Since the 1990s, Roland K. Bullard's Philadelphia-based FastShip Inc. has been a lot more successful raising millions from rich investors - and the toll-paying public - than in executing its scheme to build ships that could carry freight from South Philly to France in just three days.
Plans to profit from a new generation of speedy trans-Atlantic cargo vessels have collapsed to the hope of a possible lawsuit -- against the U.S. Navy.
Last week's federal bankruptcy filing by FastShip in Wilmington listed hundreds of common stock investors, including heirs to the DuPont Co., Campbell's Soup and Rome and Haas family fortunes, who are unlikely to see their investment dollars again.
Bullard and his backers, lobbyists and government allies campaigned to raise $2 billlion for four trans-Atlantic ships and port cargo systems so fast and cheap "the resulting service would be comparable to airfreight at half the cost," the company said in its bankruptcy filing.
FastShip raised its first $10 million in the mid-1990s - $7 million from the Delaware River Port Authority, $3 million from members of the Holt family, port terminal operators. From 1998-2008, according to the filing, FastShip "came close to raising the necessary capital to launch the business plan on three occasions," with private money and also help from U.S. Sen. Arlen Specter, R-Pa., and others who advocated federal subsidies for the program, "but were unable to close on the required financing because of political and market setbacks" capped by "deal fatigue and the collapse of the global economy" in the 2008 credit crisis.
The company's last hope: Some of the Navy's new "littoral combat ships" like the USS Freedom, built by Lockheed Martin (an early FastShip supporter) in a Wisconsin shipyard, use a design which "infringes" on patents controlled by a FastShip affiliate. By reorganizing the company, Bullard hopes to raise money from new investors to finance a lawsuit against the Navy.
"It's a creative use of Chapter 11 to preserve our creditors and fund the litigation," Bullard told me.
FastShip owes $9 million to unsecured creditors, including $4.5 million to Philadelphia law firm Blank Rome LLP and a predecessor firm, Dyer Ellis & Joseph of Washington, D.C.; $765,000 to Citizens Bank owner Royal Bank of Scotland; $654,000 to former U.S. Rep. Bud Shuster's firm, Strategic Advisors Ltd.; and $250,000 to Conrail, among others.
And here's the investors, in descending likelihood of getting paid:
- $30 million to lenders whose financial support was secured by FastShip's "intellectual property," including $3.5 million to the Delaware River Port Authority, and others who were not named in the initial legal filings;
- $7 million to DRPA, a preferred-equity investor;
- An unreported total, to more than 100 common shareholders who lie at the end of the line in most bankruptcy cases, including, among others, the families of Elise Wood du Pont, candymaker Forrest E. Mars Jr., Dorrance Hamilton (Campbell's Soup), Thomas Holt, former Inquirer publisher Sam McKeel, Peter Benoliel, and Norwegian and British investors.