The Connecticut-based yard of Derecktor Shipyards has filed for Chapter 11 bankruptcy protection again, citing the weak economy. The yard’s management team is further pursuing investors or buyers.
Derecktor Shipyards Connecticut, as the facility is called, has faced difficulties in recent years. Derecktor previously filed for bankruptcy protection in 2008, related to a dispute over Project Gemini, now known as Hemisphere. (During those bankruptcy proceedings, the partially constructed megayacht was sent to Pendennis for completion.) Derecktor had reorganized and settled the dispute sufficiently by last August to emerge from bankruptcy. Unfortunately, that same month, a breach of contract lawsuit was filed against it by Cakewalk V Ltd., related to the construction of the 281-foot (85.6-meter) Cakewalk. Then, in September Derecktor announced what it termed as a temporary shutdown of operations. Paul Derecktor, president of the yard, told local newspapers that a slowdown in both new construction and service spurred the decision.
That slowdown continues to affect Derecktor and led to the new bankruptcy-protection filing. According to a statement from the yard’s management team, “A depressed economy, the cash drain of investment made in building out the Bridgeport facility, and a recent lack of new construction opportunities have put a tremendous strain on the company’s finances.”
So what does the filing mean for Derecktor? Chapter 11 permits a company to propose a plan to reorganize so that it can pay its creditors and become profitable again. Management continues to operate the day-to-day business, but any major decisions outside that realm need approval from the bankruptcy court.
In the same statement announcing the bankruptcy re-filing, Derecktor’s management team says it is seeking buyers or investors. It believes the location and abilities of the yard in both the yachting and commercial sectors make it attractive. On the yachting side, Cakewalk was delivered in 2010, and the equally famed Stars & Stripes sloops for the America’s Cup were built there, too. Several service and refit projects, including one this summer for a 197-foot (60-meter) motoryacht that has been kept anonymous, have also occurred on site.
If Derecktor does find a buyer or investor, it would be for the company itself, not the physical shipyard. Derecktor leases the space from the Bridgeport Port Authority, which is among the creditors listed in the bankruptcy filing.
In the meantime, the Derecktor operations in New York and Florida remain unaffected. In fact, the Florida location recently saw the 168-foot (51.2-meter) Gallant Lady arrive for work. Derecktor says refit and repair revenue for 2011 at that facility grew about 30 percent over 2010. In addition, upgrades are planned throughout the coming year.
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