New Chapter 11 Filing - Hollister Construction Services LLC

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Hollister Construction Services LLC

September 11, 2019

Sometimes it really pays to be a middleman. If you’re a middleman that can razzle dazzle potential claimants by saying you leverage a lot of cloud-based software, data integration apps and drones, you may even plow your way to $292mm in gross revenue. It’s all about tech these days.

NJ-based Hollister Construction Services LLC is a general construction firm that, in the course of providing construction management services, leverages the aforementioned tech. It doesn’t construct projects itself; rather, it engages in (i) design development, (ii) pre-development services, (iii) assisting with municipal approvals (iv) pre-construction services (including the subcontractor bidding process), and (iv) construction administration. Its projects are located across NJ and NY.

Here’s the thing: lots of tech and expertise are great but you still have to have a functional operating business. The economy has been charging and cranes are everywhere. The building business is booming. This is great if you’re ready to scale with the opportunity. Hollister apparently wasn’t up to the challenge. Per the company:

…recent and rapid expansion of the Debtor’s client base, combined with the Company’s underestimation of the costs of certain projects, resulted in the Company not being able to fully service all of its Project Owners’ projects. Likewise, Hollister was not able to ensure that Subcontractors were paid on the agreed-upon schedule. Certain Subcontractors subsequently stopped performing on their contracts with Hollister.

Accordingly, certain Project Owners ceased making remittance or progress payments to the Debtor on Projects that were pending or completed, but not yet paid in full. As Project Owner payments are the Debtor’s sole source of operating revenue, non-payment led to the Company experiencing significant operational cash flow and liquidity issues.

That’s brutal to read. This is what they call, “over your skis.” 45 projects are in various stages of completion.

The bankruptcy filing is predicated upon triggering the automatic stay, initiating a “breathing spell,” and giving the company an opportunity to negotiate with the Project Owners, the subcontractors, property owners and insurers on how to proceed.

  • Jurisdiction: D. of New Jersey (Judge Kaplan)

  • Capital Structure: $14mm line of credit (funded, PNC Bank NA), $1.3mm Term Loan (funded, PNC Bank NA)

  • Professionals:

    • Legal: Lowenstein Sandler LLP (Brian Buechler, Kenneth Rosen, Joseph DiPasquale, Jennifer Kimble, Arielle Adler)

    • Financial Advisor/CRO: 10X CEO Coaching LLC (Paul Belair)

    • Business Consultant: The Parkland Group Inc. (Larry Goddard)

    • Claims Agent: Prime Clerk LLC (*click on the link above for free docket access)

  • Other Parties in Interest:

    • PNC Bank NA

      • Legal: Duane Morris LLP (James Holman, Sommer Ross)

9/13/19 #55