Mare Island Dry Dock Files Chapter 11 Bankruptcy After Coast Guard Contract Loss, Seeking Reorganization and Sale Options
Mare Island Dry Dock in Vallejo has filed for Chapter 11 bankruptcy as it tries to keep the yard operating while restructuring and pursuing a potential sale or partnership. The filing follows the yard’s late-2025 shutdown warning tied to the loss of a key U.S. Coast Guard maintenance award, and the case now becomes a test of whether the facility can preserve workforce and capability while stabilizing cash flow under court protection.
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Shipyard reorganization, not a simple shutdown
The full story frames Mare Island Dry Dock’s filing as an attempt to preserve operations under Chapter 11 while the business restructures and explores a sale or partnership. The case lands after a period of financial stress linked to the loss of key Coast Guard work and a closure warning that triggered layoffs, and it now moves into a court process where budgets, vendor treatment, and any transaction milestones determine whether repair capacity can be sustained.
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Court process
The petition discloses broad ranges for assets and liabilities and a large creditor count, setting up a vendor and cash-management challenge typical for repair yards. -
Capacity stakes
The outcome matters because a functioning West Coast drydock slot can be difficult to replace quickly once it goes dark. -
Milestone watch
Early court orders, critical vendor treatment, and any announced sale pathway are the practical indicators of stability.
The case will be judged by continuity: whether the yard can keep jobs, suppliers, and repair schedules stable long enough to restructure and land a durable operating platform.
| Reader shortcut | Case facts that matter | Continuity pressure points | Stakeholders most exposed | Next proof points |
|---|---|---|---|---|
| Chapter 11 filed |
Mare Island Dry Dock filed a voluntary Chapter 11 petition in the Eastern District of California.
Case number is reported as 26-20777.
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Court-supervised cash management and vendor confidence become immediate execution variables. | Customers with repair slots, suppliers extending terms, and local workforce stability. | First-day motions, cash collateral access, and any court-approved operating budget. |
| Debt and balance sheet range | Filing summaries report assets and liabilities each in the $10M to $50M range, with 100 to 199 creditors listed. | Payment cadence can shift as critical vendors are prioritized and past-due terms are addressed. | Equipment vendors, subcontractors, utilities, and logistics providers supporting repairs. | Creditor committee formation and any DIP or alternative financing disclosures. |
| Contract loss trigger | The yard’s stress is linked in reporting to a major Coast Guard maintenance award that went elsewhere, followed by a closure warning. | Loss of a steady government workload can reduce baseline utilization and cash predictability. | Government work pipeline, ship repair scheduling reliability, and local industrial employment. | Whether new government work, partnerships, or bridge revenue appears during the case. |
| Sale or partnership track | Company statements and reporting describe a reorganization path paired with pursuit of a sale or partnership. | A sale process can freeze some decisions while buyers diligence contracts, permits, and environmental obligations. | Prospective strategic buyers, lenders, and customers evaluating yard viability. | Any stalking-horse process, exclusivity, or announced transaction timetable. |
| Environmental handling detail | Reporting on the petition notes controlled industrial wastewater requiring ongoing attention during operations. | Continuous compliance tasks can create fixed operating costs even during low throughput periods. | Regulators, port stakeholders, and any buyer underwriting remediation and compliance risk. | Court orders covering ordinary-course environmental handling and site operations. |
The Chapter 11 filing moves the yard into a court-supervised operating mode where continuity depends on two practical items: access to cash for day-to-day operations and confidence from customers and critical vendors. The near-term story is whether the yard can keep work flowing while a reorganization plan and possible transaction path take shape.
Shipyards are vendor-dense businesses. In Chapter 11, keeping critical suppliers stable and paid is often as important as winning new work.
Owners and operators watch whether a yard can keep schedules, labor, and materials moving without last-minute disruptions.
The company has signaled reorganization plus a sale or partnership search, which can reframe the yard as an asset under review.
Balance-sheet ranges (as filed)
Sequence markers that drive the near term
Closure risk surfaced after a key Coast Guard maintenance award went elsewhere, followed by shutdown warnings and layoffs reported by multiple outlets.
Voluntary Chapter 11 petition filed, with statements describing a reorganization plan and a sale or partnership search.
Operating budget approvals, treatment of critical vendors, and any disclosed transaction timeline become the practical indicators of continuity.
Execution feel: workable, but schedules may carry buffers
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