Mare Island Dry Dock Files Bankruptcy to Save, Reorganize Its Business
Nearly two months after saying it was likely to close after losing a key U.S. Coast Guard contract, California’s Mare Island Dry Dock (MIDD) has come forward with a new plan to save its operations. The company filed for bankruptcy on February 14, seeking to reorganize while also negotiating for a sale or partnership.
“Ensuring the shipyard’s continued operation is crucial for both the shipyard itself and the community,” said Steve DiLeo, President of MIDD. “Going into reorganization is a necessary step toward a sale that will support the interests of all stakeholders.”
The company reports it laid off 65 workers in December but says the bankruptcy will allow it to keep 50 employees working. The bankruptcy was precipitated by the U.S. Coast Guard awarding a maintenance contract for the USCG Healy icebreaker to Vigor Marine in Portland, Oregon. MIDD asserts that it was the low bidder, but according to the Vallejo Sun newspaper, USCG told California Congressman John Garamendi, who represents the area, that it went with Vigor because the crew is based in the Seattle area, making the maintenance period easier on the crew.
DiLeo reports that they are exploring the sale of the shipyard as a “going concern” and are currently engaged in “productive discussions with several potential buyers.” He expects the terms would make it possible to satisfy all the creditors and keep the shipyard operating.
The company has been operating the yard since 2013. It acquired the rights to the facility, which was part of the U.S. naval base that dated back to 1854, but closed in 1996. MIDD was providing repair and maintenance services with contracts for the U.S. Coast Guard, Military Sealift Command, National Oceanic and Atmospheric Administration, and commercial clients.
DiLeo told the Vallejo Sun that a sale or partnership would better position the company for bidding. He said they are speaking with a larger organization that intends to expand to include shipbuilding as well as repair at the yard. He said a merger or acquisition with a larger company would permit the yard to compete for larger contracts for which it is currently too small. Furthermore, he said the yard is also optimistic about a bid for a five-year maintenance contract from the U.S. Coast Guard for the icebreaker Polar Star.
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They also note that a California-based developer and the Mare Island developer, Nimitz Group, have teamed up. The two organizations are proposing the region as one of the Maritime Prosperity Zones proposed in the new Trump plan for revitalizing American shipbuilding and the merchant marine.
In January, a group calling itself California Forever unveiled a plan to develop a massive new West Coast shipyard in the region for shipbuilding operations. It is part of a broader plan to build a new city near Collinsville, in Solano County, California.
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