THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Friday, June 23, 1995 TAG: 9506230533
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY CHRISTOPHER DINSMORE, STAFF WRITER
LENGTH: Medium: 67 lines
Jonathan Corp., the Norfolk shipyard that closed last week, is not paying its laid-off employees for their last week of work, workers and their families said Thursday.
``We hear nobody's getting their paycheck,'' said Patty Meis, whose husband, Anthony Meis, was laid off June 16.
Meis was one of about 250 employees Jonathan laid off last Friday. They were working on subcontracts Jonathan had at Newport News Shipbuilding.
Jonathan's employees would have been paid at 2 p.m. today, but word is out not to come to the shipyard.
``My boss called me and said not to come down, they're not going to be able to pay us,'' said one laid-off worker, who didn't want to be named for fear he couldn't get a reference to help in his new job search.
``We needed that paycheck to pay our rent next week,'' Patty Meis said.
Jonathan's president and founder, Gary M. Bowers, did not return a phone call Thursday. Jonathan's bankruptcy lawyer C. Grigsby Scifres declined to comment.
Jonathan is the first Hampton Roads shipyard to fall victim to defense downsizing and Navy fleet cutbacks since the end of the Cold War. It sought bankruptcy in December 1993 in an attempt to reorganize its finances. A debt repayment plan was approved in February.
``To go down the tubes this fast is just incredible,'' said Jerrold G. Weinberg, the lawyer who represented the unsecured creditors in Jonathan's bankruptcy case.
Jonathan apparently was unable to land the ship-repair contracts it needed to make that plan work, so it shut down. It's going to attempt to repay its debts by selling off the shipyard and other assets.
It's unclear whether Jonathan's creditors are going to go along with those plans. The biggest creditor is NationsBank of Virginia, which holds a loan secured by Jonathan's shipyard property on Front Street in Norfolk.
If NationsBank doesn't reach an agreement with Jonathan over the sale of the shipyard, it or another creditor may try to force a liquidation overseen by Norfolk's federal bankruptcy court.
``A lot of what happens next depends on which way the bank goes,'' Weinberg said. ``They kind of control the whole thing.''
NationsBank's lawyer could not be reached.
Meanwhile, Jonathan's employees are left without the paychecks they need to pay bills. Patty Meis and her husband will have to borrow money to make their rent payment, she said.
Anthony Meis had worked at Jonathan for seven years as an insulator. He was told late last Friday to leave the work site at Newport News Shipbuilding and not come back. Jonathan didn't even supply trucks for the laid-off workers to remove their lockers and tools, Patty Meis said.
In addition to his pay for 46 hours of work last week, Meis may also be losing a week's vacation.
There's little recourse for the laid-off employees. In the eyes of the bankruptcy court their claims come after those of the secured creditors. NationsBank and other secured creditors are owed more than $5 million. The value of the Front Street shipyard property is assessed at nearly $2.6 million by the city.
``I don't know what we're going to do,'' Patty Meis said. ``Unemployment won't start for two weeks. This is bad.''
KEYWORDS: LAYOFFS by CNB