Not even the federal stimulus package could help Fleet Construction Co. Inc.
The Cumberland firm entered receivership in April, and the company’s court-appointed overseer and its creditors are auctioning off dozens of equipment pieces and vehicles this month as the economic slowdown claims yet another victim despite signs of a turnaround.
Fleet had employed between 100 and 200 workers in recent years, according to R.I. Economic Development Corporation employment databases.
Among its financial problems, Fleet failed to keep up with loan payments to Bank of America Corp., which asserted in R.I. Superior Court documents it was owed $9.5 million.
The company’s closure has created headaches and opportunities in the local construction industry as Fleet was unable either to start or complete projects it already had been awarded. Hanover Insurance Group, the bonding company that guaranteed Fleet’s work, was forced to look for replacement contractors for numerous jobs, according to receivership filings in R.I. Superior Court.
The receivership proceedings led Providence general contractor Gilbane Building Co. to file its own motion last month, asking that Fleet officially be removed as a site-excavating subcontractor helping to construct a new CVS Caremark Corp. building in Cumberland. In court filings, Gilbane said it had already hired Smithfield-based DiGregorio Corp. to complete the job.
Gilbane, the general contractor on the CVS project, estimated that Fleet’s insolvency had cost Gilbane about $547,000. But CVS said last week it didn’t delay the project much. The new building is still slated to open in the first quarter of 2011, as initially planned.
In an interview with Providence Business News earlier this year, a Fleet manager hinted at the company’s financial problems in a sector that had been hit hard in the sagging economy.
While the company had specialized in large, private jobs, such as clearing properties for housing subdivisions and retail centers, project manager Fred Sarmento said in January that Fleet was forced to shift focus.
Fleet executives found themselves more involved in the public sector in recent months because that’s where the work was. A series of local projects was funded with the state’s $1.25 billion share of the American Recovery and Reinvestment Act of 2009.
With other companies desperate for the work too, bids were kept extremely low. “We didn’t make any money,” Sarmento said at the time. “But we kept people busy.”
The effects of Fleet’s receivership rippled through several government agencies.
The R.I. Department of Transportation confirmed that Fleet completed the Nate Whipple Highway work. But the company had been awarded a contract for emergency state road repairs in early April, according to DOT spokesman Charles St. Martin.
Once Fleet filed for receivership, DOT scrambled to give the work to another company, St. Martin said.
A R.I. Airport Corporation spokeswoman said Fleet failed to complete the Newport Airport work but the agency is working with Hanover Insurance to find a qualified replacement contractor, at no additional cost to the airport corporation.
Fleet had been awarded a second $373,900 contract to help install a pump station and connection from the airport to the Warwick Sewer Authority, but the work never got started. Hanover is working with the airport agency on the project, too.
In East Greenwich, Fleet had been the lead contractor in the construction of a new athletic field complex at the high school last year, but the school department claims the new turf field doesn’t drain properly because of defective design and construction.
East Greenwich school officials said the matter is now in litigation. Also, the turf company, Field Turf, filed a Superior Court lawsuit against Fleet, saying it was never paid $450,000 for materials related to the project.
Diane Finkel, the receiver, said Fleet had seven or eight projects ongoing when Peter Calcagni, Fleet president, filed for receivership in April. Another business of Calcagni’s, P & C Leasing Inc., a buyer and seller of construction equipment, also entered receivership the same day.
Finkel said last week that she is still assembling a list of creditors.
But she and Fleet’s largest creditor – Bank of America Corp. – have moved to liquidate the assets. •
