Navillus Tiles and Alter-ego Advanced Contracting Solutions File Chapter 11 Bankruptcy After Losing Union Lawsuit

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New York, Nov. 10, 2017— Navillus Tile, Inc. (the “Debtor” or “ Navillus ”) filed a petition for Chapter 11 of the Bankruptcy Code on November 08, 2017 in the Southern District of New York under Case No. 17- 13162.[1]

Navillus has employed the law firm of Cullen and Dykman LLP as general bankruptcy counsel and Glass Ratner as Chief Restructuring Officer.[2]

Donal O’Sullivan is the sole director of Navillus as President and Chief Executive Officer.[3] He founded Navillus in 1987 as a small family owned business.[4] Since then, Navillus has become one of the largest subcontractors in New York specializing in high-end concrete and masonry, but also performs a variety of other construction work such as tile, roofing, electrical, and fireproofing.[5] Headquartered in Midtown Manhattan since 2015, Navillus also leases properties in Queens for equipment and a fleet of vehicles.[6] They have contracted for prestigious sites such as the waterfalls for Ground Zero memorial, historical NYC subway stations, tile work for Madison Square Garden, and currently under construction, Manhattan West and One Vanderbilt, scheduled to become some of NYC’s tallest buildings.[7] As of the filing, Navillus had 68 open construction projects employing over 700 individuals.[8] In 2016 Navillus had gross revenues of nearly $240 million.[9]

Navillus needed to file for Chapter 11 bankruptcy protection following an action, filed in the Southern District of New York, ruling against the Debtor to pay $76 million to union pension and welfare plaintiffs.[10] Navillus claims the district court action resulted in substantial 3 year litigation costs and with the hefty sum from the verdict, the Debtors cannot afford to maintain its ongoing operations.[11] The lawsuit was brought by 5 different unions which claimed Navillus used alter-egos to avoid collective bargaining with the unions, which the court ultimately agreed with.[12] Advanced Contracting Solutions, LLC, or ACS LLC is one of the Debtor’s alter-ego which also filed for bankruptcy in the same week.[13]

Navillus’ bank accounts remain frozen after the union plaintiffs served restraining notices and the U.S Marshal levied the Debtor’s bank accounts to satisfy $1.8 million of the judgement.[14] Navillus also reports the judgement led to numerous issues with Tishman construction, their construction manager for the Debtor’s largest projects, One Vanderbilt and Manhattan West.[15] Tishman has determined that Navillus is rendered insolvent and has issued notices of default and termination on the contract valued at $279 million, approximately 40% of the Debtor’s current work in progress.[16] Navillus has decided to fight the court orders and appeal in the second circuit to vacate the judgement or reduce the verdict amount.[17] O’Sullivan offered deeper insight into the Chapter 11 Bankruptcy filing,

This chapter 11 filing seeks to protect the value of Navillus’ business for all of its constituencies – including the trade creditors that continue to supply materials, equipment and other goods and services to Navillus in connection with its open construction projects, as well as the Union Plaintiffs. After careful consideration, and after exhausting all available remedies outside of a chapter 11 filing, Navillus has determined that it requires the protection offered by chapter 11.[18]

Navillus intends to pursue appeals against the court ruling but stated that even if successful, it would still need to reorganize in order to address the Tishman contract issues.[19] The Debtor will continue operating during the reorganization and continue working on backlog of future construction projects in New York.[20] After evaluation of its assets, Navillus assured that there will be sufficient funds to make a distribution to unsecured creditors.[21]

 

Cristina Lipan is a bankruptcy attorney and partner with the law firm of Shipkevich PLLC. Cristina is admitted in the Southern and Eastern Districts of New York and regularly practices before the United States Bankruptcy Court. For more information on this matter, you can reach Cristina at  646-867-0098 or at  clipan@shipkevich.com

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  • [1] Voluntary Petition for Non-Individuals Filing for Bankruptcy, Doc. No. 1, Case No. 17- 13162, S.D. NY. Filed November 08, 2017 (the “Petition”).
  • [2] Petition, Unanimous Written Consent of The Sole Director of Vavillus Tile, Inc. (No. 17- 13162); Affidavit of Donal O’Sullivan, Persuant to Local Bankruptcy Rule 1007-2, Doc. No. 7, Case No. 17- 13162, S.D. NY. Filed November 08, 2017, Events Leading to Chapter 11 Filing (the “Affidavit of Donal O’Sullivan”), ¶ 8.
  • [3] Petition, Unanimous Written Consent of The Sole Director of Vavillus Tile, Inc. (No. 17- 13162).
  • [4]Affidavit of Donal O’Sullivan, ¶ 4.
  • [5] Affidavit of Donal O’Sullivan, Navillus’ Business Operations, ¶ 1.
  • [6] Affidavit of Donal O’Sullivan, Navillus’ Business Operations, ¶ 3.
  • [7] Navillus, Home Page, http://www.navillusinc.com/ (last visited Nov 10, 2017); Tiffany Kary & David M. Levitt, NYC’s One Vanderbilt, Manhattan West Towers Snared by $76 Million Union Spat, BloombergMarkets, November 9, 2017, https://www.bloomberg.com/news/articles/2017-11-09/nyc-s-one-vanderbilt-manhattan-west-towers-snared-by-union-spat
  • [8] Affidavit of Donal O’Sullivan, Navillus’ Business Operations, ¶ 3.
  • [9] Affidavit of Donal O’Sullivan, Navillus’ Business Operations, ¶ 3.
  • [10] Affidavit of Donal O’Sullivan, District Court Litigation With Unions, ¶ 1.
  • [11] Affidavit of Donal O’Sullivan, District Court Litigation With Unions, ¶ 2.
  • [12]  Moore, et al. v. Navillus Tile, Inc., et al. and Gesualdi, et al. v. Navillus Tile, Inc., et al. (Lead Case No. 14- 17-13162-shl Doc 7 Filed 11/08/17 Entered 11/08/17 11:49:51 Main Document Pg 3 of 22 4 cv-08326) ¶ ¶ 71, 156.
  • [13] Voluntary Petition for Non-Individuals Filing for Bankruptcy, Doc. No. 1, Case No. 17- 13147, S.D. NY. Filed November 06, 2017.
  • [14] Affidavit of Donal O’Sullivan, District Court Litigation With Unions, ¶ 4.
  • [15] Affidavit of Donal O’Sullivan, Events Leading to Chapter 11 Filing, ¶ 2.
  • [16] Affidavit of Donal O’Sullivan, Events Leading to Chapter 11 Filing, ¶ 2.
  • [17] Affidavit of Donal O’Sullivan, Events Leading to Chapter 11 Filing, ¶ 6.
  • [18] Affidavit of Donal O’Sullivan, Events Leading to Chapter 11 Filing, ¶ 5.
  • [19] Affidavit of Donal O’Sullivan, Events Leading to Chapter 11 Filing, ¶ 6.
  • [20] Affidavit of Donal O’Sullivan, Events Leading to Chapter 11 Filing, ¶ 7.
  • [21] Affidavit of Donal O’Sullivan, Events Leading to Chapter 11 Filing, ¶ 7.
  • Image Credit: Dusty, Smiling Worker by Susan Sermoneta via CC Licensing

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