Navigating with a Half-built Boat and a Bankrupt Boat Builder
Our client, the San Francisco Bay Area Water Transit Authority, owned two partially built passenger ferries when the California Legislature sunsetted the agency and created a new one in its place.
The new agency was handicapped because the legislature neglected to appoint a new board. Then the Nichols Brothers Boat Builders, Inc., which had been contracted to design and build the ferries for $4 million, entered bankruptcy as a Chapter 11 debtor.
Having worked on the original contract, we were able to navigate through both parties' turbulence to protect the San Francisco Bay Area's ferry assets. We worked with the bankrupt Nichols, as well as one of Nichols' subcontractors in connection with the subcontractor's purchase of the ferry construction contract in a bankruptcy court-approved sale. As a new board came to power at the new agency, now named the San Francisco Bay Area Water Emergency Transportation Authority, the subcontractor assumed all of Nichols' contractual obligations and completed the ferries without any additional expense.