AAI Reaches Agreement with General Contractor on World Trade Center Contract

American Architectural Inc. (AAI) and Skanska USA, a general contractor with whom AAI had been working on the interior glass work and interior glass railing for the World Trade Center’s PATH Hall, have reached a proposed agreement in a dispute about the subcontract. Skanska had motioned, as part of AAI’s bankruptcy case, for the court to order AAI to resume or reject the subcontract in an expedited manner.

The two companies now have filed a proposed stipulation agreement noting their “desire to resolve the motion by fixing a date certain by which [AAI] must assume or reject the subcontract and, in the interim, establish a temporary joint check payment procedure for the payment of trust fund beneficiaries’ claims incurred from the date hereof and to provide for the payment by Skanska to the debtor and certain trust fund beneficiaries for work performed on the project during the interim period.” The agreement defines “trust fund beneficiaries” as those who have completed work as subcontractors for AAI and/or have supplied materials for the project.

The proposed deadline for AAI to file a motion to assume or reject the subcontract is now September 14. According to the agreement, if AAI rejects the subcontractor, the company will be required to provide “all materials and drawings (in CAD and PDF format) in [its] possession for the project [to Skanska] and assign any and all subcontracts and purchase orders as directed by Skanska to [ensure] a smooth and orderly transition to Skanska or a replacement contractor.” In addition, the parties agree to resolve any amounts Skanska owed to AAI (as of September 14) within 30 days.

The companies further propose that, once the court approves the stipulation agreement, through the period of September 4, Skanska will issue joint checks to the trust fund beneficiaries on the project and direct checks to the debtor for self-performed work all within a capped amount of $663,975 for work performed during the interim period.

In its original motion to expedite the court’s consideration of the matter, Skanska had alleged that it had paid AAI $696,485 for work completed on the project during the month of May, and that, at the time of the motion, at least two vendors had ceased work on the project due to AAI’s alleged failure to pay them.

At press time, the court had not yet approved the stipulation agreement.

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