximum of $2,600. The remaining portion of the un-refunded deposit would become a general unsecured claim. Consumers owed deposits are only paid after all of the secured creditors and administrative expenses of the bankruptcy (such as bankruptcy lawyers’ fees) are paid. As priority creditors, holders of deposits would be paid up to $2,600 before any general unsecured obligations of the retailer are satisfied.” (Information provided by BDO USA, an accounting company.) It’s possible that folks who paid deposits might get a better shake at getting more of their money back than others.

Until the bankruptcy court gets the filing and appoints a trustee, there’s very little other than speculation that can be made as to the outcome. However, if you did make a deposit on a Lil Snoozy trailer and never took possession, you’d be best served by contacting the company’s bankruptcy attorney and confirming that you are on the creditors’ list. And if you plan on making a deposit on a rig in the future, you may want to consider using a credit card to make that deposit – it’s possible that you might find a little additional protection in case a similar situation should happen to you.