Skanska USA, a New York-based general contractor, has objected to American Architectural Inc.'s (AAI) recent motion to sell its assets, including several outstanding subcontracts, via an auction process. The objection and motion both were filed in the U.S. Bankruptcy Court for the Eastern District of Pennsylvania, where AAI's Chapter 11 bankruptcy case currently is under review.
Skanska had awarded a subcontract to American Architectural for the interior glass works and interior glass railings at the PATH Hall, a part of the World Trade Center Transportation Hub. This subcontract is one of several listed in AAI's motion to sell as part of its assets that would be up for sale at the requested auction.
While the two parties had resolved a prior dispute regarding the subcontract via an agreement filed with the court in July, Skanska officials write, " … nowhere in the stipulation did AAI reserve its right to assign the subcontract to a third-party under Section 365(f)(1) of the bankruptcy code. The concept of assignment was never contemplated or embodied in the stipulation, most certainly, because the parties recognized that assignment of the subcontract … is legally impermissible and practically impossible."
Additionally, Skanska alleges that AAI "has continued to fail to perform under the subcontract despite receiving payment for its May and June 2012 requisitions."
"As of September 4, 2012, Skanska has received no drawings and/or material in exchange for the aforementioned payments during the post-Stipulation period," writes the company in its objection. "Despite repeated requests, Skanska has not received a response concerning the timeline for when AAI intends to deliver these drawings and/or material, and Skanska, as well as the PATH Hall project, remain at great risk."
The company further argues that because a deadline of September 14 had been set earlier in the case for AAI to assume or reject the PATH Hall subcontract, "the subcontract should be removed from this process and the procedural and scheduling order should reflect that the subcontract is not to be included in the 'subcontracts' to be sold or assigned."
In conclusion, Skanska writes, "While the debtors enter 'free fall,' they should be held to prior court orders and the stipulation, and not attempt to bring the PATH Hall project, Skanska, the Port Authority and the citizens in the Metropolitan area and neighboring communities down with them."
The court had not yet ruled on AAI's motion for authorization to sell its assets at press time.
