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Co-owner sues Christensen Shipyards

Number of lawsuits against financially troubled Vancouver-based yacht maker rises to five

By Aaron Corvin, Columbian Port & Economy Reporter
Published: March 13, 2015, 12:00am

Christensen Shipyards, the financially troubled builder of yachts in Vancouver, now faces a total of five lawsuits, including one leveled by Henry Luken, the deep-pocketed Tennessee businessman who owns 50 percent of the company.

Based on court filings, it appears Christensen, which once sold a yacht to Tiger Woods and boasted of a turnaround after the economic crash, is approaching an endgame in which it will no longer exist in its present form, if it survives at all.

In a lawsuit filed on March 9, Luken and Christensen Financing LLC, apparently a current or former affiliate of Luken’s, are asking a Clark County Superior Court judge to appoint a receiver to assume control of Christensen Shipyards and to manage its assets.

With the power to sell and to negotiate with the yacht builder’s customers, the suit says, a receiver would ensure that partially completed boats, including two separately purchased by Luken and Christensen Financing, are finished.

The suit is one of five that have been lodged against Christensen Shipyards since Feb. 12, about two months after initial hints of the company’s financial stress emerged. One of the parties suing the company is a supplier who says it generally supports appointing a receiver. Stellar Industrial Supply argues Christensen has been mismanaged and that its leaders “are deadlocked” over how to manage the company’s affairs.

Christensen Shipyards, which most recently shuttered production in February, is pushing back.

In answering Luken’s suit, the company says Luken has “unclean hands” because he owns 50 percent of Christensen, is a board member, and owned or controlled Christensen Financing. The company also alleges Luken “used his control and influence” at Christensen Financing and Christensen Shipyards to arrange for the shipbuilder to sell 164-foot yachts to Christensen Financing and to himself at less than Christensen Shipyards’ costs, according to the filing by Portland law firm Field Jerger.

In court documents, Joe Foggia, the president of Christensen, who also serves as a board member along with founder Dave Christensen and Luken, says he’s been working on a deal to sell the company to a competitor.

Under that arrangement, Westport Yachts, a Florida shipbuilder, would purchase Christensen Shipyards and real estate owned by Christensen Group Inc., a company affiliated with Dave Christensen that leases facilities to Christensen Shipyards. Westport would then complete Christensen’s customers’ unfinished yachts, “rehire workers and responsibly continue operations,” according to Foggia.

Foggia says in the court documents he believes Luken “wants to finish his boat and his friend’s boat at (Christensen) for below-market costs, and then acquire the (Christensen) name to continue with his personal yacht business at Christensen Inlet in Tennessee.”

‘In imminent danger’

The first sign of Christensen’s financial problems emerged in December, when the company announced it was “currently working on a multipart ownership restructure.”

Creditors were circling in December and January. In February, workers arrived one morning to start their day at the company only to find the gates locked. Later that month, employees showed up to pick up paychecks, days after learning the company had again halted production. That same month, one employee told The Columbian that Christensen’s workforce had steadily declined, through furloughs and layoffs, from a range of 400 to 450 down to a range of 100 to 110. Other employees, who wished to remain anonymous, cited similar numbers to The Columbian.

In their suit urging the court to put a receiver in charge, Luken and Christensen Financing say Christensen Shipyards is “currently insolvent, or it is not generally paying its debts as they become due, or it is in imminent danger of insolvency.” In answering the complaint, Christensen Shipyards admits to this description of its finances.

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Luken and Christensen Financing say that in order to complete their hulls and any other in-process yachts Christensen Shipyards must be reopened and its employees rehired. “It is critical that this process begin immediately,” they argue in documents filed by the Portland law firm Ball Janik. “The longer that (Christensen’s) doors remain closed, the more likely that (Christensen’s) former employees will have found new jobs and be unwilling or unable to return to work.”

Making an argument

Stellar, one of the parties that’s sued Christensen Shipyards, says in court documents that it generally supports the call by Luken and Christensen Financing to appoint a receiver. However, the company says, a receiver should be granted broad powers to take control of Christensen Shipyards. Such an arrangement would benefit all parties who have a financial interest in Christensen, not just Luken and Christensen Financing, according to Stellar in documents filed by the Tacoma law firm of Morton McGoldrick.

Stellar spells out numerous reasons in arguing that there appears to be cause for appointing a receiver. The company’s reasons: there’s evidence that Christensen is insolvent; the company has “substantial financial obligations;” the business operations of Christensen “have been mismanaged;” the company “has ceased business operations;” Christensen’s “shareholders and directors are deadlocked and are unable or unwilling to effectively manage the company’s affairs;” and an “affiliate of (Christensen’s) is threatening to initiate eviction proceedings.”

The parties who’ve sued Christensen Shipyards and, in some cases, named additional defendants are: Luken and Christensen Financing; Stellar; Washington Manufacturing Services, which operates as Impact Washington; Composites One LLC; and Ferguson Enterprises Inc.

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Columbian Port & Economy Reporter