General Contractor Pushes Court to Compel American Architectural to Assume or Reject World Trade Center Contract Quickly
July 3, 2012

by Penny Stacey, pstacey@glass.com

A New York-based general contractor, Skanska USA, has filed a motion in the Chapter 11 bankruptcy case of American Architectural Inc. (AAI) asking the court for "expedited consideration … to compel AAI to assume or reject the interior glass works and interior glass railings subcontract at the World Trade Center PATH Hall."

According to the motion, Skanska was awarded the PATH Hall contract by the Port Authority of New York and New Jersey in early 2010 and had subcontracted AAI for the ornamental glass railings, select storefronts, balanced doors, smoke baffles and miscellaneous glazing items on the project. The AAI subcontract was priced at $6.2 million.

The PATH Hall is a component of the World Trade Center's Transportation Hub, designed to "restore and greatly enhance the level of transportation services that existed prior to the September 11, 2001, tragedy," writes the company.

Skanska argues in its June 28 motion that the work at the World Trade Center "is extremely sensitive, time-critical work."
"The prime contract and the subcontract provide that 'time is of the essence,'" writes the company. "The prime contract with the Port Authority contains completion dates and provisions of significant liquidated damages for failure to meet them."

Skanska further alleges that since the PATH Hall project began, "the quality of AAI's submittals have been deficient and durations in which it has taken them to complete the submittals have been excessive."

The motion alleges that in a meeting on June 5, AAI president John Melching advised Skanska that his company "was having cash flow problems supposedly related to payments due to AAI on other projects." The company filed for Chapter 11 bankruptcy 10 days later-on June 15.

Skanska further claims that it paid AAI $696,485 under the subcontract for the period of May 1-31.

"Skanska provided AAI with funds under the subcontract without the benefit of knowing whether AAI is maintaining those funds in trust for the benefit of AAI's subcontractors," writes the company. "Skanska is aware of two vendors that have ceased work on the PATH Hall project because of AAI's failure to pay those vendors."

In addition, Skanska alleges that the PATH Hall project is designed to be completed in phases, "and some of the other trades cannot be completed until AAI's services under the subcontract are fully completed."

"Unreasonably prolonging the time period in which AAI makes a decision leaves Skanska in limbo (as well as the other trades) as to how the completion of the PATH Hall project will be met," writes the company. "In this regard, the court should be mindful that not only Skanska, but also the Port Authority of New York and New Jersey, as well as the completion of the PATH Hall project, are affected by the decision to assume or reject the subcontract."

Skanska has asked the court to enter an order compelling AAI to "either assume or reject the subcontract within seven days from the entry of an order granting this motion."

At press time, the court had not yet ruled on the motion. Stay tuned to www.USGNN.com™ for further updates as they become available.

This story is an original story by USGlass magazine/USGNN™. Subscribe to USGlass magazine.
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