Contractor in deadly South Dakota building collapse may need to liquidate
UPDATE: Aug. 17, 2018: A court official in the Hultgren Construction bankruptcy case has questioned whether the company will be able to continue with its Chapter 11 reorganization plans given that it has no assets and that the limit of its liability insurance is only $2 million, which is not nearly enough to pay for the several wrongful death and injury lawsuits that claimants have filed against the company, according to the Argus Leader.
Distressed companies that choose to file for Chapter 11 reorganization typically want to continue doing future business but are burdened with debt and seek court protection and time in order to come up with a repayment plan that will satisfy creditors. While the case is ongoing, creditors cannot pursue action against the company outside of bankruptcy proceedings. However, Hultgren officials said they do not plan to conduct business post-bankruptcy but only want to use the court to distribute what little money they do have equitably among those who have filed claims.
If the court rejects Hultgren's Chapter 11 status, the court's protection will be end, and those suing the company will be able to continue legal action.
If Hultgren is set on filing bankruptcy, Chapter 7 liquidation would be its only likely alternative.
- Hultgren Construction, the general contractor that was working on the Copper Lounge in Sioux Falls, South Dakota, when it collapsed in December 2016, has filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of South Dakota, according to court documents. The accident killed one worker and trapped another in the debris for hours.
- Hultgren's representatives claim the company has only approximately $3,700 in assets but has estimated liabilities of almost $5 million. Gross operating revenue for the calendar year 2016 was more than $4.7 million. In 2017, the company brought in less than $16,600 in contracting income. The company's creditors include the Occupational Safety and Health Administration for fines related to the Copper Lounge collapse and various insurance companies and other parties looking to recoup the losses they suffered as a result of the accident, including $4.8 million, according to KSFY, for property damage as well as claims of unknown amounts on behalf of the injured and deceased workers.
- Chapter 11 is usually reserved for companies that want to reorganize and to continue doing business, but Hultgren's attorneys said this would allow a faster distribution of what's left of the company's assets than Chapter 7 liquidation proceedings would. Hultgren's lawyers said the company is out of business.
OSHA fined Hultgren Construction a total of $200,628 for serious and willful violations related to the accident. The agency also fined labor staffing company Command Center $114,075. Citations to both companies included those for allegedly failing to train workers in safety procedures, not providing adequate personal protective equipment and unsafe use of scaffolding and ladders. Both companies have contested OSHA's fines and citations.
According to OSHA records, it still has an open case involving South Florida contractor Munilla Construction Management and the fatal Florida International University pedestrian bridge collapse on March 15. Crews had just installed the bridge after building it offsite when it fell, crushing cars and people. The collapse killed six and left several others injured. The accident is still under investigation, but some reports indicate that there were cracks in the bridge before it was even put in place.
The Miami Herald is suing the Florida Department of Transportation to obtain documents related to the case. The federal government has asked a Leon County (Tallahassee, Florida) judge to delay any rulings in the case until it decides whether it will get involved, as the National Transportation Safety Board has argued that some of the requested documents are part of its investigation.
- Sioux Falls Argus Leader Hultgren Construction announces bankruptcy filing
- KSFY Bankruptcy filing will impact payments to building collapse victims
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