New owner sought to keep local shipyard open as maritime firm struggles with bankruptcy

A look at upcoming changes to Fairhaven Shipyard

Here's a look at Fairhaven Shipyard in Bellingham in March, 2017. The Carpenter Building and wood portion of the pier were to be demolished as part of a $12.5 million overhaul at the site of Fairhaven Shipyard.
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Here's a look at Fairhaven Shipyard in Bellingham in March, 2017. The Carpenter Building and wood portion of the pier were to be demolished as part of a $12.5 million overhaul at the site of Fairhaven Shipyard.

Bankruptcy reorganization hasn’t worked out for the owner of Fairhaven Shipyard, but a trustee is working to find a new owner to keep the shipyards open.

On March 28, U.S. Bankruptcy Judge Brian D. Lynch signed an order to convert last year’s Chapter 11 bankruptcy reorganization filing of Puglia Engineering to a Chapter 7 filing, forcing the liquidation of the company that owns two Washington state shipyards in Fairhaven and Tacoma.

The shipyards are finishing up projects and a court-appointed trustee is negotiating a sale of the company to someone interested in keeping the shipyards open, said Neil Turney, president of Puglia, in an interview with The Bellingham Herald. In an ideal world, the sale will be completed before the shipyards are forced to close, he said.

“I feel it will always be a shipyard,” Turney said of Fairhaven Shipyard, which is near the Bellingham Cruise Terminal. “Fairhaven was a gem for us for so long.”

Puglia Engineering filed for Chapter 11 reorganization on April 13, 2018. The financial difficulties had more to do with a deal to acquire a drydock in California that resulted in a separate protracted court case, Turney said. The weight of that case and the bankruptcy filing impacted Puglia’s ability to function, leading to the Chapter 7 liquidation, he added.

At the time of last year’s bankruptcy filing, Fairhaven Shipyard employed about 75 workers, while the Tacoma facility had about 25 employees. Turney didn’t have a current workforce total, but it is now much smaller, he said. He is hopeful that employment levels at the facility will go back up if the sale is completed.

The Port of Bellingham is in contact with the bankruptcy court and will aggressively market the property and return it to productive use as soon as possible, said Mike Hogan, spokesman for the port.

“Protecting working waterfront jobs is one of the port’s highest priorities,” Hogan said in an email, adding the port wants a company offering long-term job security in the marine trades community.

The port has refrained from making legal maneuvers to collect money owed to the agency that would have put those maritime jobs in jeopardy earlier, said Rob Fix, the port’s executive director, in an email. Now that the case has been moved to Chapter 7, the port is moving to recover as much of the public’s money as possible and to free up the property for a job-wielding tenant. Fix estimates Puglia owes the port about $450,000.

Fix said they are currently exploring the market to see what demand there is for a shipyard. Initial reports indicate that new shipyards quickly have a backlog of business. If a shipyard operator doesn’t materialize, the Port would consider a marine-related company that doesn’t necessarily involve ship repair.

Court documents show that Puglia was having trouble keeping up with expenses during the reorganization. According to one document, Puglia was at least $808,000 behind in its obligations with no reasonable likelihood of getting back on track.

The property itself is also in the final stages of a major cleanup and renovation project by the Port of Bellingham. IMCO General Construction was awarded a $12.5 million contract 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 project is currently in its second phase of contamination cleanup work and in a public comment period. The Washington State Department of Ecology is holding a public meeting at 6 p.m. on April 17 in the Bellingham Cruise Terminal about the cleanup. Details can be found on Ecology’s website.

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Dave Gallagher has covered the Whatcom County business community since 1998. Retail, real estate, jobs and port redevelopment are among the topics he covers.