Nichols Brothers Closing - Followup
Empress of the North - Built By Nichols BrothersFrom what further information I have been able to gather, one of the primary reasons for the shutting down of Nichols Brothers Boat Builders is a pending lawsuit by a company called Hornbeck Offshore Services, Inc. Rumor has it, and I don't have documentation so it is so far only rumor, that Nichols Brothers built a boat for Hornbeck, and it was delivered much later than was originally promised. I do not know the reasons for the delayed delivery. I suspect it's not a simple explanation. As I get more information I will keep you updated.
There is an email being circulated asking folks to email Hornbeck Offshore Services and ask them to drop their lawsuit and work out some sort of settlement that would allow Nichols Brothers to continue in business, particularly considering the major hardship to the local community.
The person to email is Todd Hornbeck and his e-mail address is:
todd.hornbeck@hornbeckoffshore.com
It might not make any difference, but it couldn't hurt, either.......
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5 Comments:
Nichols faces 2 suits filed in March and June.
Expoships alleges that Nichols delivered a 228 footer six months late and in need of repairs, costing them $3.1 million monthly.
Hornbeck alleges that Nichols breached a contract for 6 boats, by not securing a Letter of Credit.
Even if both suits were dropped and bankruptcy gave Nichols a fresh start, one big question remains: Will Nichols’ management do any better in the future?
This is a serious problem with regional consequences. If anyone has first-hand knowledge of how Nichols got into this mess, please drop me a line at foxwing (at) Comcast (dot) net. Thanks!
Mike: Some big questions exist, and until I have more facts I'm not going to blame Nichol's management, at least not yet.
1. Was the Expoship boat late because of design changes, or supplier delays?
2. As to the the damage claimed, was the boat damaged when it left the boatyard, or was it damaged in transit? If in transit, who was responsible for delivering it to Expoships?
3. If I remember rightly, the Expoship boat was a 12 million dollar boat. Losing 3 million a month on it doesn't sound kosher to me.
4. The letter of Credit issue, I suspect, is also a lot more complicated than it appears.
It will be interesting to see what the facts actually are.......
..... Mr. C.
Sure hope this ends well. Did you go to the informational meeting at the Trinity Church Tuesday?
I wrote my letter to Hornbeck, and he answered.
A synopsis of my knowledge (and concerns) is at http://nichols-brothers-boats-story.blogspot.com/.
Don't believe everything you read in the news.
The reason given by Nichols for filing Bankruptcy was the Hornbeck lawsuit. This lawsuit was filed, but has not gone to trial yet. No trial, no debt. What put the coupany under is the extreem debt incurred over the past years. The exact amount is being compiled by the bankruptcy court, and all Creditors are filing thier claims with the court now. This is a 30plus day process.
I'm sure everyone reading this can come up with why Mr. Nichols needs to constantly get financing to keep the door open, even when the yard has been consistantly putting out new projects. It is not like the customers of the vessels are not paying progress payments as the vessels go thru the build process. Where is that money going?
I read in one of the blog posts that the reason one of the vessels was delivered late was due to customer changes. I would expect that the contract with the customer would spell out how changes are handled (cost and delay). In the example of the Expo Ships (Grand Luxe) project, the customer (David Lester) sited the delay being that the boat yard started the project months later than promised, and then only put a fraction of the resources on the project to complete it. David Lester contends that all changes were handled by Change Orders, agreed to by both parties, that addressed the cost and delay of each change. Nichols settled that lawsuit out of court. Go figure.
Behind the scenes, a new company has been formed (Ice Floe, LLC), who is being positioned by Nichols to 'purchase' the company for less than pennies on the dollar. Interesting that Ice Floe, LLC was formed just days before the Bankruptcy filing? Also interesting is that the company is being formed by a group led by Nichols' silent partner.
The big winners here are the owners of Nichols. They retain thier jobs and get to wipe the slate clean. Mr. Nichols (the Owner) continues to recieve lease payments from the boat company on the property he ownns which houses the boat yard in Freeland and the facility (used less than 2 months a year but is paid for the entire year) in Langely. The big losers are the vendors, who currently are owed some 20+ million dollars. It must be nice to get a 'do over' Mr. Nichols.
Hey, is it not interesting that the biggest news on South Whidbey Island in over 10 years has not generated a single Leter to the Editor in the South Whidbey Record? They have had a Nichols story on the front page almost every edition, but has not published a single Letter to the Editor. Odd.
At least some of the workers will get to come back to work as well. I wonder for how long since the management responsibile for this financial disaster will still be at the helm.
Max has hit the nail on the head. Ice Floe was just recently formed by an existing silent partner in the company shortly before the bankruptcy was filed. The Nichols continue to point the finger at lawsuits asking people to write to these companies on their behalf. How the Nichols can say this past lawsuit pushed them into bankruptcy just proves the incompetence by management. Take a look at their declining revenues for the past three years. Their revenues in 2007 do not appear to be enough to even cover operating expenses. Whidbey Island is an incredible community and I can only hope the best for the families that this entire situation will work itself out. Lets call this was it is though, a "restructure". They can say it is a bankruptcy and they are selling the business but it boggles my mind that the person who is trying to buy the company is ALREADY an owner of Nichols Brothers and intends to keep the same management staff??!! Why would any creditors, vendors, or clients trust this company if management has not changed? The only hope would be for this silent partner to buy the company and hire new management. Besides, I find the arrogance of the Nichols disgusting. I would expect more humility instead of an entitlement mindset from men who just drove their father/grandfather's company into the ground and laid off over 100 people with no notice and have possibly drastically hurt the economy of a small town. Other boat builders have recovered from bankruptcy but I think you have to learn a lesson before you can move on and honestly, these men have not. All of the stories I read are slanted toward the view of the Nichols which would explain why, I again agree with Max about letters not being printed in the Whidbey Record. You can't tell me concerned citizens and employees have not written letters about this? Of course this is all my opinion and I could be wrong.
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