Nichols Brothers files for bankruptcy
June 25, 2008 · Updated 10:17 AM
Company could get sold at auction
Nichols Brothers Boat Builders Inc. voluntarily filed for Chapter 11 proceedings at U.S. Bankruptcy Court in the Western District of Washington on Friday, Nov. 16.
The Freeland shipyard is expected to be sold at auction as the bankruptcy process continues. Nichols Brothers is currently talking with a potential buyer for the boat yard, the South Ends largest employer.
The bankruptcy filing comes less than two weeks after Nichols Brothers laid off 185 workers, putting many on standby and telling them they might be back to work in six to eight weeks.
Company president Bryan Nichols did not return a request for comment Monday.
Marc Barreca, an attorney representing Nichols Brothers in the bankruptcy proceedings, said the first hearing on the case was scheduled for Wednesday morning.
There is a hearing ... in front of bankruptcy Judge (Samuel) Steiner to approve, on an interim basis, a loan to the company that will let it keep its current small staff and get it through the early stages of the bankruptcy process, Barreca said.
The goal, Barreca said, was to get workers rehired to continue work on current contracts.
The only way Nichols can do that is for Nichols to sell the company, Barreca said.
What Nichols Brothers is hoping to do is sell its assets to a buyer who would restart the business, he said. It would be a different ownership. They would need someone else to come in and buy them. They are negotiating with one party right now.
Because the company is in bankruptcy proceedings, the sale would be through an auction.
Although Nichols would propose a sale to a certain party, it would be subject to other qualified parties bidding, as well.
The main point would be that the company would like to have a sale effecutated as soon as possible so that employees could get rehired, and so that contracts could be worked out with the existing customers to help complete their projects, Barreca said.
Currently, there are three main outstanding contracts that need to be completed at the shipyard.
There are several, depending on how you add them up. It would be premature to talk about which contracts those are, he said. Everything else would have to be left to the buyer to work out.
The bankruptcy is the first for Nichols Brothers in its more than 43 years of operation.
Barreca said the shipyard has hundreds of creditors.
They have substantial debt of millions and millions of dollars, Barreca said.
The assets of the business dont come close to covering the debt.
How much assets the company holds depends on how they are valued. But not nearly as much as they have debt, Barreca said.
The bankruptcy case may also put a wrinkle in the Hornbeck Offshore Services lawsuit, as any debt owed to Hornbeck will have to be satisfied through the bankruptcy, Barreca said.
It will automatically stay the Hornbeck lawsuit as to Nichols Brothers Boat Builders, Inc., he said. If there are other defendants, then presumably, the litigation would move ahead against them.
Whatever debt there is to Hornbeck will have to be dealt with in the bankruptcy, Barreca said.
Pending litigation wwas cited by Nichols as the reason for the closure earlier this month.
Hornbeck Offshore Services filed a lawsuit in federal court against Nichols Brothers after the Covington, La.-based company signed a $50 million-plus contract with Nichols Brothers in March 2006 for the construction of two 240-foot off-shore supply vessels. Hornbeck sued Nichols Brothers for breach of contract after the Freeland shipyard could not get the required financing to build the vessels.
Spencer Webster can be reached at 221-5300 or email@example.com.