THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Thursday, January 26, 1995 TAG: 9501260388
SECTION: BUSINESS PAGE: D2 EDITION: FINAL
SOURCE: BY TOM SHEAN, STAFF WRITER
DATELINE: NORFOLK LENGTH: Medium: 56 lines
Jonathan Corp. told the U.S. Bankruptcy Court on Wednesday that it finally won the support of all creditors for the planned reorganization of its debts.
But evidence of possible environmental hazards at the company's Tidewater Steel facility in Chesapeake could complicate Jonathan's emergence from bankruptcy, an attorney for the company told the court.
Jonathan, a Norfolk ship-repair company that sought court protection from creditors in December 1993, said it learned last week that part of its Tidewater Steel property had been used as an industrial waste pond in the 1960s.
However, U.S. Bankruptcy Judge Hal J. Bonney expressed confidence in the reorganization plan after questioning Jonathan President Gary M. Bowers about the company's financial prospects.
Bonney gave the company until Feb. 23 to resolve questions about possible environmental problems at the Tidewater Steel site.
Existence of a waste pond at Tidewater Steel turned up when an environmental consulting firm recently examined the property, said Grigsby Scifres, Jonathan's attorney.
Two earlier audits of the property by the same firm had disclosed no environmental problems, he said.
The consulting firm has recommended further investigation of soil conditions at the site on the Southern Branch of the Elizabeth River.
The latest audit, Scifres said, was performed at the request of Virginia Beach real estate developer and investor F. Wayne McLeskey, who agreed to buy the property and lease it back to Jonathan for 10 years.
However, ``McLeskey is not willing to go forward until that (environmental) issue is resolved,'' Scifres said.
Jonathan, whose Norfolk shipyard thrived during the 1980s by handling repairs and overhauls of Navy ships, blamed its financial difficulties on the demise of the Cold War and the falloff in Navy spending for ship repairs. Jonathan said its problems were exacerbated by its heavy borrowing for commercial real estate, which proved difficult to sell when the company no longer needed the properties.
When it filed its Chapter 11 petition in late 1993, Jonathan listed assets of $21.1 million and $26.3 million of liabilities owed to nearly 900 creditors. Chapter 11 allows a financially strapped company to continue doing business under court supervision while it attempts to restructure its debts.
Although the falloff in Navy ship-repair business probably will stabilize in two years, Jonathan's future will be tied to steel fabrication work for commercial customers, Bowers told the court.
``Our real need is the opportunity to turn from military business to commercial business,'' he said. The company's Tidewater Steel subsidiary and an Erie, Pa., shipyard that repairs ships on the Great Lakes ``represent that opportunity.'' by CNB