Christensen Shipyards, the luxury yacht builder in Vancouver, is set to close its receivership after two years.
A Clark County Superior Court judge finalized the settlement Friday, allowing the disbursal of $6.1 million to more than 600 claimants who went unpaid as the company struggled.
The receiver, Miles Stover, called the decision a success, considering the number of companies and people involved.
“If you have any experience in this world, this was a very successful case,” he said. Stover expects to officially end the receivership in the next two months.
Christensen Shipyards Ltd. struggled in the aftermath of the recession. The company was nearly bankrupted in early 2015 when several companies filed lawsuits claiming they were owed for supplies and services.
Most of the claims will pay out 72 cents on the dollar, said Albert Kennedy, of the Portland law firm Tonkon Torp. He added the monthslong wait was due largely to the sheer number of claims that needed to be negotiated.
Four large companies received their settlements, which amounted to a combined $2 million, last June, Kennedy said. Some 120 employees were awarded $400,000 total for unpaid benefits including vacation pay and sick pay; as well as taxes paid to government agencies.
But around 500 claims, totaling $4 million, will go to businesses – many of which come from a broad spectrum of providers of luxury goods. Forensic accountants in the receivership said claims were filed from the likes of Swedish spa manufacturers and suppliers of Armani chairs.
“The people who are buying these boats are sophisticated people and their taste, obviously, is going to be quite high,” said Tiffany Couch, whose company Acuity Forensics of Vancouver conducted the forensic accounting.
The multimillion dollar payout will also benefit small businesses, Couch said, some of which had not been paid for two years. When the receivership was ordered by the court, Couch said Christensen owed millions but had just $15,000 in the bank.
“You can imagine, for some of these folks, that’s a significant time to go without money, especially if they are small business owners,” she said. “It’s a great day. I’m proud to be a part of it and sending checks to these vendors.”
‘Weak internal controls’
Founded in 1983 by Dave Christensen, Christensen Shipyards, at 4400 S.E. Columbia Way, developed a reputation for its mega yachts. Among its notable customers was golfer Tiger Woods.
The first signs of trouble arose in December 2014 when Christensen announced it was restructuring its ownership to get a better handle on finances.
Two months later, workers told The Columbian they arrived to work one morning, but found the gates locked.
Details started coming to light that the company had been laying off employees, and its workforce dropped from around 400 to 110. Creditors started circling, and Christensen halted production on two occasions.
By March 2015, the yacht-maker faced a handful of lawsuits for failing to pay its contracts, mainly from industrial suppliers and business consulting services. At the request of some stakeholders, a Clark County Superior Court judge appointed a receiver, Stover, to manage the firm’s assets.
Stover, founder of management firm Turnaround Inc., restored the day-to-day operations and rehired 70 employees, according to court documents. But he reportedly also found an accounting mess.
An investigation “revealed books of records that indicate a history of very weak internal controls, a general lack of segregation of duties and nonadherence to generally accepted accounting principles,” Stover wrote in a court filing and reported by The Columbian.
In July 2015, the court approved the sale of the company’s assets for $5.5 million to one of its co-owners, Henry Luken, a businessman from Tennessee. The sale included assets from machinery and computers, plus trademarks and unfulfilled contracts for new yachts.
The $5.5 million was set aside to pay for the claims while the receivership finished negotiating the hundreds of claims, and comprised the bulk of the $6.1 million pot.
Under Luken, a new company, Christensen Shipyards LLC, has operated since summer 2015, with many employees returning to work. A lawsuit among the owners of the previous business is still pending, Kennedy said.