Nichols Brothers back in business following sale of its assets to a creditor

Nichols Brothers Boat Builders, Whidbey Island, Wash., has sold its assets to a Dallas equity firm, giving the company badly needed cash to resume operations.

Nichols Brothers filed for bankruptcy protection from creditors in November because it could not borrow money to finance operations. The proceeds from the sale will allow the company to hire 100 workers, bringing the total back to the prebankruptcy level of 150 employees.

The company was able to keep enough workers employed to finish a couple of boats that were only days from completion. The new owner of the company is Alaska-based Ice Floe LLC, a Nichols Brothers creditor controlled by Treadstone Capital Management of Dallas. The Dallas company specializes in distressed-company investments.

The $9.15 million transaction was approved by a federal bankruptcy judge in February.

Matt Nichols, chief executive of Nichols Brothers, will remain with the new company. Len York, Ice Floe financial advisor said, “The strength of the company’s workforce and Nichols’ reputation of building quality vessels made the purchase of the business very attractive.”

Treadstone Capital Management’s Michael Donohoe said the business has “a highly skilled workforce and a unique expertise in aluminum shipbuilding that is a growing part of the industry. … Nichols Brothers has gone through some tough times recently with litigation and capital constraints. This sale allows the company to move forward without these problems.”

The sale included the company name, equipment and all existing contracts. The sale does not include the land on which the shipyard operates. The land remains with the Nichols family. The family is also left with legal liabilities, such as the suit filed by Hornbeck Offshore Services for four unbuilt supply boats.

It is still unclear whether firms suing Nichols will be successful in going after their private assets. Also unclear is whether the joint proposal between Nichols Brothers, Todd Pacific and J.M. Martinac to build four ferries for Washington state will go through as planned or if Todd Pacific will take over more of the work than was structured in the joint venture.

The sale was bittersweet for Matt Nichols. “It was 44 years to the day that my parents started the company,” Nichols said. “There is a lot of emotion over this. To me it is a good thing, because it brings our employees back to work and we are getting our debts paid off, and that is what we were really hoping the outcome would be. At the same time we are excited about the financial support of our new owner, and we are ready to take Nichols Brothers to the next level and to make quality vessels for the next 40 years. Our employees, customers and vendors join me in this excitement.”
By Professional Mariner Staff