California’s Mare Island Dry Dock has filed for bankruptcy on 14 February, seeking to reorganize its business while negotiating a potential sale or partnership aimed at keeping the shipyard operating. The filing follows the company’s earlier warning that it was likely to shut down after losing a key U.S. Coast Guard contract.
The company said it laid off 65 workers in December, but expects the bankruptcy process to keep 50 employees on the job as operations continue. President Steve DiLeo said maintaining activity at the yard is critical for the business and the surrounding community, and described reorganization as a necessary step toward a sale that supports the interests of stakeholders.
MIDD linked the bankruptcy to the U.S. Coast Guard’s decision to award the maintenance contract for the USCG Healy icebreaker to Vigor Marine in Portland, Oregon. The company said it was the low bidder, but stated that the Coast Guard told Congressman John Garamendi it selected Vigor Marine because the crew is based in the Seattle area, making the maintenance period easier on the crew.
DiLeo said MIDD is pursuing a sale of the shipyard as a going concern and is in discussions with multiple potential buyers. He said the expected deal structure would allow creditors to be satisfied while keeping the yard in operation.
The company has operated the facility since 2013, after acquiring rights to a site that formed part of a U.S. naval base dating back to 1854 and closed in 1996. MIDD has provided repair and maintenance services under contracts for the U.S. Coast Guard, Military Sealift Command, the National Oceanic and Atmospheric Administration, and commercial customers.
DiLeo said a sale or partnership would improve the company’s ability to compete for bids, including through talks with a larger organisation that intends to expand activity at the yard to include shipbuilding alongside repair work. He said a merger or acquisition would enable the yard to pursue larger contracts than it can currently support, and added that MIDD remains optimistic about bidding for a five-year U.S. Coast Guard maintenance contract for the icebreaker Polar Star.
MIDD also said a California-based developer and Mare Island developer, Nimitz Group, have teamed up to propose the region as one of the Maritime Prosperity Zones referenced in a new Trump plan to revitalise American shipbuilding and the merchant marine. Separately, a group called California Forever unveiled in January a proposal to develop a large new West Coast shipyard in the region as part of a broader plan to build a new city near Collinsville in Solano County, California.
