Operator of historic California shipyard files for bankruptcy after announcing closure, layoffs

CALIFORNIA — Mare Island Dry Dock LLC, a commercial ship repair operation, filed a voluntary Chapter 11 petition on Feb. 14, 2026, weeks after announcing plans to permanently close its facility and lay off more than 80 workers.

The petition was filed in the U.S. Bankruptcy Court for the Eastern District of California. Bankruptcy documents list estimated assets and liabilities between $10 million and $50 million.

The Vallejo-based company intends to restructure its debts while addressing mounting financial challenges. Filed as Case No. 26-20777, the documents identify between 100 and 199 creditors and include the 20 largest unsecured claims.

The largest unsecured claim, $752,337.75, is owed to Petaluma-based Lind Marine, LLC, for dredging services.

The filing follows a late-December announcement that the company would cease dry dock operations due to severe financial strain, though Chapter 11 allows businesses to restructure while continuing operations.

Contract loss triggered collapse

Company leadership cited “unforeseen business circumstances,” including the loss of a key U.S. Coast Guard maintenance contract, as the primary reason for the shutdown.

The Coast Guard contract had been central to the yard’s workload.

According to reporting by San Francisco Chronicle, a roughly $10 million Coast Guard contract was awarded to an out-of-state competitor, despite Mare Island submitting a lower bid.

The decision sparked frustration among regional leaders, who argue it raises serious questions about how taxpayer dollars are being spent.

More than 80 jobs affected

In a public statement, the City of Vallejo confirmed the dry dock notified officials on Dec. 30 of its intent to permanently close and terminate employees.

The shutdown affects more than 80 workers, including union and non-union workers.

City leaders stated they are seeking new investment and exploring opportunities to preserve maritime operations on Mare Island.

Historic maritime site was a major industrial hub

Mare Island has been a key naval facility since 1854. While the main shipyard closed in 1996, the dry dock continued to operate.

The yard was a major industrial hub that built over 500 ships, repaired 1,227 vessels, and played a significant role during World War II, particularly in submarine construction.