Bankrupt, The Austin Co. to Join Austin Aecom

By: E&P Staff The Austin Co., an international firm based in Cleveland that has offered architectural, engineering, design-build and construction management services, announced yesterday that it and two affiliates voluntarily filed to reorganize under Chapter 11 of the Bankruptcy Code.

Austin has been completing one very large newspaper production plant and was named to head another big newspaper project that was expected to be announced shortly.

The company said the filing would facilitate completion of its previously planned strategic restructuring. It expects the move to result in most Austin operations becoming part of Austin Aecom, a division of Aecom, a global engineering, design and program management company.

Austin President Patrick B. Flanagan said in a statement that the bankruptcy arose from "financial strain" caused by a dispute related to a breach of contract by a subsidiary's client, and costs related to its litigation. He said the "restructuring will continue under court protection" and the firm will maintain normal operations."

The client in the contract dispute is not a newspaper company, according to Austin.

The 127-year-old company, with reported 2004 billings of $300 million, said it entered into an asset-purchase agreement whereby most of its U.S. operations will be merged with Austin Aecom, which was created earlier this year when Austin's Southwest and Midwest regional operations joined Aecom's McClier Corp. (See E&P, July 2005; E&P Online, Oct. 4, 2004; Feb. 11, 2005.)

Pending bankruptcy court, government approvals, and the absence of "better offers," the transaction is expected to close by the end of the fourth quarter.

Flanagan said Austin expects employees and vendors to be paid for services performed following the filing, and that the company intends to finance continuing operations with cash during the Chapter 11 process.

Work by two landscaping and concrete subcontractors at The Kansas City Star, however, had halted yesterday as a result of the bankruptcy filing, according to an account in that paper.

Reporter Dan Margolies quoted Production Vice President Randy Waters saying that expected delays are unlikely to "have much effect" on the 95%-completed plant, which is still slated for spring opening (E&P, Nov. 10, 2003). A year-and-a-half ago, the project's steel contractor also sought Chapter 11 protection

Reporting that Austin plans to close its Kansas City regional office, Margolies quoted Austin Sales and Marketing Senior Vice President Mike Pierce saying that "work in that office has been slow ... and it is one of the assets that Austin AECOM has elected not to purchase."