...paid 100% of Interstates invoice but then offset the retainage amount of 15% against another Interstate "value added" category set forth in a requisition. Still other times, AMEC just "flat-out refused" to pay Interstate for its services, Abramson contends. He says much of Interstates profit on the project, was to come during the later erection phase of the work.
In a meeting on Nov. 1, 2004, Abramson says he advised AMEC that Interstate was running out of cash. "I suggested to AMEC that either they terminate the subcontract or they agree to provide financing in the form of advanced payments or a restructuring of the accounting schedule for the cost of the change orders," he says. "Then Interstate could continue to operate."
Abramson claims that Muldoon told him, "If we had any intention of terminating you, we would have done it months ago." Muldoon asked to review all of Interstates books and records for the project, ostensibly to see what consideration Interstate needed to complete the project, according to Abramson. "Interstate opened its doors to AMEC," he says. But Abramson claims AMEC was gathering data in preparation for handing the work to another company.
By contrast, Muldoon says in his affidavit that AMECs review of Interstates records revealed that the fabricator was incapable of completing the job.
Abramson says he went to AMECs Manhattan office on Dec. 21, 2004, to pick up a check he believed would be for millions of dollars. Instead, Muldoon walked into the room and handed him a termination notice. Abramson says he steeled himself and said, "This is one hell of a way to treat a friend."
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| History. Interstate operations began with Morris Abramson in 1918 (right). (Photos courtesy of Interstate Iron Works) |
Shutting Down
In testy letters between the firms executives in subsequent days, Muldoon demanded to take possession of the steel right away, but Abramson says he advised him that trespassing on Interstate property was actionable and criminal and demanded full payment immediately.
By then, Abramson knew he could not meet payroll and would have to announce an Interstate shutdown. The timing, just before Christmas, did not help. He says the experience was heartbreaking, both for employees hardship and signaling the end of the 86-year-old family business.
On Dec. 22, Abramson assigned Interstates assets to Stephen B. Ravin, a Roseland, N.J., attorney who, under state law, will liquidate them for the benefit of creditors. The list involves "tons of steel and tons of money owed to tons of people," say one attorney involved. Creditors include W&W Steel, which Interstate brought into the Times job. An industry associate of Abramson says there are "plenty of people pissed off" over the fabricators sudden, holiday-time shut-down. Abramson says he helped place many of his 300 ex-staffers in new jobs.
Valley National Bank and Ravin claim that creditors security interest in the steel trumps AMECs claim to ownership. An attorney for AMEC wrote to Ravin that Interstate "has no right to retain this steel" and that "AMEC believes it will have a right to recover" millions in expenses if it is forced to re-order steel from another supplier. AMEC claims steel erection should begin by March 28.
Abramson and his accountant say that AMEC owes $6 million to $7 million more, but Muldoon claims the work is paid. Abramson says he lost most of his assets with Interstate. As for the coming auction, Valley National will net most of the proceeds. Trustee Ravin expects to collect about 15% of the first $1 million and 10% of the rest.
Legal troubles still dog Abramson, but he is looking forward to a fresh start. In recent months, he has started New York City-based steel fabrication and erection consulting firm, Bramco Steel Services. Abramson says he already has a number of industry clients.
Reflecting on how he could have handled the last two years differentlyand possibly saved the company started by his grandfather 87 years agobrings Abramson little comfort. "When I realized I had more attorneys working for me than office staff, I knew the ship was under water," he says. "Remember, Interstate and its employees are the victims of this story. We are all starting over."
