Employee-Owned Contractor C.C. Myers Files for Bankruptcy
On June 30, California contractor C.C. Myers Inc. filed for Chapter 7 bankruptcy in California Eastern Bankruptcy Court. The move came two months after two subcontractors filed lawsuits against the Rancho Cordova-based company for breach of contract due to nonpayment on projects in Contra Costa and Sonoma counties.
Lathrop-based Con-Fab Corp. said it was owed a $500,000 payment on a $2- million subcontract for work on a bridge reconstruction project in Petaluma, even though Caltrans had made a progress payment to C.C. Myers for the work. C.C. Myers, an employee-owned company, was also named in an April filing by Oakland-based Bay Cities Paving and Grading for $900,000 owed for work completed on a highway project in Contra Costa County. The suit alleges that C.C. Myers accepted payment from Caltrans, even though the company “was actually insolvent under any accepted definition” and never passed the funds on to the subcontractor.
Bay Cities was the joint-venture contract entity on one of C.C. Myers’ largest projects, a $133-million Interstate 80 overpass improvement project, called “Across the Top,” in Sacramento. The partner took the lead role in December, and Caltrans spokesman Dennis Keaton noted that, despite the change in status, the project is still on schedule for completion this fall “as long as the weather cooperates.” The only delay was negotiated three years ago, when work on the other Sacramento corridor, Highway 50, was underway: Caltrans juggled the projects to ensure both roads were not closed at the same time. Because Caltrans was named in the ongoing April lawsuits, Keaton deferred comment.
Bankruptcy documents reported $16.5 million in assets—$7 million in equipment and vehicles and $3.9 million in real estate—against $40.3 million in liabilities. The largest secured claim, for $25 million, was from Liberty Mutual Surety.
John Gladych, attorney for Bay Cities, questioned the timing of the bankruptcy filing, as it came days before C.C. Myers was required by the lawsuit to disclose bank records. “We want to know where the missing tens of million [of dollars] that were received from Caltrans and never passed on to subcontractors went,” said Gladych. “Those funds are subject to clawback by trustees.”
Gladych said Bay Cities, acting as a joint-venture partner this time, planned to use the information about the officers in the bankruptcy documents to file individual suits against them in the following week.
Linda Clifford, the company’s chief financial officer, referred questions to her attorney, Steven Felderstein, who was out of the country. In a statement to the media, Clifford confirmed that the company was “closing its doors for good. We’ve been engaged in a deliberate process over the last several months to ensure a smooth transition, especially for our employees.”
In remarks to the media in January, when the company pulled out of a number of projects for financial reasons, President Steve Francis blamed the company’s woes on “a difficult market” and a state decrease in road construction projects.
The June Caltrans Budget and Allocation Capacity Report confirms that the annual budget had dropped to $9.7 billion in 2016-17 from a high of almost $14 billion in 2007-08. “We are concentrating on maintaining existing roadways with the funding we have,” said Keaton.
Founded in 1977, C.C. Myers Inc. may be going out of business, but the company has been in bankruptcy court before. Founder C.C. Myers was honored by ENR as a Newsmaker in 2008, after he completed a key Emeryville road repair project 32 days early. Myers also was heralded after the Northridge Earthquake in 1994, when his company finished the scheduled 140-day reconstruction of the Santa Monica Freeway 74 days ahead of time. He ran into trouble on some real estate deals in 2007 and filed for bankruptcy protection. The firm reorganized as an employee-owned venture in 2008. In 2010, the roadbuilder started Myers & Sons, Sacramento, and currently is working on the Riverfront Reconnection project.