By Monica Chen

mchen@heraldsun.com; 419-6636

DURHAM -- Mainline Contracting, a Durham construction company that reported $73 million in revenue last year, has converted its bankruptcy filing from a reorganization to Chapter 7 liquidation, and as a result, has put nearly 200 people out of work.

The conversion was approved in the U.S. Bankruptcy Court for the Eastern District of North Carolina on Oct. 15. During a hearing with creditors, Bill Janvier, the attorney representing Mainline, said the company had closed because of a lack of financial backing.

"The debtor no longer had the right to use cash collateral. That motion was brought by BB&T because the bonding company for [Hanover Insurance Co., Mainline's insurer,] had not agreed to a budget with the debtor," Janvier said in a court recording. "BB&T was left in the unintended position to fund the whole case rather than just the bonded case."

"As a result, on Monday morning, the company ceased operating and 180 people lost their jobs." Janvier went on to say. "We have no cash to use to go forward. ...We would therefore suggest the best course of action would be to convert this case into a Chapter 7 and appoint a trustee to liquidate all the assets."

The company had owed $10 million to $50 million to more than 200 creditors, many of them local companies.

Requests for comments to Randy Garrett, the former president of Mainline, and Gary Wright, the former executive vice president, were not returned Monday.

The company's Chapter 11 reorganization had been filed Sept. 15. At the time, the company leadership seemed optimistic that things would get back on track.

"We're still operating," Wright told a Herald-Sun reporter. "We're still doing our projects and doing new projects."

The company had been hurt by the economic downturn, in particular by a 40 percent drop in construction activity this year, Wright explained.

Mainline had already trimmed its staff from some 375 workers in 2008 to 200 employees this year.

Former employees said Monday that in mid-October, they had been abruptly told not to come to work, without official explanations from the company leadership.

"There is no more company. They've closed. That's all I know," said Mike Habig, Mainline's former director of operations.

"Nobody knows anything about what's going on. We've just been out of work for the past two weeks. They told us to stay home," said another former employee, who declined to be identified.

Richard Sparkman, an attorney in Angier, was appointed trustee of the Chapter 7 bankruptcy. Sparkman has hired James Johnson III, of Angier-based Johnson Properties Realtors & Auctioneers. Johnson will oversee the selling of all of Mainline's machinery, equipment and vehicles.

With the closing of Mainline, projects across the state ground to a halt. In Wilmington, where construction had begun in the spring on a section of Wrightsville Avenue, work has stopped, leading the N.C. Department of Transportation to send a letter to Mainline, according to news reports.

Mainline's facility off Neal Road sat mostly empty on Monday, with the doors locked on the office building and numerous construction equipment lined up neatly in a row. Former employees and subcontractors milled around, chatting and checking out the equipment.

The company's largest claim was $1.8 million owed to a paving and construction company in Greensboro. Mainline also owed about $206,000 to Durham-based Couch Oil, a family-owned gas and heating oil delivery company.