Ballenger Construction ceases state-wide operations [Valley Morning Star, Harlingen, Texas]

Dec. 11--HARLINGEN -- Ballenger Construction Company filed for protection under Chapter 11 bankruptcy Friday, after defaulting on 22 statewide construction projects, listing liabilities of up to $50 million and more than 1,000 creditors.

The financial crisis faced by the firm, whose business has been the construction of highways, streets and roads, could affect hundreds of employees, according to bankruptcy court records filed Sunday.

Chapter 11 bankruptcy is a court-monitored process that allows a business to restructure its debts.

"(Ballenger Construction Company) has ceased business operations, told its employees to go home, and has no ability to complete construction of its jobs," attorney Keith A. Langley told U.S. Bankruptcy Judge Richard S. Schmidt in requesting emergency relief from the automatic stay and authorization to coordinate completion of the projects.

Langley represents Liberty Mutual Insurance Company, which is Ballenger's payment and performance bond surety on the projects.

Ballenger Construction, founded in March 1937, had touted on its business website a workforce of 550 employees with offices in San Antonio, Corpus Christi, and Harlingen.

According to court records, Ballenger began shutting down its business operations on Dec. 3, at which time "a majority of its employees were told go to home."

Neither Joe C. Ballenger Jr., Joe C Ballenger Sr. nor their attorneys were immediately available for comment Monday.

Some of the contracts were for Texas Department of Transportation projects. TxDOT spokeswoman Veronica Beyer said Monday that Ballenger Construction had been the prime contractor on projects throughout numerous Texas counties.

In South Texas, these included projects in Duval, Webb, Brooks, Cameron, Hidalgo, Starr, Zapata and Willacy. Court records show other projects in Bexar, including the City of San Antonio, Medina, Jim Wells, San Patricio, and Williamson counties.

In the motion for emergency relief, Langley argued that it was warranted in this case, "because there are critical life safety issues involved," adding that with no employees and no ability to proceed with the projects, Ballenger Construction was not maintaining or securing the projects or addressing life safety issues vital to the public welfare.

"In some instances, projects are located next to schools, but in sitting unmanned for any extended period of time, results in significant risk to public safety. There is also the need to move forward quickly so that the work can be completed for the benefit of the public, as well as businesses that are being negatively impacted by prolonged construction," Langley added.

According to court records, consultants for Liberty Mutual project the insurance company will lose about $50 million, according to court records.

Schmidt granted Langley's motion for emergency relief from the automatic stay following a hearing Monday in Corpus Christi.

Beyer noted Monday that TxDOT is "working with the bonding companies to help move these projects forward without any further delays than what's already anticipated."

"Texans can be assured that these roadway projects will continue with no additional taxpayer dollars," Beyer emphasized in a written statement.

Local reaction to the developments was swift.

Cameron County Administrator Pete Sepulveda, who also oversees the Cameron County Regional Mobility Authority, said Ballenger's bankruptcy filing came as a surprise.

"There had been talk of financial difficulties, but for such a strong company, I never would have expected that this would happen," Sepulveda said.

"It's hard to imagine. That is pretty sad," Sepulveda added.

The CCRMA filed a civil lawsuit against the surety company and the construction firm on Oct. 11 in state district court after the CCRMA awarded Ballenger a $36 million contract for the State Highway 550 direct connector project, but the firm failed to present a performance bond, and the project didn't proceed with the firm.

The CCRMA's local counsel on the case is state Rep. Eddie Lucio III, who said that the lawsuit is still in its preliminary stages.

"I have nothing but respect for the Ballenger family," Lucio III said, adding that the family has created thousands of jobs over the years.

"They are good people, of integrity; unfortunately on this one specific circumstance, things didn't work out," Lucio III said.

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