THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Friday, September 1, 1995 TAG: 9509010521
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY CHRISTOPHER DINSMORE, STAFF WRITER
LENGTH: Medium: 72 lines
Want to buy a shipyard?
After 23 years, the high-flying ship repairer Jonathan Corp. is gone. Signs advertising an October auction went up recently on the repairer's waterfront facility on Front Street in Norfolk.
Everything must go, according to the signs. ``Marine repair facility. Complete liquidation. Cranes, trucks, tools, machinery and office equipment.''
The auction is being held by NationsBank of Virginia, which took Jonathan's assets after it went out of business in June. The auction is scheduled for Oct. 24, 25 and 26, culminating with the sale of the 11-acre site at noon Oct. 26.
Assessed at nearly $2.6 million by the city of Norfolk, the property fronts the Elizabeth River and includes 112,000 square feet of shop space as well as a pier and repair basin.
The same forces that drove Jonathan out of business make it unlikely another ship-repair firm will buy the property. Jonathan became the first Hampton Roads shipyard to fall victim to defense downsizing and Navy fleet cutbacks since the end of the Cold War.
At its height in the 1980s, Jonathan, named for the book Jonathan Livingston Seagull by Richard Bach, employed 900 people and had annual sales of about $70 million.
It sought bankruptcy in December 1993 in an attempt to reorganize its finances. A debt repayment plan was approved in February, but Jonathan was unable to get repair work to support that plan.
``Jonathan determined it could not survive economically in the shipyard business,'' said C. Grigsby Scifres, the company's bankruptcy attorney.
It shut down in June, putting more than 250 employees out of work. Those employees have yet to be paid for their last week of work.
Jonathan voluntarily surrendered all its assets to NationsBank, Scifres said.
Proceeds from the auction will go to pay Jonathan's debt to NationsBank. When the company emerged from bankruptcy it owed the bank between $6 million and $7 million, according to bankruptcy court documents.
Monroe Kelly III, NationsBank's lawyer in the case, declined to comment on the auction, citing the privacy of bank's relationship with a customer.
The unpaid employees and other creditors are unlikely to see any proceeds from the auction.
Scifres said the employees would have been paid if Newport News Shipbuilding had paid some invoices due Jonathan. Jonathan had been subcontracting repairs at the giant Peninsula shipyard.
A Newport News Shipbuilding spokesman declined to comment on the matter, citing the possibility of litigation.
Now those invoices are owned by NationsBank, which also owns Jonathan's $15 million of disputed claims with the Navy.
The 360 unsecured creditors - mostly shipyard subcontractors and suppliers - were supposed to get some of the $11.2 million they were owed. Now they may get nothing.
The Front Street property itself is encumbered with a debt of about $950,000 owed to W. MacKenzie Jenkins of Norfolk. The debt to Jenkins is senior to what NationsBank is owed based on an industrial development revenue bond he owns. Any buyer of the property would have to either continue paying him or buy him out. ILLUSTRATION: Color photo
Staff file
An auction is planned for Oct. 24-26 to sell the assets of
ship-repairer Jonathan Corp. The yard closed in June.
by CNB