THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Friday, October 13, 1995 TAG: 9510130562
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY CHRISTOPHER DINSMORE, STAFF WRITER
LENGTH: Medium: 56 lines
Taking great strides toward emerging from its bankruptcy, Marine Hydraulics International Inc. announced Thursday that it has settled its dispute with Newport News Shipbuilding and won its first major ship repair contract since its January Chapter 11 filing.
The small Norfolk shipyard also said it has gotten ``overwhelming support'' from its creditors in voting on its plan of reorganization. A hearing Monday on confirmation of that plan is scheduled in Norfolk's federal bankruptcy court.
Now the biggest hurdle MHI must clear before its reorganization plan can be approved is the objection of its fired president and chief executive James Hong, said C. Grigsby Scifres, MHI's bankruptcy lawyer.
Hong, also minority stockholder in MHI, is arguing that the plan doesn't meet certain requirements of the U.S. bankruptcy code, Hong's lawyer Donna Hall said.
MHI's creditors are suing Hong, saying he plundered MHI's assets in the two years before the bankruptcy filing.
The Navy awarded MHI a contract that could be worth more than $1.8 million for work on the guided-missile frigate Clark. The Clark is scheduled to arrive at the yard on the Eastern Branch of the Elizabeth River next week.
The award reflects renewed customer confidence in MHI. Citing uncertainty because of MHI's bankruptcy, the Navy in February wouldn't award a contract to MHI for an overhaul of the guided-missile frigate Carr. MHI was the low bidder for the Carr job.
The Navy had no such qualms about MHI's ability with the smaller Clark contract. ``They're perfectly qualified to do this contract,'' said Thomas Odom, command deputy at the Supervisor of Shipbuilding, Conversion and Repair's Portsmouth office. ``Things look OK over there.''
The Clark contract will keep MHI's employees busy until December as the company tries to get its plan confirmed and emerge from bankruptcy.
The settlement with Newport News Shipbuilding removed one of two potential stumbling blocks on MHI's road to recovery. The other is Hong.
Newport News Shipbuilding and MHI had sued each other in March 1994, alleging each owed the other millions of dollars for work MHI did at the giant Peninsula shipyard from 1992 to 1994.
Newport News agreed to withdraw its suit and reduce its $3.2 million claim against MHI to $2 million to settle its suit, Scifres said. Newport News is now MHI's largest unsecured creditor. MHI in turn withdrew its $5-million suit against the big shipyard.
Meanwhile, MHI's creditors have voted by a healthy margin to approve the shipyard's reorganization plan , Scifres said.
KEYWORDS: BANKRUPTCY SHIPYARD
by CNB