FREELAND — Nichols Bros. Boat Builders has filed for Chapter 11 bankruptcy reorganization and the shipyard’s operations may reopen in the near future, possibly with a new owner.
The company filed its Chapter 11 petition Friday in Seattle’s U.S. Bankruptcy Court. A first hearing is scheduled for Wednesday.
There, the company’s lawyers will ask for permission to keep spending money.
“It will allow them to keep a skeleton crew, get some accounting work done related to the bankruptcy and keep the lights on,” said Marc Barreca of K&L Gates, which is representing Nichols Bros.
Usually, it takes a few weeks to hold a hearing on a company’s need to continue spending cash during a bankruptcy, Barreca explained. In this case, an emergency hearing was requested.
On Nov. 2, Nichols Bros. abruptly laid off nearly all employees and closed its doors, citing financial problems and a pending lawsuit. The move put more than 200 people out of jobs.
The company said in its bankruptcy filing it has about 20 employees left, with about half of those scheduled to be laid off by the end of this month.
The Whidbey Island company hopes it won’t be dormant for long, however. Nichols Bros. Chief Executive Matt Nichols said he hopes to arrange for workers to return to the company’s ongoing ship-building projects well before the bankruptcy works through the court.
“We’re working on it,” Nichols said.
Barreca confirmed he may present to the court a plan to allows workers and subcontractors to finish pending projects. With luck, that may happen before the year ends, he said.
He also confirmed that a proposal to sell the company is in the works. Any sale would have to be approved by the bankruptcy court.
The optimism for the future of the company stands in contrast to its present finances, as detailed by the bankruptcy filing. In it, the company’s attorneys state that Nichols Bros. has minimal cash and “no ability to generate revenue on an ongoing basis.” It owes millions to creditors, the filing added.
In a statement of its finances, Nichols Bros. reported its gross income fell from nearly $35.8 million in fiscal 2005 to less than $7 million in the 14 months ended Sept. 30.
In the past year, two customers have taken legal action against Nichols Bros., claiming the boat builder failed to deliver vessels on time.
But the shipyard is vital as Whidbey Island’s third-largest private employer and is a partner in a $348 million contract building new vessels for Washington State Ferries.
Reporter Eric Fetters: 425-339-3453 or fetters@heraldnet.com.
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