A ship repair company with a major facility in Bellingham has filed for bankruptcy reorganization that is not expected to impact day-to-day operations.
Puglia Engineering filed for Chapter 11 reorganization on Friday, April 13, according to documents from the U.S. Bankruptcy Court for the Western District of Washington. Puglia operates Fairhaven Shipyard, which employs about 75 people in Bellingham, as well as a facility in Tacoma that employs about 25 people. The Fairhaven Shipyard is near the Bellingham Cruise Terminal.
The bankruptcy filing has more to do with a deal to acquire a drydock in California that has resulted in protracted court case and not about the operations in Bellingham and Tacoma, said Neil Turney, president of the company. He said there shouldn't be any noticeable change at the Bellingham and Tacoma facilities while the company reorganizes.
"This (filing) is a way to stop the legal bleeding," Turney said, adding that they are continuing with plans to hire more people this summer as they begin work on a couple of large commercial vessel projects in Bellingham. "The whole endeavor in California was to acquire a larger dock, and that didn't work out well."
Digital Access for only $0.99
For the most comprehensive local coverage, subscribe today.
The future of the company is a big deal for Bellingham. Not only is it a source for living-wage maritime jobs, but the property itself is being cleaned up and renovated by the Port of Bellingham. Last year the port awarded a $12.5 million contract to IMCO General Construction to do some dredging, improve marine habitat, remove a building that was sitting over the water and rebuild a pier that Fairhaven Shipyard uses.
The cleanup project is expected to be completed in 2019.
In an email, Port of Bellingham spokesman Mike Hogan said Puglia Engineering has been a terrific tenant that offers valuable shipyard services to the regional marine trades community.
"It is our understanding that while Puglia has recently experienced some out-of-state financial challenges, demand for services at their Fairhaven facility is strong and the operation remains profitable," Hogan said. He added that the cleanup project is currently well ahead of schedule.
The legal dispute that led to the bankruptcy involves drydock property in San Francisco. Turney said they reached an agreement with BAE Systems to take over the lease of the property. He said after doing due diligence work they arrived in January 2017 to discover that there was much more repair work that needed to be done to make it operational.
Turney said a settlement is being finalized and a payment will help recapitalize Puglia. Once the company has closed that chapter, Turney said they will focus on their Washington operations.
In the filing, Puglia listed assets totaling nearly $14.3 million and liabilities at $11.7 million. One of the major liabilities listed is tied to the legal case with BAE. The company lists more than 600 businesses or people that it owes money.
Fairhaven Shipyard offers a variety of repair services for commercial and government vessels. It also has a floating drydock called the Faithful Servant.