Derecktor still sailing despite bankruptcy

January 6, 2009 at 5:34 pm Leave a comment

BRIDGEPORT — Although its Chapter 11 bankruptcy filing has grown a little more complicated, Derecktor Shipyards Connecticut has added more than 100 workers since it filed the action more than six months ago.

Derecktor Connecticut, one of the city’s largest manufacturers, had about 250 employees when it filed for bankruptcy on July 18, 2008. Derecktor Connecticut is a subsidiary of Derecktor Holdings of New York, which is not in bankruptcy.

Despite the court action, Derecktor Connecticut has 291 direct employees and 127 subcontracted today, according to Kathy Kennedy, a Derecktor spokeswoman. She said the increase is due to ongoing contracts, but would not be more specific. Kennedy would not speak about the status of the bankruptcy, other to confirm it is ongoing.

The builder of yachts, ferries and other vessels cited a dispute with one client when it filed the case, but did not directly name the client.

However, court filings indicate the client was Gemini II — the name of the client and the boat — of the Cayman Islands, and the dispute was over a $27 million catamaran. The two sides filed motions indicating the dispute centered on the cost of the project and the timing of delivery.

Since then, the bankruptcy has evolved into a demonstration of how complicated the world of shipbuilding can be, including how long it can take to resolve outstanding disputes.

Derecktor won a key motion in this bankruptcy case to prevent New York Water Taxi from moving forward with its lawsuit over a $4.3 million contract completed in 2003.

Derecktor built six water taxis for the New York company and, in 2006, New York Water Taxi filed a suit in New York state court claiming a breach of contract relating to the design of the boats, which are in service. Water Taxi’s spokesperson said the company had no comment on the issue late Monday.

Derecktor won a temporary restraining order against New York Water Taxi until March 23. But its problems related to the New York Water Taxi issue aren’t over, because United Kingdom-based designer Nigel Gee — a Derecktor partner on the project — has filed a petition with a London court to be released from the dispute. Derecktor has petitioned the U.S. bankruptcy court to order a halt to the London proceedings. Companies in bankruptcy can have other cases halted because a judgment could affect the ability of the debtor to pay its obligations and damage the value of the company as it reorganizes.

Further complicating Derecktor’s bankruptcy, a key client, Cakewalk V, filed a motion to prevent the shipbuilder from moving the partially completed Gemini II catamaran. According to court documents, a potential settlement to the dispute with Gemini II would include moving the catamaran to another boatyard to be finished.

While Gemini sits partially finished in a temporary shelter on the company’s property, Derecktor is building the $82 million Cakewalk V yacht. Cakewalk’s lawyers contend $7 million of the $51 million the yacht’s owners paid Derecktor was used to further the building of Gemini II, which means Cakewalk has a potential interest in Gemini, according to court records.

These gyrations in the case didn’t surprise Bridgeport Port Authority Executive Director Joseph Riccio Jr.

“It sure is [complicated], especially when the purpose is to build boats,” Riccio said. “It’s part of the business environment.”

Riccio said there is a lot of money involved and lawsuits are common in this business, but Derecktor remains a solid company and important to the future of the city’s port.

The good news, Riccio said, is that he hears the sides are discussing the problem through company officials, not just lawyers, and there’s no reason to expect the boatmaker will not expand as planned.

In April 2008, Derecktor won a Planning and Zoning Commission approval for three new buildings. It has not yet filed building permits to begin construction on those projects at 837 Seaview Ave.

Riccio said the BPA is putting together a package to appeal for federal aid from the incoming Obama administration to help with that growth.

“We’re waiting to see what happens with the new administration,” Riccio said. “We think it’s a great candidate for a stimulus package.”

In the works Major Derecktor projects mentioned in bankruptcy filing: Gemini II catamaran n Cost: $27 million n 145 feet long n Weighs 500 tons n Accommodates 20, including crew of eight n Partially completed Cakewalk V yacht n Cost: $82 million n 281 feet long n Weighs 2,950 tons n Accommodates 36, including 24 crew n Under construction
By Rob Varnon

Connecticut Post


Entry filed under: Dive In, Region, Working Waterfront.

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